Money Management

There have been several financial institutions shut down by the FDIC. 

In the past few weeks, we’ve seen the highest-profile bank failures in the United States since the financial crisis in 2008. And while things hopefully stabilize soon in the banking industry, there are some important questions on the minds of U.S. bank customers, including what will happen to their outstanding loans if their bank fails. Here’s what you can expect if your financial institution gets shut down by regulators.

What happens to your loans if your bank fails?

The short answer is that if your bank fails and you have outstanding loans, you still owe the money.

For more context, when a bank “fails,” it means that the FDIC has determined it cannot continue to operate independently for whatever reason (usually it is insolvent, or quickly heading in that direction). In these situations, the agency’s top priority is to find a healthy bank to acquire the assets and deposits of the failed bank. After all, the FDIC is the agency that insures deposits, and it doesn’t want to pay out money if it can simply find another bank to take over the old bank’s operations.

If this happens, the failed bank’s entire loan book is transferred to the acquiring bank, and the loan customers will simply owe the exact same amount of money and on the same terms to the new bank. For example, during the 2008 financial crisis, Washington Mutual was placed into receivership by the FDIC in the largest bank failure in U.S. history. The bank’s assets and deposits were sold to JPMorgan Chase, and all Washington Mutual branches were rebranded as Chase branches by the end of 2009. If you had a Washington-Mutual-owned loan prior to the failure, you had a Chase loan after the bank was acquired.

If the failed bank isn’t acquired right away

There are some other possible scenarios that can happen. Sometimes the FDIC can’t find a buyer for a failed bank in its entirety but can sell off the failed bank’s assets in pieces to different institutions. For example, in the financial crisis era, buyers may have been interested in acquiring a failed institution’s auto loans, credit card receivables, and top-tier mortgages, but might not have any interest in their subprime mortgages.

Another scenario is that it’s entirely possible that the FDIC will place the bank in receivership in a newly created institution (controlled by the FDIC) and it will remain there for some time. For example, when Silicon Valley Bank failed on March 13, 2023, the FDIC created and operated Silicon Valley Bridge Bank and transferred all customer deposits (such as savings and checking accounts) into it, with the goal of protecting depositors’ access to their money while the FDIC attempts to sell Silicon Valley Bank to a healthy institution.

Whatever the actual process is, the important takeaway is that you still owe the money. Don’t use a bank failure as a reason to stop making loan payments. In all cases, you should receive communication from the new bank with instructions on how to continue to make your loan payments and where the money should be sent.

The FDIC will also post information for loan customers. For example, on the FDIC’s information page about Silicon Valley Bank, there is a section of information that states: “If you had a loan, you should continue to make payments, including escrow payments, as usual; the terms of your loan will not change.”

The bottom line

To sum it up, there are two important pieces of information you need to know if a bank fails while you have an outstanding loan with it:

First, you still owe the money. Your debt doesn’t magically go away just because your bank does.

Second, the new owner of the loan — either the FDIC or the acquiring bank — must honor the original terms of the loan. In other words, it can’t decide to make you pay the entire balance immediately, change your interest rate, or make any other changes to the terms.

If your bank fails, don’t panic. You will receive information within a few days from the FDIC or whichever bank ends up acquiring your loan, and it will tell you where your loan payments should be directed going forward.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

 Read More 

Why does self-sufficiency feel so darn good?! 

Cars are expensive. And we’re not just talking about the cost to purchase one. Gas, auto insurance, and maintenance are all big parts of our budgets. That’s why one of my favorite personal finance tips is to set up a dedicated vehicle emergency fund. Just $25 a paycheck for a year gives you enough of a cushion to cover many modest repairs.

Of course, it’s even better if you can skip the trip to the mechanic altogether. For most of us, this isn’t an option for anything major. But there are a host of simple auto repairs that are easy enough for even an auto repair novice to tackle on their own (and/or with the help of YouTube). Here are a few easy repairs you can DIY and save yourself a trip to the shop.

1. Install new windshield wiper blades

The blades on your windshield wipers are usually made of rubber, which can deteriorate with time and use. And if you live somewhere with nasty weather, this can happen even faster.

Happily, windshield wiper blades are sold pretty much everywhere — most big-box stores with automotive departments have a selection of wiper blades — and they’re easy to replace. Many snap off and on in minutes. While you’re at it, give your windshield and new blades a wipedown with a clean cloth and some glass cleaner.

2. Swap out a dead battery

Alright, I have a caveat with this one: batteries are a bit heavy. So if you aren’t able to lift and move a 40-plus pound battery, this one may be best left to a professional.

That being said, the actual procedure itself is simple and easy to DIY; you likely won’t even need specialized tools, as most battery installations require only basic wrenches and maybe a screwdriver. Bonus points if you pick up a bottle of anti-corrosion spray.

3. Install a new air filter

Airflow is a necessary ingredient in combustion engines — it’s part holy trinity of fuel, air, and spark that makes your engine run. But you don’t want dust, dirt, and other debris to be brought in with that air. Hence, the air filter.

Replacing an old, dirty air filter is another simple repair that shouldn’t require any special tools (other than a screwdriver). It’s as easy as opening the filter housing, pulling out the old filter, and slipping in a new one. (If you’re not sure how to find your filter housing, check your car’s manual or do a quick online search.)

4. Change a dead lightbulb

There are a few important lightbulbs in your vehicle, including your headlights, taillights, and interior overhead lights. All of these bulbs can die on occasion, which can be a safety hazard (and get you a ticket in some cases).

This is a simple job, but access may be a challenge depending on where your lights are mounted (and what’s in front of them). You shouldn’t need specialized tools, though gloves should be worn (grease or oil from your hands can damage the lightbulbs when they get hot). Once you’ve gotten into the housing, the bulbs will screw in and out.

A special note: If you’re changing out your headlight bulbs, make sure to adjust them! Headlights should be pointed toward the ground, not into the eyeballs of oncoming drivers!

5. Replace the spark plugs

These little parts have a big role in your engine. They’re what ignite the fuel-air mixture that makes your engine run. Replacing worn-out spark plugs is part of a regular auto tune-up, and most manufacturers’ manuals will suggest it be done every 30,000 miles or so.

This may be the most complex repair on this list, but it’s still manageable (if I can do it, so can you!). The most difficult part of changing out spark plugs will be getting to them, as there may be a few things in your way. Read your manual carefully (and/or watch the appropriate video carefully).

Once you have access, spark plugs typically screw in and out. You may need a couple specialty tools for best results: a gap gauge and a spark plug socket.

A little self-sufficiency goes a long way

Taking care of simple car repairs can be a good way to save a little money. But there’s also an extra perk: self-satisfaction. There are few things more satisfying than fixing something yourself. Each time you start your car or turn on your lights, you get that little zing of, Oh yeah, I’m the bomb! (or whatever it is young people say these days).

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 

You may have another option for grabbing this tasty bite. 

People who eat fast food often have their go-to menu items they order time and time again. So when a favorite gets pulled, it can be a blow.

Such was the case for many fans of the McDonald’s snack wrap, which was eliminated in 2016. The snack wrap, a blend of chicken, shredded cheese, lettuce, and sauce wrapped in a soft flour tortilla, was, for many people, the perfect mini meal. But McDonald’s franchisees found the snack wrap too complicated to make. And when you’re in the fast food business, that can be a deal-breaker.

If you’ve been longing for a McDonald’s snack wrap, here’s some good news. Wendy’s is launching its version of the snack wrap, and it might end up being a pretty good replacement.

An option to explore

Fans of the McDonald’s snack wrap haven’t taken too kindly to its demise. A Change.org petition asking for its return surpassed 17,000 signatures, and many fans have taken to Twitter to beg for the menu item to come back.

McDonald’s isn’t looking to reintroduce the snack wrap. But now, Wendy’s is bringing its own version to the table. And you may want to check it out if it sounds right up your alley, or if you remember the days of the McDonald’s snack wrap with fondness.

Wendy’s version of the snack wrap is a grilled chicken wrap with shredded cheddar cheese, romaine lettuce, and ranch sauce. It’s not the same as the McDonald’s version, since it uses grilled chicken instead of the crispy chicken McDonald’s featured. But still, it sounds pretty tasty in its own right.

Will the Wendy’s snack wrap become a new favorite of yours?

Wendy’s is selling its version of the snack wrap for $6.29. And when you think about it, that’s kind of a lot of money for something that’s essentially supposed to function as, well, a snack or small meal.

In fact, one misconception about fast food is that it’s cheaper than buying groceries. Often, it’s not. And if money has gotten tight and you’re already racking up a balance on your credit cards, then you may want to visit fast food joints sparingly. The same holds true if your goal this year is to grow your savings account balance.

This isn’t to say that you shouldn’t give the new Wendy’s snack wrap a try, and perhaps treat yourself to it on occasion if it tickles your taste buds. But at $6.29, you’re talking about a pretty expensive snack. And if you shop strategically, you can pull off an entire dinner for less money than that — and potentially have leftovers.

Incidentally, Wendy’s is also removing two items from its menu — the grilled chicken sandwich and southwest avocado salad. The chain is introducing the snack wrap to be able to offer customers food that’s lighter and more easily portable.

The snack wrap might seem like a great option when you need food you can eat on the go. But if you’re on a budget, you may want to order it sparingly — or learn to make your own version at home.

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 

Got any other big expenses coming up? 

There are many ways to borrow money, and one of the most flexible options out there is a personal loan. Personal loans can come with flexible repayment terms, with different term lengths available. Unlike a credit card, personal loans come with fixed interest rates. And unlike an auto loan or a mortgage, you can take out a personal loan to pay for anything you want.

Need to remodel your kitchen? Want to start a small business? A personal loan could be a good option for you, especially if you have good credit and can qualify for the lowest interest rates. Here’s what you should think about when deciding how long your loan term will be.

1. How much can you afford to pay per month?

When you get a personal loan, it’s important to consider the total amount you’ll be paying, between the amount you’re borrowing and the interest you’ll pay on top of it. But don’t forget to look at your expected monthly payment, too. Run it through your existing budget and make sure you can afford it. Note that the longer you opt to pay, the lower your payments will be (but the more interest you’ll pay in the end).

Different lenders offer different loan term lengths, so depending on the lender you choose, you could be looking at a term of anywhere from 12 months all the way to 144 months. Find out what term lengths are offered by lenders you’re considering while you’re shopping around and opt for one that gives you the flexibility you need.

2. Are you planning to take on another big expense soon?

Your personal loan will appear on your credit report, and your credit score could take a minor hit due to the hard credit check needed to approve you. This might not be a big deal if you’re not intending to borrow again for a while. But if you’re about to start looking for, say, mortgage loans, you want your credit score to be in the best shape possible. Plus, it could give a mortgage lender pause to learn that you’ve also just taken out a personal loan and have another ongoing monthly debt payment for a few years to come.

3. Is there a penalty for paying the loan off early?

Let’s say you get an unexpected windfall and are able to pay off your 24-month personal loan 10 months earlier than originally scheduled. Or perhaps you are able to start paying extra toward the loan principal, cutting down your repayment period as a result. Some lenders charge prepayment penalties, meaning you’ll have to pay a fee should you pay your loan off early. You may want to opt for a lender that doesn’t charge for this.

Personal loans can be a good way to borrow money, but there’s a lot to consider when picking one. Do your research and think carefully about how long you can commit to paying one off.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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 

It has to do with getting paid more in a surprising manner. 

At this point, many Americans are in the process of putting the finishing touches on their tax returns. And if you’re anticipating a large refund, you may want to get your return filed sooner rather than later.

But some people may not be in line for a tax refund this year. In fact, Mark Steber, Chief Tax Information Officer at Jackson Hewitt, says that more people might owe the IRS money than they did in 2022. And the reason largely boils down to the expiration of pandemic-era tax breaks that were in effect in 2021.

In 2021, a number of key tax credits had their maximum value boosted. Also, the Child Tax Credit became fully refundable, so anyone eligible for it could claim its full value. Those provisions, however, did not stick around for 2022, even though some lawmakers pushed for them to.

But that’s not the only reason you might owe the IRS taxes this year for the first time. In 2022, banks finally started paying a lot more interest on savings accounts and certificates of deposit (CDs). So if you earned a lot of interest income, that alone could push you to the point of having to write the IRS a check.

A very unpleasant surprise

Steber has been keeping tabs on the tax situation this filing season, and he says many filers are shocked to learn that they owe the IRS money.

“We’re seeing a big increase in balance due filers,” he explains. And tax refunds are also down. If you earned a lot of interest in your savings account or in a CD in 2022, that could be driving your tax bill up.

It’s not so common to make estimated quarterly tax payments on interest income — or at least it hasn’t been in recent years, given that savings accounts and CDs were barely paying anything. But last year, the Federal Reserve raised its benchmark interest rate numerous times, and that led to higher interest rates for savings accounts and CDs. That’s a good thing for savers — but only to a point.

Many people don’t realize that interest income is taxable. Not only that, but it’s taxed as ordinary income, which means it’s subject to the same tax rate as your regular paycheck.

So let’s say you earned $40 in interest income in 2021, but you earned $400 in 2022. That, combined with other factors, might push you to the point where you owe money to the IRS.

Brace for a higher tax bill this year

If you received a large refund last year or had a fairly small tax bill, you may be anticipating a repeat situation this year. Steber says you shouldn’t.

“Last year’s tax return is probably not a good roadmap for what to expect this year,” he insists. And if you earned a lot of interest in your savings account in 2022, don’t be shocked to end up sending money to the IRS rather than receiving it after filing your tax return.

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 

Will it result in an improved financial standing? If not, reconsider. 

Thanks to the internet, it’s never been easier to borrow money. You no longer have to visit banks to apply for loans in person, and can instead research the best personal loans available and compare rates from the comfort of your couch. Despite this ease, it’s important to remember that when you borrow, you’re making a financial commitment to repay the loan, and depending on how much you’re taking out, it could take years. Here are a few purchases and expenses that it might be better to save up money for, rather than signing on the proverbial dotted line for a loan.

1. A wedding

While charging wedding expenses to a credit card can actually be a good idea (due to purchase protection and earning points or cash back), going into debt to have your dream wedding isn’t. After all, at its core, a wedding is a big and potentially very expensive party. According to The Knot, the average cost of a wedding in 2022 was $30,000. It’s an important milestone for many people, to be sure, and it’s a wonderful way to bring family and friends together to celebrate a loving relationship. But do you really want to start off your married life with additional stress in the form of a loan to pay back?

Plus, finances are a common reason couples fight, and if your money situation takes a turn for the worse while you’ve still got those loan payments, it could really put a strain on your relationship. Consider having a smaller wedding and cut costs where you can (say, by skipping the super expensive venue).

2. A vacation

Time off is important, but so is your financial future. You might be tempted to finance that European excursion you’ve been thinking about, but think twice. It might seem daunting to save up for a vacation, but it is possible. For example, you could consider using a travel rewards credit card to pay for your everyday expenses if you want to make travel a priority,but be sure you can afford to pay those charges off before the interest comes due. This way, you can earn points or miles to make that trip cheaper. Also, start planning and budgeting early. If you want to visit Europe in September, start investigating costs now.

3. A leisure vehicle

There are some financial gurus who will tell you that you shouldn’t even finance a necessary vehicle purchase, like the car that takes you to and from work every day. However, cars have skyrocketed in price the last few years, and if you live in an area without adequate public transportation, you might have no other choice than to buy a vehicle. Signing a short-term auto loan on an inexpensive used car is likely the way to go here.

However, reconsider the impulse to take out a loan to purchase a boat, ATV, snowmobile, or other unnecessary vehicle. These are no doubt fun to have, but taking on a big financial obligation for a leisure vehicle (not to mention the costs of repairs and insurance for, say, a boat) isn’t a great move. Just like your wedding or vacation, you might consider saving money to pick up a used boat, or make the boat purchase a longer-term goal, and figure out how much you can put aside in your savings account to make the dream a reality.

4. A new home appliance to replace one that still works

My washing machine is old and doesn’t work as well as it used to, so I’m considering replacing it with a new one in a few months. I say “in a few months,” because I would rather put aside the money over that time period, rather than financing the washer or leaving a big hole in my monthly budget by having to pay for it in one fell swoop. After all, my old one is still running.

If you’ve got an appliance that just isn’t up to snuff, or is seriously ugly, you might be thinking of financing a replacement. While this isn’t a bad move if you can get a 0% APR credit card for the purchase and know you can pay it off before you’re charged interest, rethink this idea if you don’t have the room in your budget for another payment. If you can’t qualify for 0% APR financing, definitely hold off and save up the money instead. If a necessary home appliance is out-and-out broken, it’s understandable that you need a replacement sooner rather than later. But if it still works, you may have time to scrape up the cash.

Ideally, it’s best to borrow money for expenses that will actively improve your financial standing if you can’t pay for them outright. This includes things like that car to get you to work every day, or the mortgage loan to put a roof over your head, or the personal loan to start the small business you’ve got a comprehensive business plan for. Otherwise, consider saving up the cash beforehand.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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