Money Management

There could be a big payday coming your way. 

Wells Fargo made a big mistake — or rather, a series of them. It denied customers the option to modify their mortgage loans when it should’ve allowed them to change the terms to make their monthly payments more affordable. It also repossessed vehicles erroneously after mishandling auto loan payments. And, it froze bank accounts mistakenly, resulting in consumers losing access to their own money for a period of time.

As a result, Wells Fargo has been assessed a whopping $3.7 billion penalty — and rightfully so. And if you were impacted by the bank’s missteps, there could be a nice pile of money coming your way.

Consumers are already getting compensated

The Consumer Financial Protection Bureau (CFPB) reports that 11 million Wells Fargo banking customers have already received funds as part of the aforementioned settlement. And more payouts are in the works.

If you’re a Wells Fargo customer and you see a lump sum of money hit your bank account, it may be compensation you’re entitled to. And if you aren’t seeing that money yet, worry not — it’s on the way.

In fact, Wells Fargo says that customers impacted by its actions do not need to do anything to get their share of the settlement. Rather, those payments should come through without you having to file a claim or fill out any paperwork.

How much money should you expect?

The amount of money you receive from Wells Fargo will hinge on the way your finances were impacted. Customers who had their vehicles wrongly repossessed could be entitled to $4,000 in compensation, and in some cases, even more money than that. Meanwhile, if you had a checking or savings account that was frozen for no good reason, you should expect a $150 payout for the inconvenience.

A lesson no doubt learned

It’s of course possible that some of the actions taken by Wells Fargo were done in error — not in an attempt to harm consumers intentionally. But still, the banking giant needs to be held accountable for its actions.

Cutting off access to one’s savings or checking account, for example, is not something to be taken lightly. And so it’s good that Wells Fargo is being forced to compensate the customers upon whom it inflicted a world of stress.

That said, an equally important takeaway is that Wells Fargo will no doubt aim to learn from its mistakes and not repeat them. And hopefully, other big banks will start paying closer attention to their practices to avoid getting hit with comparable fines.

Holding banks accountable is a key step toward ensuring that consumers are protected accordingly. And seeing what just happened to Wells Fargo should actually give consumers more peace of mind knowing that there are watchdog agencies like the CFPB looking out for them.

Meanwhile, if you have reason to believe you’ve been mistreated by your bank or lender, don’t stay quiet about it. Instead, check out the CFPB’s website to learn more about the rights you have as a consumer — and what to do if you feel they’ve been violated.

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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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Don’t start shopping for a mortgage until you’ve read Ramsey’s advice. 

Getting a mortgage is a monumental life decision. It’s most likely going to be the biggest financial commitment you make throughout your lifetime and the payments will be with you for decades after you sign on the dotted line and buy your home.

Before you go into a lender’s office to start the process, finance expert Dave Ramsey says there’s a crucial task you need to do first. Here’s what it is, as well as some advice on whether he’s right.

This is a must-do step before applying for a loan, according to Dave Ramsey

Ramsey advised that the first part of the process of buying a home is to do a deep dive of your finances.

“Before you step foot in a lender’s office, look at your finances and make sure you’re ready to buy a home,” Ramsey advised. “For many people, this is the hardest hurdle to jump. But if you have car loans, student loans or credit card debt, the last thing you want to do is take on owning and paying for a home.”

Ramsey advises you to take this step even though lenders have their own process of evaluating your credentials. That’s because lenders are focused only on making sure you aren’t likely to default on a loan. They’ll let you borrow as much as they think you could reasonably pay back — but they don’t necessarily care if you’re a financial success at anything but paying off your home loan.

By contrast, you obviously want to accomplish all your goals and be successful at every stage of your financial life — so you want to make sure you’re in the right place to buy given the big picture.

“You should be out of debt with an emergency fund of 3-6 months of expenses, and you should have at least a 10% down payment saved,” Ramsey said. He believes you’re only ready to purchase a home if you’ve accomplished these milestones since taking these steps first can help you avoid borrowing for surprise costs later on or paying more on your home loan and other debts than you should.

Should you follow Ramsey’s advice?

Ramsey is absolutely right that you shouldn’t rely solely on a lender to make your home-buying decisions for you. After all, lenders benefit when you borrow more money because they collect more interest from you. And they don’t care if they give you a loan that leaves you “house poor” or without the funds to save for things like retirement and vacations.

While you don’t necessarily have to listen to Ramsey’s advice to be entirely debt-free before buying, you should make sure you’re well-positioned to qualify for a loan with favorable terms and that whatever mortgage you’re taking out will have monthly payments you can easily make.

If you follow Ramsey’s advice and assess how a mortgage will fit into your overall budget and financial plan, you’re much less likely to end up with regrets. If you don’t want to spend decades lamenting the fact you got the mortgage you did to buy the home you’re living in, it’s well worth the effort to pause and consider your situation before a lender fills your mind full of pictures of all the wonderful houses you could buy with the too-big loan it’s willing to offer.

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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.
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You still have options for getting your hands on more money at the end of the year. 

Some companies give a year-end bonus to every single person on staff, regardless of performance. Others reserve year-end bonuses for those who go above and beyond to exceed expectations.

But it may be the case that your company isn’t giving out year-end bonuses this December. Maybe money has gotten tight and your employer wants to conserve funds, especially with warnings of a potential recession in 2023. Or maybe your employer has never really upheld the practice of giving out year-end bonuses, and this year is no exception.

If that’s the case, you may be bummed out that you won’t have an influx of cash to spend as you wish or stick in your savings account. But that doesn’t mean you can’t scrounge up extra money this month. Here are a few things you can do to take the place of a year-end bonus.

1. Pick up a side hustle

Although we’re already deep in the throes of the holiday season, many businesses are still looking for temporary help to assist with an uptick in customer traffic. If you’re willing to work a side hustle for a few weeks, you might manage to earn the equivalent of the year-end bonus you were expecting.

Not sure where to find a side gig? Start by searching your town’s social media page. Local businesses might advertise there if they need temporary help.

Otherwise, walk around, stop in, and ask small business owners in your neck of the woods if they could use more assistance. Chances are, someone will say yes.

2. Do a home cleanout and sell things you no longer need

There are probably some items sitting in your basement, garage, or closet that you no longer have a use for. These might include pieces of furniture, electronics, clothing, or sports and fitness equipment.

If you’re willing to put in a little time, you can try selling these items for cash to take the place of a year-end bonus. Once again, your town’s social media site may be a good source for listing larger items you can’t easily ship out or stick in the mail. For smaller, more portable items, you can try sites like eBay.

3. Sell unwanted holiday gifts

For better or worse, there’s a chance you’ll get at least a few gifts this holiday season that just aren’t your taste. Rather than let those unwanted gifts collect dust in a corner, sell them. You can also try selling gift cards you’ve received but don’t have much of a use for. And while you may need to offer them at a discount, getting $45 for a $50 gift card is better than keeping a $50 gift card you aren’t going to use.

If you worked your hardest for the past 12 months and were expecting a nice bonus as a result, not getting one could be a big blow, and understandably so. But the good news is that you can still find ways to eke out more money at the tail end of the year.

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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.

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Image source: Getty Images
What Happened: Thousands of holiday flights have been delayed or canceled as winter storms hit the nation. High winds, ice, and snow are slowing airline operations. Airlines are proactively making adjustments to their flight schedules due to safety and operational concerns. So What: A record number of people are traveling this week to visit family and friends for the holidays. With a significant number of flights being delayed or canceled, travelers may need to alter their holiday plans.
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FlightAware tracks flights, including cancellations and delays. At the time of writing, FightAware has reported over 6,000 delays for flights going in or out of the U.S. Additionally, there are more than 2,100 cancellations for flights going in or out of the country. The numbers continue to grow. Many airlines are allowing impacted travelers to reschedule their flights without paying change fees. If you need to adjust your plans, you may be able to do so without penalties. American Airlines tweeted this message on Dec. 21, “Winter Storm Elliott is expected to impact operations across the Midwest, Northeast and East Coast airports. Visit our Newsroom to learn more about your flexible travel options,” suggesting travelers consider making alternative plans to fly at a different time when the weather improves. According to their notice, those impacted by winter storms can make changes without paying extra fees. Now What: If you plan to fly out in the coming days, stay on top of the news. Before heading to the airport, travelers should check if their flight has been delayed or canceled. It’s also a good idea to ask if the airline offers free flight changes if they want to avoid traveling at this time. This news serves as a good reminder for travelers to review the terms and conditions of their airline tickets before finalizing their bookings. Many airlines offer refundable tickets. While these tickets cost slightly more than non-refundable ones, they provide greater flexibility. Reviewing the travel benefits offered with your credit card is also recommended. If you use travel rewards credit cards to book your flights, your card issuer may include travel protections like trip delay and trip cancellation insurance as a perk. Knowing what’s covered and what isn’t before traveling can help you decide how to handle unexpected travel changes. Depending on your coverage, you may qualify for reimbursement for additional travel expenses due to delays and cancellations resulting from severe weather. If you’re traveling soon and are concerned about the weather reports, it may be best to consider changing your holiday plans to have a less stressful holiday and not risk your safety. Top credit card wipes out interest until 2024If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 

What Happened: Thousands of holiday flights have been delayed or canceled as winter storms hit the nation. High winds, ice, and snow are slowing airline operations. Airlines are proactively making adjustments to their flight schedules due to safety and operational concerns.

So What: A record number of people are traveling this week to visit family and friends for the holidays. With a significant number of flights being delayed or canceled, travelers may need to alter their holiday plans.

FlightAware tracks flights, including cancellations and delays. At the time of writing, FightAware has reported over 6,000 delays for flights going in or out of the U.S. Additionally, there are more than 2,100 cancellations for flights going in or out of the country. The numbers continue to grow.

Many airlines are allowing impacted travelers to reschedule their flights without paying change fees. If you need to adjust your plans, you may be able to do so without penalties.

American Airlines tweeted this message on Dec. 21, “Winter Storm Elliott is expected to impact operations across the Midwest, Northeast and East Coast airports. Visit our Newsroom to learn more about your flexible travel options,” suggesting travelers consider making alternative plans to fly at a different time when the weather improves. According to their notice, those impacted by winter storms can make changes without paying extra fees.

Now What: If you plan to fly out in the coming days, stay on top of the news. Before heading to the airport, travelers should check if their flight has been delayed or canceled. It’s also a good idea to ask if the airline offers free flight changes if they want to avoid traveling at this time.

This news serves as a good reminder for travelers to review the terms and conditions of their airline tickets before finalizing their bookings. Many airlines offer refundable tickets. While these tickets cost slightly more than non-refundable ones, they provide greater flexibility.

Reviewing the travel benefits offered with your credit card is also recommended. If you use travel rewards credit cards to book your flights, your card issuer may include travel protections like trip delay and trip cancellation insurance as a perk.

Knowing what’s covered and what isn’t before traveling can help you decide how to handle unexpected travel changes. Depending on your coverage, you may qualify for reimbursement for additional travel expenses due to delays and cancellations resulting from severe weather.

If you’re traveling soon and are concerned about the weather reports, it may be best to consider changing your holiday plans to have a less stressful holiday and not risk your safety.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Talk about a major blunder on the part of a major bank. 

Many consumers have struggled to keep up with their auto and mortgage loan payments this year due to surging inflation. And many have depleted their savings balances due to the higher living costs they’ve been forced to grapple with over the past 12 months.

But one banking giant and lender may have made financial matters exponentially worse for consumers at a time when things were already tough. And now, it’s going to pay.

A massive fine

The Consumer Financial Protection Bureau (CFPB) has fined Wells Fargo to the tune of $3.7 billion for mismanaging consumer loans and engaging in illegal activities. Of that, $2 billion is earmarked for consumer compensation, while $1.7 billion represents a civil penalty.

So what exactly did Wells Fargo do wrong? For one thing, it illegally imposed fees and interest charges on auto loans and mortgages when it shouldn’t have. That’s a big oopsie.

Also, some consumers had their vehicles repossessed due to errors on the part of Wells Fargo in processing their auto loan payments. And the bank also charged consumers unlawful overdraft fees — a practice banks have increasingly been moving away from.

Another bad move on Wells Fargo’s part? Improperly denying homeowner requests for mortgage modification.

Borrowers who struggle to keep up with their mortgage payments are often allowed to modify the terms of their mortgages to make their home loans more affordable. To be clear, this isn’t the same thing as refinancing. Refinancing means swapping one loan for another. With mortgage modification, consumers keep their existing loans, but the terms of those loans are altered.

But either way, Wells Fargo denied customers the option to modify their mortgages when it shouldn’t have. And that led to some homeowners falling victim to wrongful foreclosures — and losing their homes in the process.

Finally, Wells Fargo unlawfully froze more than 1 million consumer bank accounts on the premise of fraudulent deposits. Customers who were impacted by those account freezes were unable to access the money in their accounts for at least two weeks on average. Talk about not good.

Know your rights

When you’re a borrower or someone who banks at a major institution, you might assume that any time you’re assessed a fee or denied the option to change the terms of a loan, that that’s just how things have to be. But clearly, that’s not always the case.

If your bank or lender does something that doesn’t sit right with you, whether it’s imposing a surprise fee or denying what sounds like a simple request, seek out more information. Speak to a supervisor, and if that doesn’t work, visit the CFPB’s website to learn more about your rights as a consumer.

It may very well be that a lot of the missteps Wells Fargo took were made in error. But the fact that the banking giant is being fined billions of dollars tells us that its actions were just plain not okay. And if you have reason to believe you’re being mistreated by a bank or lender, you shouldn’t just take it lying down.

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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.Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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