What Happens If You Die Without a Will_780x440

What Happens If You Die Without a Will?

Did you know that if you die without a will, the court gets to decide how your possessions and your money are distributed? That means that any plans you had about giving items or cash to friends, charities, or other recipients won’t likely be followed. What’s more, your survivors may have a tricky road ahead as they navigate the management of your estate.

Unfortunately, the situation of dying without a will is something that can happen more often than you might think. Many people plan to write a will but just never quite get around to it. Even though the process doesn’t have to be pricey or time-consuming, there are plenty of people who avoid the task or other estate planning duties.

Here, you’ll find out what happens if you haven’t made a will. You’ll also learn how writing a will can save your loved ones stress, time, and, yes, money.

Who Handles Your Estate if You Die Without a Will?

When there is no will to name an executor, state law dictates who will be in charge of handling your estate.

A will is where you designate an executor or personal representative. This is the person who takes responsibility for your estate after you die. They make sure final bills and taxes are paid and your assets are distributed properly.

This is often based on a priority list. For example, most states will make the surviving spouse, if there is one, the executor. Adult children are typically considered next, followed by other family members.

Until the courts decide who will distribute your assets, they will be frozen. That means no one can touch your stuff, even if you had told them they could have it.

If nobody is willing or able to handle your estate, the courts will name a public trustee to represent you. This would mean that a stranger would be in charge of distributing your assets according to the laws in your state.

Recommended: Guide to Safety Deposit Boxes

Who Gets Your Money If You Die Without a Will?

If you were to die without a will (legally called “intestate”), the state would decide how to divide your assets.

This process is called probate. Depending on your financial situation when you die, this can be a complex process that can hold your assets in place and be potentially time-consuming and expensive for your survivors.

How an estate will be distributed will depend on state law. Typically, however, the bulk of the estate will go to a spouse. If you have children, they will also likely get a share or, if there are no children, your parents. Next, the state will typically look for siblings, nieces, nephews, aunts, uncles, and cousins. Some relatives might have to claim unclaimed money from the deceased (aka, you).

The probate process can mean that your belongings are inherited by those you didn’t necessarily intend. For example, if you are single and you die, your parents may get all of your possessions. This may not have been your wishes if you have a partner, or if you and your parents don’t get along.

If you are in a relationship but have no marriage certificate, your significant other may not be able to inherit any of your assets.

You also don’t have an opportunity to give anything to charity, your alma mater, or create a legacy.

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What if I Die With Credit Card Debt or Loans?

Your estate typically has to pay any creditors before anything is passed down to those named in your will or determined by the court. If you have a mortgage or credit card debt alongside other assets, the process can take time and can lead to confusion and frustration for your loved ones.

If you die, federal student loan debt will be discharged, but private loan debt is dependent on your policy. If someone cosigned the loan, they may be responsible for future payments.

If you have credit card debts and not enough assets to cover them, your survivors are not responsible for payment, according to the Consumer Federal Protection Bureau (CFPB).

But despite your loved ones not being legally obligated to pay the debts, it may also lead to creditors contacting your family.

Recommended: What Happens if Direct Deposit Goes to a Closed Account?

Who Gets My Children if I Die Without a Will?

Guardianship, or who takes care of children who are minors in the event of your death, can be the most pressing concern for many parents.

If you die without a will, the state will appoint a guardian for your children. The state will choose guardians that they believe are in the best interest of the children, but these guardians may not be the same people you would have chosen.

Having the state assign guardians can also be stressful for your loved ones during what would already likely be a tough time.

A will can establish both a personal and financial guardian for your children. While this can be the same person, some parents like the flexibility in dividing guardianship.

For example, a relative may be chosen to be a financial guardian because they are skilled at managing money and have positive net worth. However, a personal guardian could be a family member who lives nearby and could ensure that the children are well cared for and their daily routines stay consistent.

You can also appoint a backup guardian in your will in case your primary choice is unable or unwilling to take on the role. You might also look into putting your house in a trust for your children, which could help ease the transfer process.

Writing a Will Can be Easier (and Cheaper) Than You May Think

If you have a lot of property or assets and may want to set up trusts for your heirs, it can be wise to hire an experienced estate attorney to help you write a will, as well as any other estate planning documents. They can also advise you on the best way to handle a will if you are married.

For many people, however, online templates can be sufficient and, provided the documents are signed appropriately, will be legally binding. A will is an important part of an estate-planning checklist.

After you write your will, you may need witnesses and a notary in order to make sure it’s legal in the state where you live. Once you have a will, there are a few other steps you may want to take, including:

•   Keeping your will in a safe place. This may include having a digital copy and also a physical copy.

•   Letting someone know where copies of the will are kept (say, the person you appointed as executor of your will).

•   Creating other end-of-life documents, including a living will and power of attorney. These documents can be invaluable if you were to become incapacitated and needed people to make medical decisions for you.

•   Talking about your decision with others. Many people put off creating a will, which can lead to confusion and uncertainty if the worst were to happen. Encouraging your loved ones to draft their own wills can help give peace of mind to the entire family.

•   Updating it regularly. It can be a good idea to consider looking at your will every year or so, or after a major event, such as a marriage, divorce, death in the family, home purchase, or the birth of a child.

The Takeaway

Creating a will may seem overwhelming, but it can also be a financially prudent move that helps protect your assets — and creates a legacy based on your wishes.

If you die without a will, you will have no say in how your assets will be distributed and, if you have children, who will care for them. You also risk putting your survivors in a difficult situation.

You may be able to create your own will relatively quickly online simply by plugging in your information. The rest is done for you, and the results are legally binding.

While you’re tackling the to-dos you’ve long been putting off, you may also want to also work on getting your financial life in order. SoFi Checking and Savings makes it easy to manage your money by allowing you to save and spend, all in one account, while earning a competitive annual percentage yield (APY).

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.



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SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This article is not intended to be legal advice. Please consult an attorney for advice.

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Paying Off $20,000 in Credit Card Debt

Paying Off $20,000 in Credit Card Debt

Having credit card debt of any amount can feel overwhelming, but this is especially true with a steep amount like $20,000. Not sure how to pay off $20,000 in credit card debt? There are a number of options to consider to get your credit card debt under control and paid off.

For one, you might consolidate the debt using a balance transfer credit card or debt consolidation loan. Or, it might come down to adjusting your monthly budget or simply choosing the repayment method that works for you. Another option is pursuing a debt management program. Really, once you understand the potential solutions at your fingertips, paying off $20,000 in credit card debt can start to sound more doable.

Tips on Paying Off $20,000 in Credit Card Debt

Having $20,000 in credit card debt does present a challenge to the borrower working to pay that amount off, but it is possible to make progress and become debt-free. Let’s look at some ways you can make progress on paying off your debt.

Open a Balance Transfer Credit Card

Paying off credit card debt can be more difficult when you’re juggling multiple credit card balances. To help simplify the debt repayment process, you might consider opening a balance transfer card.

It’s possible to transfer just one credit card balance or multiple to a balance transfer card. This can be a good move to make if you can qualify for a balance transfer card with an introductory annual percentage rate (APR) of 0%.

While this 0% APR period is temporary, it can last at least six months and sometimes longer than a year. Not having to pay interest during that time period means all payments go toward the principal balance. This makes it a lot easier to pay down credit card debt faster, and it can save a lot of money in the process.

The trick here though is to pay off the entire balance before that introductory period ends and the interest rate shoots up.

Use a Debt Consolidation Loan

If someone has multiple sources of credit card debt, they might also consider consolidating that debt using a debt consolidation loan. This will lead to taking out a $20,000 loan, but it can help streamline the debt repayment process. In fact, debt consolidation is one of the common uses for personal loans.

After you apply for and get your personal loan approved, the way a debt consolidation loan works is that you’ll then use the loan funds to pay off your other sources of debt. This could be multiple credit cards or other types of debt, like personal loans mixed with credit cards.

Ideally, when someone applies for this new loan, they’ll be able to qualify for a lower interest rate than they’re currently paying on their other sources of debt. That way, they’ll spend less on interest and can afford to put more money each month toward repaying their debt. This can make it easier to pay the debt off faster and save on interest (you can even determine your exact savings with a personal loan calculator).

Another benefit of a debt consolidation loan is that it takes multiple sources of debt and turns them into just one source, with a single interest rate, minimum monthly payment, and payment due date.

Choose the Right Repayment Method

Paying down debt takes a lot of work and discipline, and sometimes you need the right type of motivation to stay on track with debt repayment. This is where the debt snowball and debt avalanche repayment methods can come into play, with some consumers finding one method helps them make more progress than the other.

•   Debt snowball. With this method, the borrower makes the minimum payments on all credit cards each month, but focuses on making extra payments on the card with the lowest balance. Once they pay that one off (it will be the fastest to pay off), they’ll move onto focusing on the card with the next lowest balance. Making progress quickly like this can be really motivating for some people.

•   Debt avalanche. Again, the borrower will continue to make all minimum debt payments each month. With this strategy though, any extra payments go toward the debt with the highest interest rate first. This method saves the most money, which can free up room in someone’s budget to make more debt payments each month.

Debt Management Program

Another option consumers have for getting help paying down their $20,000 credit card debt is to join a debt management program. This can be a good path forward for consumers who can’t afford to make extra debt payments each month or whose credit score doesn’t make it possible for them to qualify for a balance transfer card or a personal loan for debt consolidation.

Debt management plans are offered by credit counseling agencies. During the course of these programs, the credit counselor will alert the borrower’s creditors that they’re working with a debt management plan. From there, the counselor will attempt to negotiate a lower interest rate or lower monthly payments.

These plans tend to last three to five years, but they can help consumers make progress on their debt and avoid bankruptcy.

Credit Card Debt Forgiveness

Unfortunately, it can be very difficult to negotiate credit card debt forgiveness and it rarely happens. When someone opens a credit card, they agree to repay the money they borrow.

It can, however, be possible to negotiate a new payment plan that is easier on the borrower’s budget, especially if some kind of hardship occurred that’s making repayment challenging.

Additional Options for Paying Off Debt

One of the best ways to make progress on paying off debt is simply to make repayment a priority. To stay on track, consumers need to make their minimum required debt payments a fixed part of their monthly budget. By budgeting for debt payments and prioritizing them over other spending temptations, it’s more likely to make faster progress.

Another way to make progress on paying off $20,000 in credit card debt is to work on making additional room in your budget for extra credit card payments. Finding ways to lower expenses and other bills can leave more money each month to pay off debt. Remember — the faster you pay off your debt, the less you’ll spend on interest.

It may be necessary to make some spending sacrifices until you’re debt free, but once you are, you’ll have a lot more room in your monthly budget to add fun spending back in. Cutting back on dining out, shopping, traveling, and entertainment now can really pay off in the future.

The Takeaway

It is possible to pay off $20,000 worth of credit card debt, but it will take time. Patience is key here, as is assessing which approach for tackling $20,000 in credit card debt will be right for you. For some, a debt consolidation loan (one of the types of personal loans) may make sense, while others may opt for the debt snowball or avalanche method. Spending time focusing on paying off credit card debt can really help improve your financial outlook though, and it’s very much worth the effort.

If someone decides that consolidating their debt would really help them streamline repayment and possibly even save them money on interest, they may want to research their personal loan options. SoFi makes personal loans easy — it’s possible to check your rates in 60 seconds, and you can borrow up to $100,000.

Apply for a SoFi Personal Loan in minutes!


Photo credit: iStock/filadendron

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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Comparing Personal Loans and Balance Transfer Credit Cards

Balance Transfer Credit Cards vs Personal Loans

Three ways to consolidate and pay off debt are a balance transfer credit card, a personal loan, or a combination of the two. Which option is best depends on the type and amount of debt you have and your ability to pay off that debt over time.

For instance, a balance transfer credit card might be a smart choice if you have good credit and debt across a few credit cards. On the other hand, a personal loan might be better if you have multiple types of debts (credit cards plus other types of loans) and need more time to pay off your debt.

Read on to learn more about the choice between a balance transfer or personal loan, including the pros and cons of each option and how to leverage the benefits of both.

What Is a Personal Loan?

A personal loan is a lump sum borrowed from traditional banks, credit unions, or online lenders that you agree to pay back over time, usually with interest. The borrower will make regular payments, usually on a monthly basis, to the lender over a fixed period of time until the loan is repaid.

Unlike many other types of loans, personal loans can be used for just about anything. Often, these loans are used to resolve short-term cash flow problems, cover unexpected expenses during an emergency, or pay for large expenses.

Personal loans are also used for debt consolidation, where a borrower takes out a personal loan and uses it to pay off balances on high-interest credit cards and other debts. Because personal loans typically have lower interest rates than credit cards, the borrower can potentially save money while paying off their debt.

Though there are different types of personal loans, they’re most often unsecured loans. This means they’re not backed by collateral like, say, your mortgage is backed by your house. As such, the lender will usually assess your creditworthiness and financial situation when determining whether to approve you for the loan.

Recommended: Check Your Personal Loan Rate

What Is a Balance Transfer Credit Card?

A balance transfer credit card is a credit card that allows you to transfer balances from other accounts. Let’s say an individual has outstanding balances on three or four high-interest credit cards. They could transfer that debt to a balance transfer credit card that charges a lower or even 0% annual percentage rate (APR).

If a lower rate is offered, it will usually last for a limited period of time — 12 to 18 months is the norm. Should that person pay off their debt within that window, they could save money on interest and have all of their payments go directly toward paying down the principal. After the promotional period ends, however, the interest rate could be quite high, usually higher than the interest rate on a personal loan.

Balance Transfer vs Personal Loan for Debt Consolidation

When deciding on either a balance transfer credit card or personal loan for debt consolidation, consider the type of debt you have and your capacity for monthly payments.

A balance transfer credit card might be the right choice if you’re confident you can pay off your debt within the APR introductory period. However, a personal loan might be the better choice if you find it difficult to resist spending on a credit card, or if you have debt that needs to be paid off over a longer period of time. Personal loans are also preferable if you want a fixed interest rate and would like to know ahead of time how much your monthly payment will be, as it’s going to be the same each month.

Balance Transfer Credit Card vs. Personal Loan

Balance Transfer Credit Card

Personal Loan

Types of Debt You Can Consolidate

•   Generally best for credit card debt

•   Good for multiple types of debt

Interest Rates

•   Can offer a lower intro APR, after which the rate will likely be higher than a personal loan

•   Generally a variable rate

•   Tend to have lower rates compared to credit cards

•   Typically a fixed rate

Fees

•   One-time balance transfer fee that’s usually 3% to 5% of the amount transferred

•   One-time origination fee ranging from 0% to 8% of the loan amount

Terms

•   Promo APR offers generally limited to 18-21 months

•   Can have terms up to 72 months or longer

Repayment

•   Only have to make the minimum required payment

•   Fixed payments over a set period of time, with a predetermined payoff date

Credit Score Requirements

•   Generally need at least good credit (670+) to qualify

•   Best rates and terms reserved for those with good credit

Credit Score Impacts

•   Might increase credit utilization, which can negatively affect credit

•   Might lower your credit utilization, which can help credit

Pros and Cons of Personal Loans

Both balance transfer credit cards and personal loans can be good options depending on the amount and type of debt you have. Personal loans generally offer lower APRs, which can be helpful if you have a variety of types of debt that may take some time to pay off. Personal loan terms vary, but it’s possible to borrow up to $100,000 and pay off the balance over several years.

However, your interest rate will also depend on your credit score — a low score can mean a high interest rate. It’s smart to compare a few rates, such as SoFi personal loan rates against those of other lenders.

Pros and Cons of Personal Loans for Debt Consolidation

Pros

Cons

Loans can be large enough to consolidate many types of debt. The interest rate may be high if you have bad credit.
Those with good credit can secure low APRs. It could be a few years before your debt is fully paid off.
Budgeting is easier with fixed interest rates and monthly payments. There’s less flexibility in your monthly payments, as they’re fixed.
You have the option to choose from different loan terms. An origination fee may apply, which could be up to 8% of the loan amount.

Pros and Cons of Balance Transfer Credit Cards

If you only have debt on a few credit cards, a balance transfer credit card might allow you to save on interest while you pay it down. These cards can offer lower or even 0% APRs for a certain period of time, usually for 12 to 18 months. This gives you time to pay off the total balance transferred from other cards.

However, suppose you do not pay off the balance within that window. In that case, the interest rate could rise above the rate you were initially paying before you consolidated the amounts to your balance transfer credit card.

Pros and Cons of A Balance Transfer Credit Card for Debt Consolidation

Pros

Cons

You can get a low or 0% APR for an initial period, thus saving on interest. You need a good to excellent credit score to qualify.
Once your debt is paid off, you have an additional open credit line, which may boost your credit score. You may not be able to transfer the full amount of your debt to the card.
Some balance transfer credit cards offer rewards, points, or other perks. There may be a balance transfer fee, which generally is 3-5% of the balance transferred.
You’ll have the flexibility to pay off as much as you’d like each month with no fixed payment schedule. If you don’t pay off your debt during the promo period, the interest rate may become higher than that of your initial debt.

Using A Balance Transfer Credit Card and a Personal Loan

A third option for debt consolidation is to use both a personal loan and a balance transfer credit card. You could use a balance transfer credit card to pay off as much high-interest credit card debt as you can at a low APR. Then, you’d take out a personal loan to pay off the rest of your debt at a lower interest rate than what you’re currently paying.

To figure out how much of a personal loan to take out in this scenario, add up your total debt. Next, calculate how much you would have to pay each month in order to pay off your debt in full by the end of the promotional APR.

For example, if you had $4,000 in credit card debt and a 0% APR that lasted for 18 months, you’d have to pay $222 each month. If you weren’t able to pay that much, you could consider applying for a personal loan to pay off the remaining amount.

The Takeaway

Three ways to proactively consolidate and pay off debt are to use a balance transfer credit card, a personal loan, or a combination of the two. To determine what’s right for your situation, it helps to know the differences between a balance transfer credit card vs. personal loan. In general, a balance transfer credit card is best for those with good credit and primarily credit card debt. Those with various types of debts and who need a structured debt payment plan may prefer a personal loan.

Deciding which option to choose requires some research upfront on how much debt you have, what type of debt it is, and how long you will need to pay it off. Those looking to consolidate their debt should also check the terms and fees of their options.

One option to explore might be SoFi, which offers personal loans for debt consolidation. The online application is convenient and fast. Plus, our personal loans have zero origination, prepayment, or late payment fees. They offer low fixed rates, and amounts range from $5,000 up to $100,000.

Apply today for a SoFi personal loan!

FAQ

What is a balance transfer loan?

A balance transfer is a credit card transaction whereby debt is moved from one account to another. These cards often offer a 0% introductory APR for 12 to 18 months, which means any balances moved to the card could potentially be paid off interest-free. The downsides are that there is often a balance transfer fee, and there may be a limit to the total amount you can transfer to the new card.

Does a balance transfer hurt your credit?

It depends. Opening a new credit card and transferring all your other credit card balances to it could push your credit utilization ratio to its limit, which would hurt your credit score. Your score is also negatively affected from the hard inquiry that results from applying for a new card. However, if you use a balance transfer credit card wisely and pay off all of your higher-interest cards, that will lower your credit utilization ratio and lift your score.

Is there a difference between a loan and a balance transfer?

Both a loan and a balance transfer are ways to consolidate debt, but they are not the same thing. A debt consolidation loan is where you take out a loan to pay off your existing debt, while a balance transfer allows you to move your existing debt onto one credit card. Each option has unique pros and cons.


Photo credit: iStock/PeopleImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Payday Loan Requirements: Things to Know

Payday Loan Requirements: Things to Know

Payday loans are also called cash advance loans, deferred deposit loans, post-dated check loans, or check advance loans. They are short-term, high-interest loans. People who use these loans tend not to have access to other types of lending, and this is a last resort to get them through to the next paycheck.

Many states consider these loans predatory because of their high interest rates and financing fees. Some states place caps on the fees and interest rates or ban this type of lending completely.

Read on to find out what a payday loan is, how they work, and other options for those who need a short-term loan or cash advance.

What Is a Payday Loan?

Payday loans, also known as cash advances, are high-interest, short-term loans, typically for $500 or less. They are notorious for having very high interest rates and fees. There are few payday loan requirements, but borrowers typically need to be over 18, have a checking account in good standing, and show that they earn a secure income.

Consumers can find these types of loans through online lenders, apps, and local brick-and-mortar merchants. The loan amount is typically paid back by direct debit once the borrower receives their next paycheck. Alternatively, loans may be secured with a post-dated check.

How Does a Payday Loan Work?

Consumers fill out an application with a lender and show proof of identity, a recent pay stub, and a bank account number if required.

Borrowers have to secure the loan with a post-dated check or agree to have the funds debited from their account when they are paid, usually in two weeks. Loans are usually between $50 and $1,000, and funds are deposited within a day or two. Borrowers can also receive cash.

People with bad credit and access to better financing tend to use these loans to help them get by temporarily. However, payday loan problems are well-known: High interest rates and exorbitant fees can trap someone in spiraling debt if they cannot repay the loan on time.

The Consumer Financial Protection Bureau states, “More than four out of five payday loans are re-borrowed within a month, usually right when the loan is due or shortly thereafter.” Borrowers then face even higher financing fees and interest rates compounding their debt load.

Many states place caps on the interest rates and fees charged for payday loans; some states, such as New York, have outlawed them completely.

What Are the Requirements for a Payday Loan?

Most working adults qualify for a payday loan. Here are the most common standards.

Age

Borrowers must be at least 18 years of age.

Proof of Income

Applicants have to show proof of income, such as a pay stub.

Citizenship

Consumers may have to show proof of U.S. citizenship.

Bank Account

Borrowers need to have a bank account that is in good standing.

Payday Loan Interest Rates

Depending on the state, interest rates for payday loans can carry a 400% annual percentage rate (APR) or more.

In states that cap interest rates on payday loans, lenders may instead charge a fee that is a percentage of the amount loaned. Finance charges can be between $15 and $30 for each $100 borrowed.

Payday Loan Amounts

Payday loan amounts are usually $100 to $1,000. In some states, a borrower is allowed only one payday loan at a time. Other states, like Texas and Nevada, offer unlimited payday loans for customers.

Alternatives to a Payday Loan

Rather than take out a high-interest payday loan, there are better options for people in a precarious financial situation.

Credit Cards

If the borrower has a credit score, using a credit card is a safer bet than a payday loan. The average credit card interest rate is around 22%, while payday loan interest can be over 400%. However, if the borrower needs the cash to pay bills such as rent or utilities, that is often not possible with a credit card.

Cash Advance Loans

A cash advance loan puts cash immediately into your bank account. These loans are offered by online lenders, such as Earnin or PayActiv. These companies don’t charge loan financing fees but ask for “tips.” So, a borrower might tip between 5 and 15% of the advance. These apps are often marketed as payroll benefits, and they charge membership and service fees.

TSP Loans

A TSP account is a tax-deferred retirement savings and investment plan that offers Federal employees the same tax advantages as a 401(k) retirement plan. If you have a TSP retirement account, you can take out a loan from that plan without having to pay tax or penalties. However, you must pay the amount back to the account within five years with interest (which will be much lower than the interest on a payday loan).

Personal Loans

For consumers with a good credit score, banks and online lenders offer unsecured or secured personal loans. Unsecured loans are not backed by any collateral and will have a higher interest rate than a secured loan, but not as high as a payday loan.

Unexpected expenses can be paid for with a personal loan and at a lower interest rate. Many people take out personal loans to pay off credit card debt because the interest rate on a personal loan is less than the interest rate paid on their credit card debt. Getting approved for a personal loan isn’t hard if you have good credit.

Loan payback terms can be between two to seven years, with loan amounts typically between $1,000 and $50,000. If you manage the payments on a personal loan responsibly, you can build up a strong credit history. That is not the case with a payday loan, which is not reported to credit rating bureaus.

Recommended: What Is a Personal Loan?

The Takeaway

Payday loans are short-term loans that cash-strapped consumers use to get by until their next paycheck. The borrower is expected to repay the loan on their next payday, or they may submit a post-dated check. Interest rates are extremely high because of the risk to the lender that the borrower will default. Unfortunately, this is often the case, and borrowers can find themselves spiraling into debt as interest and fees accumulate. For this reason, many states have banned payday loans.

Payday loans are probably the worst option for quick cash. But a SoFi Personal Loan offers fixed, competitive interest rates on loans from $5K to $100K. And there are no fees ever.

SoFi’s Personal Loan was named NerdWallet’s 2022 winner for Best Online Personal Loan overall.

FAQ

What are the requirements to get a payday loan?

Most working adults qualify for a payday loan. A borrower needs to be 18 or over, show proof of income (a paystub) and citizenship, and have a bank account.

Is proof of income a requirement for a payday loan?

A lender requires proof of income because they want to know you have the means to pay the loan back. A recent pay stub or similar documentation is typically enough.

Is taking out a payday loan a good idea?

Basically, no. A payday loan should only be used as a last resort, and if you are sure you can pay back the loan in two weeks. Even then, the interest you will pay will be much higher than a cash advance or a short-term loan from an online lender.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Top Bathroom Trends of 2022

Top Bathroom Trends of 2022

Today’s burgeoning bathroom trends range from bold color palettes to high-tech functions. Whether you’re gut-renovating a primary bathroom or freshening up a powder room, you’re bound to find plenty of inspiration at all price points and levels of difficulty.

Keep reading to find bathroom remodel ideas for 2022, plus tips on how to budget for the home spa of your dreams.

8 Bathroom Ideas for 2022

The dominant bathroom trends for 2022 skew modern in nature with clean lines, organic materials, and a lot of warm, natural wood. At the same time, some homeowners are taking cues from their grandmothers, incorporating throwbacks to the 1960s with pink tile and patterned wallpaper. Whichever route you take, there’s little denying these bathroom ideas 2022 have a little something for everybody.

For a deeper dive into the topic, check out our guide to bathroom remodels.

1. Opt for an All-in-One Shower and Bath

Price: Moderate
Difficulty: High
Style: Contemporary

Functionality is at the forefront of many homeowners’ minds. And what’s more functional than a bathtub that doubles as a shower? It saves space and can be more economical than adding two separate bathing areas. Prepare to spend $1,100-$5,500 to remodel a shower alone, whereas a shower-tub combo costs around $1,400-$1,600, including fixtures and modifications.

Recommended: The Cost To Repair a Plumbing Leak

2. Choose Earthy, Organic Styles

Price: Low to Moderate
Difficulty: Moderate
Style: Contemporary

Gone are the days when subway tile was the only way to decorate a shower enclosure. In 2022 bathroom trends, tile is more tactile and natural. To mix things up, consider stacking tile vertically during layout, then enclosing it with a horizontal border.

Homeowners are opting for wooden tile for an organic look, often complementing it with white floor tile. Also on the rise: other natural materials in earthy tones that give the bathroom a sense of warmth.

3. Bring the Outdoors In

Price: Low
Difficulty: Easy
Style: Contemporary

In addition to earthy tones, homeowners are adding more plants to their bathroom spaces. Lush greenery is an economical way to mimic the feel of a resort spa. In addition to floor and counter planters, consider hanging plants from the ceiling in locations that enjoy natural light.

If you’ve got the budget to spare, merge indoors and out via a glass wall and outdoor rain shower.

4. Add Twin Showerheads

Price: Low
Difficulty: Moderate
Style: Contemporary

Adding side-by-side showerheads is one of many shower remodel ideas you may choose to add to your bath remodel. Not only does it add symmetry to your shower, but it allows more than one person to shower at a time. That can come in handy if you have children you’re trying to bathe simultaneously, or spouses who get ready for work at the same time.

5. Incorporate Creative Storage Solutions

Price: Moderate
Difficulty: Easy to Moderate
Style: Contemporary

If you live in an apartment or own a home with smaller bathrooms, finding new ways to add storage is at the top of many homeowners’ priority list. Perhaps you have an unused nook where you can add built-ins for toiletries and linens. Or you can replace a floating vanity with one that has under-sink storage. Built-ins and custom cabinetry can cause your bathroom budget to balloon, but they’re often worth the investment if space elsewhere in your home is at a premium.

6. Switch to a Bold Black Palette

Price: Varies
Difficulty: Easy to moderate
Style: Contemporary

Black is back in bathroom trends 2022. Taking a page out of Scandinavian design (which is fond of mixing black with natural wood), interior designers are using black walls, floors, and stone to make a strong statement. Even bathroom fixtures are skewing dark with matte black tubs and faucets.

Love black but don’t want your entire bathroom to be a single color? Use black sparingly instead — on floor tile, a wooden wall covering, or a sink and toilet combo — and incorporating gold fixtures.

7. Go All Out with Color and Pattern

Price: Varies
Difficulty: Moderate
Style: Traditional

On the flip side of the sleek black trend is Grandma’s bubblegum-pink bathroom. Adding a splash of color to your bathroom is one way to up the wow factor. Dare to go all pink — from a clawfoot tub to dusty rose floor tile to a blush-dominant floral wallpaper. Or simply add a pink toilet as a statement piece. Want to test out this bathroom trend but wary of going too pink? Modern wallpaper patterns (think: flamingos and palm leaves) and geometric tile are two ways to walk the line between traditional and modern.

8. Go High-Tech

Price: Moderate
Difficulty: Moderate
Style: Contemporary

As home technology continues to advance, so do homeowners’ desires to operate everything via apps and devices. Many homeowners opt for wall-mounted digital interfaces that operate everything from the shower heads to stereo speakers. Adding heated flooring and high-tech bidets are also among the top bathroom ideas 2022.

Recommended: How To Pay for Emergency Home Repairs

How To Budget for Your Bathroom Reno

When researching materials, start with what you know you need: tile, faucet, paint, etc. For things like tile and paint, plan on purchasing 20% more than your square footage requires. Then consult DIY sites to make sure you include all the necessary incidentals to complete the project. For a DIY tiling project, for example, you’ll need grout, a grout float, thinset, sealant, drop cloths, etc. (Here’s some info on how to keep inflation from blowing your reno budget.)

The most expensive part of a bathroom reno is labor. If you’re hiring a contractor to do the work, expect 75% of your budget to go to the contractor(s). That’s because full bathroom updates require a number of specialists, such as plumbers, electricians, and tile installers. Even for smaller updates, a general contractor can cost $50-$75 an hour. (Learn more about how to find the right contractor.)

Finally, experts recommend adding a 20%-30% cushion to your overall budget to cover any unforeseen issues.

Keep Resale Value in Mind

The good news is that bathroom updates do increase your home’s value — but there are limits. Typical updates recoup about 70% of their cost, while upscale renos have a lower ROI of about 60%, according to the 2022 State of Remodeling in the U.S. survey.

The upshot: You’ll enjoy a better bang for your buck by keeping updates modest and avoiding anything too trendy or unique (ahem, black bathtub).

Consider Your Financing Options

Before you commit to any of these bathroom remodel ideas, you’ll need to figure out how you’re going to finance your home improvement project. A personal loan, credit card, savings, or HELOC are all ways you might finance your bathroom remodel. No matter how you pay for your bathroom upgrades, it’s wise to weigh your options and compare terms, conditions, and interest rates upfront.

The Takeaway

Some bathroom trends for 2022 are on the practical side, such as creative storage and side-by-side showerheads. Others are more daring, like switching to matte black fixtures. Whichever way your tastes lean, make sure you have the budget to do things right. It’s what’s behind the walls that really matters — to your family and potential homebuyers.

Don’t rely on credit cards to fund your reno. With a home improvement loan from SoFi, you can borrow up to $100,000 at a competitive fixed rate, and with no fees. So there’s no need to cut corners on your dream bathroom.

Check your rate in 60 seconds, and get your loan funded as soon as the same day you’re approved.*

Personal Loan Tips

Tip 1

If you don’t have the cash to renovate or remodel your home, one financing option is a personal or home improvement loan, which can be faster and easier to secure than a construction loan.

Tip 2

In a climate where interest rates are rising, you’re likely better off with a fixed interest rate than a variable rate, even though the variable rate is initially lower. On the flip side, if rates are falling, you may be better off with a variable interest rate.

Tip 3

Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.


Photo credit: iStock/LeoPatrizi

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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