Credit Card Late Payment Consequences

Missing a credit card payment can happen to anyone. Unfortunately, paying your credit card bill late can come with certain consequences, such as late fees, interest accrued on the credit card balance, and potential negative impacts to your credit score. The longer your credit card payment is past due, the more consequences you may experience.

Exploring the potential consequences of a missed credit card payment and solutions to help prevent this from happening may, therefore, help you avoid the negative financial impact of a missed payment.

When is a Credit Card Payment Considered Late?

As soon as you fail to pay your credit card bill by the due date assigned, it’s considered past due. If you miss a payment, your credit card company may send you notices about it in the form of calls, emails, letters, or texts.
In the chance you don’t hear from your credit card company, you may still face some financial consequences.

What Happens if You Make a Late Credit Card Payment?

The Credit Card Balance Could Increase

Even if you didn’t use the card to make new purchases during a particular billing cycle, making a late payment could increase your balance in several ways.

With even the first missed due date, the credit card company can charge a late fee of up to $28. If you miss another payment within the next six billing cycles, the late fee can go up to $39.

The silver lining here is that the late fee can’t be more than the minimum amount due on the account. Credit card companies typically calculate the minimum payment due on a set fee plus a percentage of the new balance for that billing cycle. So if you have a low balance, your minimum payment is likely to be lower than if you have a high balance.

There’s also a chance the creditor will increase your interest rate. For example, let’s say your credit card payment is 60 days late, at which time your credit card company may decide to increase your interest rate.

Increasing your interest rate will also increase your total credit card balance because that new, higher rate (generally referred to as a “penalty APR”) will apply to the entire unpaid balance.

Not all credit card companies have penalty APRs for late payments, so check with your credit card company to verify.

Your Credit Score Might Be Affected

Since your credit score includes information about your credit history, such as your payment history and the standing of your accounts, a late payment may negatively impact your score. However, the amount of time it’s impacted may vary.

Generally, creditors send information to credit bureaus using different codes to indicate if a payment is current or late. Since there is no credit code for payments that are one to 29 days late, they may use a “current” code.

Once the payment passes 30 days late, creditors generally use the “late” code, which is considered a delinquent payment. But different creditors will send different codes at different times so there’s no way to know for sure when you will see the late payment reflected in your credit report.

Creditors may not report a late payment to credit bureaus at all until a full billing cycle has gone by with no repayment (typically 30 days). With this in mind, if your payment’s due date was the 11th and you paid on the 13th, there’s a chance your credit won’t take a hit.

Although every situation is different, a late payment might end up staying on your credit report for several years. And because credit history is only one of the factors used to determine your credit score, it’s hard to predict exactly how a late payment will impact your score.

The Balance Could Be Charged Off

Another consequence of not paying your credit card bill is that the credit card company may not allow you to continue to use your card for other purchases until your account is in good standing.

Also, if your payment is 180 days past due, the credit card company can close your account and charge off the balance. “Charging off” means the credit card company will permanently close the account and write it off as a loss, but the debtor still owes the balance remaining.

Sometimes, credit card companies will attempt to recover what’s owed through their own collection department, but charged-off debts are sometimes sold to third-party collection agencies, which then attempt to get payment from the debtor.

Credit card companies do have leeway to work with their customers. Under FDIC regulations governing retail credit, the creditor can help customers who have had financial setbacks—like job loss or the death of a family member—get back on track.

This leniency is typically shown to people who are willing and able to repay their debt, and the FDIC encourages creditors to proceed with this step with a structured repayment plan and to monitor the progress of the plan.

Consolidate your credit card debt
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How to Resolve a Credit Card Late Payment

Paying it Right Away

If the payment just slipped your mind, don’t panic—there are a few solutions for tackling a late credit card payment. Contacting your credit card company when you realize you’ve missed a payment is a smart move.

Paying the credit card balance in full immediately helps avoid accruing interest charges and potentially saves your credit score from dropping. Alternatively, you might want to ask about arranging a payment plan to minimize the damage.

Negotiating Fees

Even though your credit score may not drop because of one missed payment, you may incur late fees or an interest rate increase. Additionally, the late payment may result in a penalty interest rate (or, more accurately, a penalty APR as mentioned above), which will likely increase your total balance.

But, even if you do incur additional fees, sometimes credit card companies are willing to work with you to waive the fees.

Calling your credit card company to request a waiver of late fees could be a first step. If you’re unsure what to say when calling your credit card company, Experian suggests something like the following script.

“I missed a payment on my card recently, but I’m up to date now. Would you consider waiving the late fee? As you can see, I’m normally a good customer who always pays my bills on time.”

If the representative doesn’t seem willing to make any changes, you may want to request to speak with a manager. But if you’re not a repeat offender, credit card companies may be willing to waive fees.

Some credit card companies may not be as willing to waive interest increases. So, if your credit card company seems unwilling to change your rate back to the original amount, you might consider asking if they will do so once you show responsible payment history.

Automating Your Credit Card Payments

To help prevent any late credit payments in the future, one option might be to set up autopay to cover the minimum payment on your credit cards.

This way, if a payment slips your mind, you shouldn’t face any late payment consequences. Setting your bill to be automatically paid in full a few days before the payment is due can ensure you pay your balance by the due date.

If you would prefer not to sign up for autopay, many credit card companies have an option to sign up for notifications that remind you when your payments are due.

Getting Out of Credit Card Debt

To avoid late credit card payments once and for all, you may want to consider solutions for getting out of credit card debt entirely. Strategies depend on your unique financial situation, of course, but here are several for getting rid of debt for good.

Budgeting to Get Out of Debt

First, you may want to put together a budget. Creating a budget can help you better manage your money so you know what you have coming in and going out.

You can use either a simple spreadsheet or a budgeting app to simplify your efforts. Once you have a handle on how much extra money you can put toward your debt, you may want to select a debt repayment strategy such as the snowball method or avalanche method.

With the debt snowball method, the focus is on paying off the smallest debt balance first and then moving on to the second smallest debt balance, and so on, while still making minimum payments on all debt. This type of method is meant to give a psychological boost.

The debt avalanche method tackles the most expensive debt first—the one with the highest interest rate. Since you’re starting with the most expensive debt, this strategy can be a big money saver.

Opening a Balance Transfer Credit Card

If your credit is in good standing, you may want to consider opening a balance transfer credit card as a solution. Usually, these types of credit cards come with low or 0% APRs for a certain period.

Some companies may offer up to 21 months of interest-free payments during the promotional period. But, while the introductory period might be interest-free, you may still have to pay a balance transfer fee between 2% and 3%.

Ideally, you would pay your credit card balance in full by the time the introductory period is over, which would allow you to avoid interest payments on the debt.

Keep in mind, however, many balance transfer credit cards have restrictions. For example, if you make a late payment, you may lose your introductory rate.

Another limitation may be that your introductory APR only applies to the transferred balance and all other transactions may have a higher rate.

Before taking out another line of credit, understand that it can impact your total credit score. Credit scores are calculated using several factors, including credit history and new credit, both of which could be affected when opening a new account.

Consolidating Debt with a Personal Loan

Another option may be to consolidate your credit card debt with an unsecured personal loan. Essentially, when you consolidate your credit card debt, you take out a loan to pay off that existing debt, then make payments on the one new loan.

There are several reasons for choosing consolidation to help eliminate debt. For starters, you might be able to get a lower interest rate with a new personal loan, which could enable you to pay off your debt faster.

For example, very few credit cards have fixed interest rates, and the average variable APR for credit cards is about 17%. In contrast, for a person with better-than-average credit, the average rate for a credit card consolidation loan is currently lower. Depending on how much you owe and what your credit score is, you could save some money.

But, it’s important to note that personal loan rates and terms will vary. The rates and terms an applicant is offered are usually determined by their credit history and other financial factors. Essentially, different borrowers may qualify for different rates. With this in mind, consolidation might only be ideal for those in good financial standing.

With SoFi, It takes just a few minutes to check eligibility and possible rates—and there’s absolutely no obligation to continue if you don’t wish to. Applying for a personal loan can be a useful step to help you regain control of your finances.

See if a credit card consolidation loan from SoFi can help you get your finances back on track.

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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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How Much Does It Cost to Reface Cabinets?

Buying a home means knowing you could walk into a large number of expenses: from basic costs to aesthetic ones. And while you might love your home as it is when you move in, you might also consider changing things up once you’ve settled in.

Let’s talk about an area you probably spend a lot of time in: your kitchen. Whether you’re cooking for yourself or entertaining guests, you most likely want this space to feel welcoming and aesthetically pleasing. If you’ve been wondering how to change the look of your cabinets, you may be considering cabinet refacing.

When it comes to kitchen cabinet refacing, it’s important to do some research before getting started. If you’re wondering “what is cabinet refacing?” let’s break it down: refacing allows you to change the look of your cabinets without replacing them completely.

That means you keep the bare-bones structure of your cabinets but change the look and perhaps some of the smaller pieces.

Whether you’ve just moved into a new home or want to breathe new life into your current one, refacing cabinets in your kitchen or dining space could really transform the space.

Reasons to Reface

According to HouseLogic , refacing your cabinets might actually save you money. That’s because refacing your cabinets generally only costs about half as much as replacing them entirely. It also creates less disruption in your home in general, since you don’t need to do an entire overhaul.

First off, you should make sure that your base is strong. If your cabinets end up needing more work later, it might be beneficial to just make all of those improvements now. If you see any other major work that needs to be done, now might not be the best time to consider refacing.

For example, if you need to improve the condition of the drawers, that might be an issue to tackle before considering refacing.

A minor kitchen remodel like refacing might be one of the most useful home improvement projects to increase the value of your home. This could potentially be impactful.

Think of it as an investment into not only your current living situation, but perhaps your future one if you consider selling this house. In that case, the refacing kitchen cabinets could be worth the investment in the long run.

Standard Options for Refacing

Wood Veneer

The look of wood veneers can really revamp your space by making your cabinets look as if they are made of certain types of wood. Refacing your cabinets with wood veneer, however, is the priciest choice of the available options.

According to HouseLogic, this can cost between $2,500 to $6,000 . The overall refacing kitchen cabinets cost depends a lot on what materials you choose.


You can also choose plastic laminates or melamine-based laminates for your cabinets. The laminate is glued to the cabinet and the excess is then trimmed off. This project can often be done by smaller shops or even some handy DIY-ers.

These can often be more affordable but can run the risk of chipping. According to HouseLogic , refacing your kitchen cabinets with a laminate material will cost around $1,000 to $3,000.

Rigid Thermofoil (RTF)

This vinyl-material is often confused with laminate, but it’s made up of different materials and installed with a different method—generally by using a large vacuum press to fuse the thermofoil over the cabinets.

Using this material will yield cabinets that are fairly moisture resistant, although they won’t be the most heat resistant. RTF cabinets are also fairly easy to keep clean.

If you’re still weighing your options, consult a professional for some guidance to see which option is best for your space.

Working on Your Budget

When thinking about the question of money—how much it costs to reface cabinets—quite a few factors can come into play. It’s often beneficial to think about your budget sooner rather than later. You don’t want to be halfway through your project only to realize the costs are higher than what you can realistically spend.

If you are living with a partner, sit down with them and open up the topic of budgeting for this project. Talk about your mutual goals; establish what you feel comfortable setting as the overall cabinet refacing cost.

If you are looking for a starting point, consider using SoFi’s Home Improvement Cost Calculator. This easy-to-use tool just requires you to input some basic information about your home and your possible project.

For example, you could indicate that you want to do a basic update on your medium-sized kitchen. Say you live in the 90013 zip code and the house was built in 1980. The calculator will give you a rough estimate of your kitchen project.

One thing to keep in mind: this total amount also includes a 20% margin for contractors. Consider doing the same when creating your budget from scratch.

Long-term Goals

Refacing your cabinets might feel like a small project with short-term effects but in reality, the changes you make to your home now can help you in the long run.

Consider using tools like SoFi’s Home Improvement ROI Estimator to get a sense of which home improvement projects could help increase the value of your home.

Getting Started

Now it’s just a matter of figuring out when you want to start this project. Some homeowners plan out their remodeling project for the winter season, when more contractors might be available.

HouseLogic states that the process takes around two to four days , so keep that in mind when trying to find a good time as well. Research professionals in your area who can do it for you, or consider finding more information on how to do it yourself.

Whatever your decision, have fun with the project and know that it will potentially add value to your home in the long run.

Financing Your Home Improvement

If you’re officially ready to get started on this home improvement project, but you are short on cash, you could think about the possibility of taking out a home improvement loan to offset the costs. You can get a quote, apply online, and get your funds in as little as three days.

SoFi offers personal loans with low rates and no fees required. To get an idea of what your loan could look like, take a look at SoFi’s personal loan calculator.

Check your home improvement loan rate in 1 minute.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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5 Trend Indicators to Know

Financial markets are notoriously fickle. Trying to time the market is a difficult task that few non-professional investors do with repeatable success. Still, there are some ways to make more educated investment picks based on publicly available data.

Once an investor selects which securities to buy, how do they decide a good price to enter into a trade at? One of the simpler ways to make a more informed decision regarding when to buy or sell a stock involves using trend indicators.

Trend indicators give investors a sense about which direction the market has moved and for how long it has been heading that way. Trend analyses aim to anticipate futures based on previous patterns in buying, selling, and pricing over time.

Understanding Trend Indicators

Trend indicators are an aspect of technical analysis. Technical analysis uses either computer-generated mathematical information (indicators) or looking for visible patterns in the charts of stock prices.

This investment approach isn’t guaranteed and doesn’t always boost investors’ returns. But, trend analysis can provide investors with one way to try to appraise the market’s next move.

Although technical analysis involves the use of objective data rooted in mathematics and historical price movements, this kind of analysis also relies on human interpretation of that data.

So, it can be said that using indicators and patterns involves aspects of both art (aka interpretation and intuition) and science (aka data and math).

Commonly Used Trend Indicators

Here’s an overview of five commonly used trend indicators that investors may want to look into:

1. Moving Averages

A “moving average” (aka MA) is defined as the mean of time series data. In finance, this technical trading term means the average price of a security (aka a monetary instrument, like stocks, with monetary value)—as calculated over a certain timeframe.

When prices begin trading above a moving average, this can sometimes be seen as a bullish signal, but doesn’t always produce reliable returns over time. A much stronger signal comes when two moving averages of different time lengths cross paths.

When a shorter-time-frame moving average crosses above a longer-time-frame moving average, the move is referred to as a “golden cross.” The general consensus among traders is that the most significant golden cross involves the 50-day MA moving above the 200-day MA. Put another way, it’s when a security’s short-term average is heading above it’s long-term valuation average.

While a single moving average can convey some important information, MAs can be much more useful when used in conjunction with additional MAs of different lengths or with other trend-following indicators.

2. Relative Strength Index (RSI)

The Relative Strength Index (aka RSI) provides insight into whether a security might be overvalued or undervalued. This indicator oscillates between extremes, which is a fancy way of saying that it moves up and down.

The RSI is as straightforward as they come. It’s represented by a single line plotted on a graph with values that range from 0 to 100.

The higher the Relative Strength Index value, the more overbought a security is thought to be. In contrast, lower values are generally thought to indicate oversold conditions. So, for some investors, a low reading on the RSI could signal a potential buying opportunity.

Just how low should this indicator drop before it can be considered a buy signal? The answer to this question might depend on who you ask.

Fortunately, there is an easy way to estimate when the RSI becomes overextended in either direction. Between 30 and 70 is a shaded area sometimes called “the paint.” When the line breaches this zone, it’s thought that trading momentum in a given security has begun to reach its limits, and a trend reversal could be in the cards soon.

In other words:

•  an RSI reading of below 30 is generally thought to indicate oversold conditions, meaning prices could be getting ready to move higher sometime soon.
•  An RSI above 70 is generally thought to indicate overbought conditions, meaning a move downward could be coming soon.

As with most other trend following indicators, the RSI works best when used in conjunction with other metrics of a stock’s overall trading sentiment.

3. Moving Average Convergence Divergence (MACD)

The Moving Average Convergence Divergence (aka MACD) illustrates the relationship between two moving averages. While the Relative Strength Index (aka RSI) noted above tracks changes in pricing in a single stock or asset (typically represented as a fluctuating line graph), the MACD shows two lines in addition to a histogram that indicates trend strength.

This indicator is used in a similar way as the RSI, although there is a little more information contained in the MACD. Both indicators are known as momentum indicators because they try to gauge the strength of a trend.

Whereas the RSI oscillates between 0 and 100 based on average price gains and losses over a set period, the MACD measures the relationship between two exponential moving averages.

Subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA is how the MACD is calculated. This calculation results in the MACD line. A nine-day EMA of the MACD, which is often referred to as the “signal line,” is shown on top of the MACD line. The lines are plotted atop a histogram meant to give traders an idea of momentum strength.

As with most trend indicators, there are multiple ways to interpret the MACD. One of the most common interpretations involves the MACD crossing its signal line.

A cross above the signal line is considered to be a potential buy signal, while a cross below the signal line is considered to be a potential sell signal.

4. On Balance Volume (OBV)

On balance volume (OBV) is a measurement of the selling and buying pressure on a given security. Volume gets added on up days and subtracted on down days.

On a day when the security closes at a higher price than its previous closing price, all of that day’s volume is considered upward volume. When the security closes lower than its previous closing price, that day’s volume is considered downward volume.

The numerical value of the OBV isn’t really important – it’s the direction that counts. Declining volume tends to indicate declining momentum and price weakness, while increasing volume tends to indicate rising momentum and price strength.

While the RSI is an indicator that signals bullishness when weak, OBV works in the opposite way. One of the most striking signs of a potential pullback in price can be seen using OBV. This can happen when the price of a security continues making higher highs even as OBV stalls or begins declining.

When this happens, it’s referred to as a negative divergence, and may mean that fewer traders are pouring money into a trade—potentially indicating that prices could start falling.

Here are a few other quick notes about OBV:

•  When both OBV and price make higher highs and higher lows, there’s a higher likelihood that the upward trend may continue.
•  When both OBV and price make lower highs and lower lows, it’s likely the trend could continue.
•  When prices are confined to a tight range, and OBV is rising, this may signal a period of accumulation. An upward breakout could be on the horizon.
•  When prices are confined to a tight range, and OBV is falling, this may signal a period of distribution. A downward breakout could be on the horizon.

5. Average Directional Movement Index (ADX)

The ADX is another trend indicator that aims to measure trend strength. It works by averaging the differences in price range over time. So, if an asset’s price barely move from day-to-day, the ADX will show a lower reading—while a big change in price will show a higher reading.

The Average Directional Movement Index is represented by a simple line graph beneath a stock chart. This trend line is even easier to use than most. It’s thought that an ADX above 25 indicates a strong trend and an ADX below 20 indicates little to no trend.

Here are some notes about potential ways to interpret the ADX:

•  When the ADX nosedives from a high point, it could signal a coming trend reversal.
•  A downward trend in the ADX could suggest that trends are dissipating overall. And, so, using any trend-following indicators could prove less reliable.
•  If the ADX rises by 5 points or more after a long period of staying low, this could be interpreted as a trade signal (a time to potentially buy or sell, depending on the direction of price movement).
•  A rising ADK generally means the market is entering into a stronger trend. The slope of the ADX line will be steeper when prices change faster. Steady, gradual trends tend to lead to a flattening of the ADX.

Keeping Tabs on Market Trends

There’s an old saying among traders—“the trend is your friend.”

Simply put, trends tend to keep moving in a certain direction when they have enough momentum. That’s why traders try to take note of them by studying trend-following indicators.

Trend indicators are a key way that many traders try to discern things like:

•  Which way a trend is moving
•  How strong that momentum is
•  How long the trend is likely to continue.

Some traders even go as far as trying to pick the exact time when a trend will change, using advanced strategies like options and futures contracts to try and profit from market volatility.

For most novice investors, adopting this kind of exact-timed technical strategy could prove highly risky, and might not always be necessary to earn returns over time. Individual investors might find it easier to use trend indicators to try determine when to buy and sell orders.

Whether an investor is brand new to the markets or has been building a portfolio for years, SoFi Invest® lets users take care of their investment needs in one secure app – including, trading stocks, buying crypto, and automated investing.

Learn more about building a financial future with SoFi Invest.

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How Low Can a Stock Go?

As any long-term investor in the market can attest, stocks rise and fall—influenced by a meandering mix of human psychology, economic trends, and supply and demand.

The value of stocks, in other words, is never etched in stone. Besides investors’ continued willingness to put their money into a specific company, there’s no one thing that makes a stock’s value keep going up.

Given the inherent volatility of stock values, there are periods when the market is down (and times when it’s gaining steam). So, how low can a stock go? Well, in some cases, stock prices can fall the way to zero.

Watching stocks in free fall can induce fear and panic in investors, causing some to sell their holdings. While most every investor aims to buy low and sell high, timing the stock market is very challenging and doesn’t guarantee investors will see gains.

(Many investors sell stocks when the market is plunging to prevent further losses, but this isn’t necessarily the best decision.)

Sometimes when a stock goes down in value it can present an investment opportunity, but in other cases the stock could fall to zero and never recover. In the later case, it may behoove investors to sell before the stock price falls all the way down to zero.

Here’s an overview of what happens when a stock’s value falls to zero, including some ways to stop a holding that’s spiraling downward.

What Causes a Stock to Fall to Zero?

When a stock falls to zero, it doesn’t mean that the company is, objectively, worth nothing. Some companies with very low stock values are still earning money (or possess assets). And, some investors buy penny stocks that have extremely low prices.

If a company continuously spends more money than it earns, and investors sell off the stock, ultimately that can lead to the company going bankrupt. Most companies file for either Chapter 7 or Chapter 11 bankruptcy before their stock reaches $0.00.

Below is a summary of the difference between Chapter 7 and Chapter 11 bankruptcies.

Chapter 7 Bankruptcy

With a Chapter 7 bankruptcy filing, the company for it must sell off its assets until it can repay lenders and creditors. The order that stakeholders get paid is as follows: creditors, bondholders, preferred stockholders, common stockholders.

This means that if the asset sale doesn’t bring in enough money to pay everyone, it’s likely that common shareholders won’t receive a dime. In this case, stockholders lose all the money they had invested in that stock.
Under Chapter 7, stock trading and all business activities must be put on hold.

Chapter 11 Bankruptcy

Under a Chapter 11 bankruptcy, however, the company negotiates loan terms with its creditors in order to avoid selling off assets. With Chapter 11, companies can still conduct business and their stock can be traded.

Once a company files for Chapter 11, it is likely that the stock will continue to fall, since many investors won’t have much faith in the business. Sometimes, shares are canceled with a Chapter 11 filing—in which case, investors lose all the money they had put into the stock.

Even if a company files for bankruptcy before its stock falls to zero, their attempts to salvage the business may ultimately fail and the stock could become worthless. However, it can take a strong team and business model to go public and get listed on stock exchanges in the first place, so bankrupt companies do have the potential to make a comeback.

Some companies with very low stock prices get acquired by larger companies before their stock falls to zero. Even a company with a low stock might have a promising product or service that a larger company is able to successfully sell. One example of this in recent memory is when Alphabet acquired FitBit.

What Happens to Stocks That Fall to Zero?

Some stock exchanges delist stocks if they fall below a certain level. For example, the New York Stock Exchange will remove a stock if its share price falls below $1 for 30 days in a row.

And, as mentioned above, if a company files for Chapter 7 bankruptcy, its stock will be delisted temporarily.

If a stock gets delisted, it generally can still be traded on an “over the counter” market, but these are not easily known or accessible to most investors.

Fortunately, it is not possible for a stock’s price to go into the negative territory—under zero dollars in value, that is.

Still, if an investor short sells or uses margin trading, they may nevertheless lose more than they invested. For this reason, margin trading and short selling are risky investment strategies.

Short selling is when an investor predicts that a stock is going to decrease in value. So, rather than buying the stock, they ‘bet’ that it will go down. If the stock does in fact go down, they make money.

But, if the stock ends up increasing in value, they lose money. Potentially, an investor in this scenario could lose more money than they put into the initial short sell.

Margin trading is when an investor borrows money from the brokerage firm to trade stocks. If the investor makes a trade that doesn’t go in their favor, they can end up owing the brokerage firm money.

If a company goes bankrupt and an investor has a margin trade in place (and no margin account debt), they will almost never owe any money.

Types of Stocks Likely to Fall to Zero

Every stock comes with risks, but some are more risky than others. Besides companies on the brink of bankruptcy, there are other types of businesses that have a higher chance of becoming worthless.

Knowing what to look for and researching stocks before buying is key to building a resilient portfolio. Some of these higher risk stocks might include:

Companies With Weak Business Models

Even if a stock is currently performing well, it may fall in the future if the business model is fundamentally flawed. For this reason, many investors prefer to research a company’s practices, team composition, and business model before investing in its stock.

Penny Stocks

Stocks that trade below $5 are known as penny stocks. These low price stocks tend to be very volatile, as the companies that issue them have low or no profit.

Sometimes penny stocks can turn out to be scams or pump and dump schemes, which end up completely worthless.

Buying the Dip

Rather than selling stocks when the market declines, some investors believe it can be a good idea to buy while the market is low. By buying the dip, investors pay less for stocks.

And, since these stocks still have the potential to go up in value as the market recovers after the decline, they can be preferred by long-term investors. After all, they may have more time to let their portfolio go back up in value over time.

However, if a company is going bankrupt or otherwise likely to fall to zero, it’s unlikely to offer a strong return on investment.

It’s also very difficult to time the market, so a trader might buy in when they think the market has hit bottom, only to watch it continue to go down.

Generally, building a diversified, long-term portfolio can offer higher returns on average over time than trying to time the market based on shorter-term trends or dips.

How to Prevent Holding a Stock that’s Falling Lower

While it’s true that the market is impossible to predict, there are some measures that investors can take to protect themselves from losses—especially in the case of a stock spiraling towards zero.

By setting up a stop loss sale, for instance, investors could automatically exit a position at whatever threshold they choose. Below is an overview of some common, preventative investment measures:

Stop Losses

Investors can set up a trade to automatically sell shares, if a stock reaches a specific price. This type of trade is called a stop loss. It’s a strategy that could help prevent losses in the case of an individual stock or overall market drop.

There are multiple types of stop losses, including trailing stops and hard stops. Trailing stops move the stop level up as the stock rises in value, but stay in place if the stock falls. Hard stops are fixed at a specific price and will execute if the stock falls to that price.

Limit Orders

Limit orders allow investors to set the price at which they want to buy a stock. An investor selects the price and the number of shares they wish to buy. In practice, the order only executes if the stock then hits that price.

This is one way for traders to step away without worrying that they’ll be buying in at a price they didn’t want.

Put Options

A put option is a type of order that gives traders the option to sell or short-sell a specific amount of stock at a specific price, within a certain time frame. If a stock decreases in value in this case, the trader can still sell it at a higher price than it previously held.

Diversifying Asset Holdings

In an effort to prevent losses, some investors may want to diversify their portfolios into a mix of non-correlated assets—dividing their holdings between assets at a higher and lower risk of fluctuating in value.

In a diversified portfolio, should one asset class decrease in value, the other types may not. Over time, the ups and downs of each asset could possibly balance the losses in each.

Setting Up a Stock Portfolio

By researching companies and setting up a portfolio according to one’s personal risk tolerance, it’s possible to hedge against a stock sinking down to zero.

But, not all investors know what to look for in a stock when picking which securities to buy. Digital investing tools can help investors keep track of stocks.

One such online investing tool is SoFi Invest®. SoFi lets users buy and trade their favorite stocks in an easy to use app right from their cellphone. Members gain access to professional research, daily business news, and actionable market insights.

It’s also possible to build a portfolio through automated investing, buying pre-selected groups of stocks curated by investment professionals.

Curious about investing online? Get started in minutes with SoFi.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“SoFi Securities”).
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.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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3 Ways to Pay for Your Kid’s Braces

Many people contemplate the cost of raising children long before they have them. There’s daycare and preschool fees to consider, a possible increase in rent or mortgage payments if a family needs more space with a baby, and of course the oft-discussed (and ever-rising) cost of college tuition to save for.

Braces are another item to add to that list. How much do braces cost? Well, according to the American Association of Orthodontists , the average cost of braces for adolescents is between $4,978 and $6,900, depending on the course of treatment determined by your orthodontist.

For adults, the average price for braces ticks up a bit, with costs ranging between $5,100 to $7,045.
That price tag may come as a surprise to some. For the most part, dental insurance plans don’t cover much of the cost of orthodontia, if any. And the same is true for lots of pricey dental procedures you (or the kids) might need one day.

The bright side, in addition to a beaming smile once the braces have been removed, is that there are various ways to pay for braces, rather than depleting your savings account or asking family to foot the bill. Following are three possible paths to take on your child’s way to straight teeth and/or an aligned bite.

Smart Options to Pay for Braces

1. Asking Your Orthodontic Office About Payment Plans

Some orthodontic offices try to make care more accessible by offering payment plans for a patient’s treatment. Ask your orthodontist’s staff about what they offer, including whether or not they require a downpayment and if there is interest charged. Even with a payment plan, you’ll likely want to do some research to find out how much braces cost a month.

Payment policies will vary from office to office, so you might shop around for the one that makes your monthly payments manageable. Some offices will begin treatment with an initial payment—perhaps around $250 .

Others offer payment plans, sometimes even extending past the end of treatment. Plans like these can come with an interest rate, and interest could play a role in how much braces are ultimately going to cost you.

For example, if you find an office that offers an interest-free payment plan, with no required down payment, spread across 24 months, that makes a $5,000 orthodontic treatment cost about $209 per month—and that could be a whole lot more palatable to some than paying all at once.

As you get quotes from different orthodontists, factor in the time spent at appointments, as well as traveling to and from.

Depending on the type of orthodontia required, this could add up. See if the orthodontist can give an estimate of how frequently appointments will need to be scheduled and how long the treatment plan will last.

2. Using a Flexible Spending Account or a Health Savings Account

Flexible spending accounts (FSAs) and health saving accounts (HSAs) are offered as a part of healthcare plans by some employers. Both allow you to save pre-tax dollars to be used toward eligible expenses for yourself, your spouse or your dependents—i.e., your kid’s pricey braces.

With an FSA, users state how much they want their employer to set aside each month. Find out what the maximum amount allowed into your FSA is per year; each employer sets their own limit, though the government has determined a maximum contribution, for the 2020 tax year, it is $2,750 .

With an FSA, funds typically expire at the end of the year. Depending on the policy, there may be a short grace period in which funds can be used.

Sometimes plans allow one year’s funds to be rolled over into the next year. Both of these benefits are at the discretion of the policy, so you can check with your employer or program administrator to confirm.

But, if you’re enrolled in an FSA, that’s a good chunk of change to help pay for braces. Again, policies vary from employer to employer, so you can ask how you can use your FSA benefit toward orthodontia.

Health Savings Accounts (HSAs) have their own pros and cons, too. First, HSAs can sometimes be paired with high-deductible health insurance policies (HDHPs). If you opt for that plan, you may pay more out of pocket for regular medical needs.

The upside is that HSAs typically have than FSAs, up to $3,450 higher contribution limits or individuals and $6,900 per year (as of the 2019 tax year) if you have a family HDHP.

And money saved in an HSA can be rolled over from year to year depending upon your employers plan. That could allow you to save up a larger amount of pre-tax dollars to pay for braces.

3. Taking out a Loan

If the above options aren’t available, don’t fully cover the cost of braces, or just aren’t agreeable to you and you’re still struggling with how to pay for braces, you could consider an unsecured personal loan.

SoFi personal loans are unsecured installment loans that can be used for a wide variety of personal expenses. “Unsecured” means these loans are borrowed without requiring any collateral as security. Personal loans through SoFi are extremely flexible and offer competitive fixed rates.

While having a savings account that can be used for medical and dental expenses is ideal, an unsecured personal loan could offer a lower rate than paying for medical expenses with a credit card. The average interest rate for new offers on credit cards is around 18% , and some medical credit cards can have interest rates as high as 26.99%.

As children grow up and their expenses seem to grow with them, it’s common for parents to have to look around for financial solutions. No matter how you pay for your child’s braces, a happy, confident kid will likely be the reward for your efforts.

Looking for options to pay for your kids braces? Learn more about SoFi personal loans for unexpected dental needs.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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