11 Best Hotel Booking Apps of 2021 – Get Cheap Deals on Rooms

You have more choices than ever when it comes to booking hotels. And using a hotel booking app can help save you time, hassle, and money when planning your next trip. Here are the apps you should download for your next trip.

Independent Hotel Booking Apps

Independent apps are not affiliated with a specific hotel brand or chain. Instead, they aggregate options across a range of hotel chains and independently owned accommodations to provide you with a bevy of choices. Here are the heavy hitters among independent booking apps.

1. Booking.com

Arguably the most popular website for reserving accommodations, Booking.com has a robust, easy-to-use app that deserves a spot on your smartphone. One of its best features is the sheer number of options it offers, including accommodations in off-the-beaten-path locations around the world.

If you’re traveling to a country where you don’t speak the language, the app makes it easy to view the address of your hotel in the local language. If you need to show a taxi or Uber driver where you’re headed, you can simply pull it up in the app and point.

Finally, the interface makes it easy to see all past, current, and future trips, and it highlights any loyalty discounts you’re eligible for at properties across the globe.

2. Hotels.com

Another major player in the online booking space, Hotels.com includes hundreds of thousands of properties in more than 200 countries and territories. One of the perks users like most about Hotels.com is that you get one night free for every 10 nights you book through it.

Redeeming reward nights incurs a $5 charge if you use the website to book. However, if you use the app to make a reward booking, you won’t be charged this fee. The app also lets you view or modify current reservations and view your reward progress toward free nights.

3. Priceline

Priceline was established in 1997 and is one of the longest-running hotel booking sites. The website is popular for its “Name Your Own Price” feature, which is now also available on the app.

You can book hotels, flights, rental cars, and even cruises through the Priceline app with a tap of your finger. The app includes exclusive discounts and promotions on hotels not found on the website. Priceline focuses on offering deeply discounted prices on travel but does not include a rewards or loyalty program.

4. Expedia

If you enjoy playing the travel rewards game and want to see just how steeply discounted a rate you can find, Expedia is the app for you. It often features exclusive app-only deals like double rewards points and extra discounts that may not be available on the Expedia website. You can also use the app to book other Expedia services like flights, rental cars, tickets, and tours.

5. HotelsCombined

A relative newcomer to the accommodation aggregate world, HotelsCombined sets itself apart from the rest in a few ways. It offers tons of pictures of potential hotels, which appeals to people who want to know exactly what they’re getting into when booking a room. It also has a “Price Alert” feature that lets you sign up for an email notification when a room you’re interested in drops in price by 10% or more. If there’s a specific hotel you want to stay in and you can plan ahead, this feature might be just the ticket for scoring a great deal.


Hotel Booking Apps For Last-Minute Deals

According to Business Insider, hotels have an average occupancy of about 65%. That means 35% of their rooms go unused each night. There are apps that take advantage of this fact, offering these vacant rooms for far less than their list price. If you enjoy the thrill of booking your nights’ accommodation at the eleventh hour, or if you need a place to stay in a strange city on the fly, these apps have you covered.

6. HotelTonight

Perhaps your Airbnb host cancels your reservation the day of your arrival, or you miss your flight and the first available connection isn’t until the next day. With HotelTonight on your phone, you can book a hotel for the same evening or up to seven days in advance.

HotelTonight aggregates a city’s empty hotel rooms in one place, and you can book one for up to 50% off the full price. Deals through the app go live at noon each day, and in some cities, you may have thousands of hotel rooms to choose from across multiple price points. The app is user-friendly and has a tiered loyalty program called HT Perks, which can net you even better rates the more loyalty credits you accrue. Even better, those loyalty points never expire.

7. One Night

If flying by the seat of your pants when you travel sounds appealing, One Night is the app for you. Using the One Night app, you can book a reservation only after 12pm for the same day in a select number of cities. Once you book a night, you can extend your accommodations for up to seven days.

The thing that sets One Night apart from other last-minute booking apps is that when you select your hotel, the app gives you hour-by-hour suggestions for fun, quirky things to do in your destination city. If you like to travel like a local, this is the app for you.

Hotel Chain Apps

If you take advantage of travel loyalty programs, it’s smart to have the app of your preferred hotel on your smartphone. With these apps, you can skip the line, choose your room, and unlock other member perks with ease.

8. Marriott

Marriott boasts more than 6,700 hotels in 130 countries. That means 1 out of every 15 hotel rooms in the world is owned by the Marriott group. So you definitely won’t be starved for choices if you book accommodations on the Marriott app.

Once you make your booking, you can request upgrades and late checkouts right from your phone. You can also request extras for your room, like a hair dryer or extra towels, from the app. If you frequently stay at Marriott or any of its 30 brands of hotel properties for work or play, keep this app on your phone.

9. Hilton Honors

If you’re a Hilton Honors devotee, you’ll love the app feature that everyone raves about: getting to choose your exact room ahead of time. At many hotels ,you can see a map of the property and pick the room you want via the app. This is especially popular with travelers who have a particular preference, such as a high floor with a view or distance from the elevator, or who want to be near a specific amenity like the pool or fitness center.

The app also has a digital key feature, so you can use your smartphone to unlock the door to your room at select properties. Finally, being able to check out of your room at the end of your stay via the app means you won’t be stuck in line at the front desk during checkout.

10. Hyatt

After a relaunch in August 2019, Hyatt’s mobile app, called World of Hyatt after their rewards program, is up and running with better functionality than the previous version. Among its features are the ability to stream personal entertainment content through the TV in your room with Chromecast, unlock your room door with your phone, and contact the hotel directly in real time through a new chat function both before and during your stay. You can view your progress toward rewards and see any points they’ve earned with previous stays at a Hyatt property.

11. IHG

Shorthand for InterContinental Hotels Group, IHG has almost 6,000 hotels across the world. Its app encourages customers to book travel directly with the chain instead of using a third-party site. It does this by offering a member-exclusive rate with savings of 3% on average if you book directly.

The app also features special rewards offers and discounts and lets you view your points balance toward a free or discounted stay. In addition to a user-friendly interface, the app also has a travel tools section with neighborhood guides and maps. Finally, it offers a white noise feature in case you don’t sleep well in hotels or suffer from insomnia.


Final Word

If you enjoy hunting out the best hotel deal to save money on vacation, or if you like racking up loyalty points you can trade in for free nights and other perks, it pays to download the above apps to your smartphone. From skipping the line at check-in to maximizing your savings to simply being able to view the property ahead of time, using hotel booking apps is an easy, free way to be a savvy traveler.

What’s your favorite hotel booking app? Why?

Source: moneycrashers.com

How Long Do Inquiries Stay on Your Credit Report & Affect Your Score?

Your credit score is an important part of your financial life. Good credit can help you qualify for loans and credit cards and secure lower interest rates on those loans. Poor credit can make it expensive to borrow money and make some lenders refuse to lend you any money at all.

Usually, when you apply for a loan or credit card, the lender looks at a copy of your credit report. This places an inquiry on your report, which drops your score by a few points.

Understanding the impact of credit inquiries and how long the impact lasts can help you manage your credit score while applying for loans.

Calculating Your Credit Score

Your credit score is a three-digit number that lenders can use to quickly gauge your trustworthiness as a borrower. Scores range from a low of 300 to a high of 850, with higher scores being better. Generally, anything above 760 is seen as an excellent score while scores above 700 are good.

There are three major credit bureaus: Experian, Equifax, and Transunion. Each tracks your interactions with debt and credit to build a credit report for you. Using the information on those reports, as well as a formula from FICO, they calculate your credit score, often called your FICO score.

There are five factors that affect your credit score.

1. Payment History

Your payment history is the most important part of your credit score, determining more than a third of it alone. It tracks your history of timely vs late and missed payments. Making timely payments helps your score. Missed and late payments hurt your score.

One missed or late payment has a much larger impact on your credit than a single timely payment, so it’s essential that you work to never miss a due date if you want to have good credit.

2. Credit Utilization

Your credit utilization measures two things, your total amount of debt and the amount of credit card debt you have in relation to your credit card’s combined limits. The less debt you have, the better it is for your credit score.

3. Length of Credit History

The length of your credit history is also composed of two factors. One is the total amount of time you’ve had access to credit. A longer credit history means more experience with debt, which can help your score.

The other is the average age of your credit accounts. Lenders prefer borrowers who stick with credit cards and loans over those who bounce from account to account. The older your average account, the better it will be for your score.

4. Credit Mix

The more different types of loans you’ve had, such as mortgages, auto loans, and student loans, the better it will be for your credit score. Dealing with different types of debt shows that you can handle all the different types of credit.

5. New Credit

New credit looks at both any new accounts that you’ve opened as well as new loans you’ve applied for. This is where credit inquiries appear on your report. Each inquiry can decrease your credit score slightly.


What Is a Credit Inquiry & How Long Does It Affect Your Credit?

When you apply for a new credit card or a loan, the lender wants to know whether you’ll repay your debts.

Typically the lender asks one or more of the credit bureaus to send a copy of your credit report. When a credit bureau receives the request, it makes a note of the inquiry on your credit report. Each credit inquiry decreases your score by a few points.

Credit inquiries reduce your score because applying for new loans on a regular basis can indicate a risky borrower. If someone asks a lender if they can borrow $25,000 to buy a car, that is a relatively reasonable request.

But if someone asks to borrow $25,000 for a car, then needs another $10,000 personal loan the next week, and $50,000 the week after that, and then a new credit card a day later, it can throw up red flags. The person might be sending in so many applications because they’re running into financial trouble or because they don’t plan to repay those debts.

A single inquiry on your credit report can reduce your score between five and 10 points. It’s not a huge impact, but it’s noticeable for someone who is right on the border between good and excellent credit or fair and good credit.

Each additional inquiry drops your score, so applying for multiple loans can cause your credit score to drop quickly.

The impact of each credit inquiry reduces over time. If the rest of your credit report is good, your score will return almost to normal within a few months. Inquiries completely fall off your report after two years.


Hard Inquiries vs. Soft Inquiries

When someone checks your credit report, it can place an inquiry on the report and drop your score. This can sound scary to people who use a credit monitoring service to keep an eye on their credit score.

The good news is that not every inquiry will hurt your credit score. When you apply for credit, lenders typically make something called a hard inquiry when asking the credit bureaus for a copy of your report. The bureaus take note of hard inquiries and put them on your credit report.

By contrast, soft inquiries are used by credit monitoring services or companies offering promotional credit offers or those helping you check if you’re pre-approved for certain products.

The credit bureaus don’t record soft inquiries into your credit, which means that soft inquiries have no effect on your credit score.

In simple terms, applying for a new loan or credit card usually involves a hard inquiry. Checking your credit without actually applying for a loan or credit card usually involves a soft inquiry.


What About Rate Shopping?

One of the best ways to save money on a loan — especially a large loan like a mortgage or an auto loan — is to shop around. If you get quotes from multiple lenders, you can choose the one with the lowest interest rate and fees to minimize your costs.

If each application results in a hard inquiry that hurts your credit score, rate shopping too extensively could damage your credit.

The good news for borrowers is that the FICO scoring formula accounts for the importance of rate shopping. For large loans like mortgages, auto loans, and student loans, all inquiries that occur within a short span — 14 to 45 days depending on the formula used — are treated as a single inquiry when calculating your score.

That means that you can safely compare rates from multiple lenders, as long as you get your quotes within a short period.


Final Word

Applying for credit cards or loans can place credit inquiries on your credit report, which can drop your score. To make sure you keep your score healthy, do your best to only apply for loans that you need.

As long as you use your credit responsibly and don’t apply for too many accounts in a short period, you shouldn’t have to worry about the impact that inquiries have on your credit score.

Source: moneycrashers.com

The Pros & Cons of Offering Owner Financing (When You Sell Your Home)

Sometimes, home sellers find a buyer eager to purchase but unable to finance the property with traditional mortgage financing. Sellers then have a choice: lose the buyer, or lend the mortgage to the buyer themselves.

If you want to sell a property you own free and clear, with no mortgage, you can theoretically finance a buyer’s full first mortgage. Alternatively, you could offer just a second mortgage, to bridge the gap between what the buyer can borrow from a conventional lender and the cash they can put down.

Should you ever consider offering financing? What’s in it for you? And most importantly, how do you protect yourself against losses?

Before taking the plunge to offer seller financing, make sure you understand all the pros, cons, and options available to you as “the bank” when lending money to a buyer.

Advantages to Offering Seller Financing

Although most sellers never even consider offering financing, a few find themselves forced to contemplate it.

For some sellers, it could be that their home lies in a cool market with little demand. Others own unique properties that appeal only to a specific type of buyer or that conventional mortgage lenders are wary to touch. Or the house may need repairs in order to meet habitability requirements for conventional loans.

Sometimes the buyer may simply be unable to qualify for a conventional loan, but you might know they’re good for the money if you have an existing relationship with them.

There are plenty of perks in it for the seller to offer financing. Consider these pros as you weigh the decision to extend seller financing.

1. Attract & Convert More Buyers

The simplest advantage is the one already outlined: You can settle on your home even when conventional mortgage lenders decline the buyer.

Beyond salvaging a lost deal, sellers can also potentially attract more buyers. “Seller Financing Available” can make an effective marketing bullet in your property listing.

If you want to sell your home in 30 days, offering seller financing can draw in more showings and offers.

Bear in mind that seller financing doesn’t only appeal to buyers with shoddy credit. Many buyers simply prefer the flexibility of negotiating a custom loan with the seller rather than trying to fit into the square peg of a loan program.

2. Earn Ongoing Income

As a lender, you get the benefit of ongoing monthly interest payments, just like a bank.

It’s a source of passive income, rather than a one-time payout. In one fell swoop, you not only sell your home but also invest the proceeds for a return.

Best of all, it’s a return you get to determine yourself.

3. You Set the Interest Rate

It’s your loan, which means you get to call the shots on what you charge. You may decide seller financing is only worth your while at 6% interest, or 8%, or 10%.

Of course, the buyer will likely try to negotiate the interest rate. After all, nearly everything in life is negotiable, and the terms of seller financing are no exception.

4. You Can Charge Upfront Fees

Mortgage lenders earn more than just interest on their loans. They charge a slew of one-time, upfront fees as well.

Those fees start with the origination fee, better known as “points.” One point is equal to 1% of the mortgage loan, so they add up fast. Two points on a $250,000 mortgage comes to $5,000, for example.

But lenders don’t stop at points. They also slap a laundry list of fixed fees on top, often surpassing $1,000 in total. These include fees such as a “processing fee,” “underwriting fee,” “document preparation fee,” “wire transfer fee,” and whatever other fees they can plausibly charge.

When you’re acting as the bank, you can charge these fees too. Be fair and transparent about fees, but keep in mind that you can charge comparable fees to your “competition.”

5. Simple Interest Amortization Front-Loads the Interest

Most loans, from mortgage loans to auto loans and beyond, calculate interest based on something called “simple interest amortization.” There’s nothing simple about it, and it very much favors the lender.

In short, it front-loads the interest on the loan, so the borrower pays most of the interest in the beginning of the loan and most of the principal at the end of the loan.

For example, if you borrow $300,000 at 8% interest, your mortgage payment for a 30-year loan would be $2,201.29. But the breakdown of principal versus interest changes dramatically over those 30 years.

  • Your first monthly payment would divide as $2,000 going toward interest, with only $201.29 going toward paying down your principal balance.
  • At the end of the loan, the final monthly payment divides as $14.58 going toward interest and $2,186.72 going toward principal.

It’s why mortgage lenders are so keen to keep refinancing your loan. They earn most of their money at the beginning of the loan term.

The same benefit applies to you, as you earn a disproportionate amount of interest in the first few years of the loan. You can also structure these lucrative early years to be the only years of the loan.

6. You Can Set a Time Limit

Not many sellers want to hold a mortgage loan for the next 30 years. So they don’t.

Instead, they structure the loan as a balloon mortgage. While the monthly payment is calculated as if the loan is amortized over the full 15 or 30 years, the loan must be paid in full within a certain time limit.

That means the buyer must either sell the property within that time limit or refinance the mortgage to pay off your loan.

Say you sign a $300,000 mortgage, amortized over 30 years but with a three-year balloon. The monthly payment would still be $2,201.29, but the buyer must pay you back the full remaining balance within three years of buying the property from you.

You get to earn interest on your money, and you still get your full payment within three years.

7. No Appraisal

Lenders require a home appraisal to determine the property’s value and condition.

If the property fails to appraise for the contract sales price, the lender either declines the loan or bases the loan on the appraised value rather than the sales price — which usually drives the borrower to either reduce or withdraw their offer.

As the seller offering financing, you don’t need an appraisal. You know the condition of the home, and you want to sell the home for as much as possible, regardless of what an appraiser thinks.

Foregoing the appraisal saves the buyer money and saves everyone time.

8. No Habitability Requirement

When mortgage lenders order an appraisal, the appraiser must declare the house to be either habitable or not.

If the house isn’t habitable, conventional and FHA lenders require the seller to make repairs to put it in habitable condition. Otherwise, they decline the loan, and the buyer must take out a renovation loan (such as an FHA 203k loan) instead.

That makes it difficult to sell fixer-uppers, and it puts downward pressure on the price. But if you want to sell your house as-is, without making any repairs, you can do so by offering to finance it yourself.

For certain buyers, such as handy buyers who plan to gradually make repairs themselves, seller financing can be a perfect solution.

9. Tax Implications

When you sell your primary residence, the IRS offers an exemption for the first $250,000 of capital gains if you’re single, or $500,000 if you’re married.

However, if you earn more than that exemption, or if you sell an investment property, you still have to pay capital gains tax. One way to reduce your capital gains tax is to spread your gains over time through seller financing.

It’s typically considered an installment sale for tax purposes, helping you spread the gains across multiple tax years. Speak with an accountant or other financial advisor about exactly how to structure your loan for the greatest tax benefits.


Drawbacks to Seller Financing

Seller financing comes with plenty of risks. Most of the risks center around the buyer-borrower defaulting, they don’t end there.

Make sure you understand each of these downsides in detail before you agree to and negotiate seller financing. You could potentially be risking hundreds of thousands of dollars in a single transaction.

1. Labor & Headaches to Arrange

Selling a home takes plenty of work on its own. But when you agree to provide the financing as well, you accept a whole new level of labor.

After negotiating the terms of financing on top of the price and other terms of sale, you then need to collect a loan application with all of the buyer’s information and screen their application carefully.

That includes collecting documentation like several years’ tax returns, several months’ pay stubs, bank statements, and more. You need to pull a credit report and pick through the buyer’s credit history with a proverbial fine-toothed comb.

You must also collect the buyer’s new homeowner insurance information, which must include you as the mortgagee.

You need to coordinate with a title company to handle the title search and settlement. They prepare the deed and transfer documents, but they still need direction from you as the lender.

Be sure to familiarize yourself with the home closing process, and remember you need to play two roles as both the seller and the lender.

Then there’s all the legal loan paperwork. Conventional lenders sometimes require hundreds of pages of it, all of which must be prepared and signed. Although you probably won’t go to the same extremes, somebody still needs to prepare it all.

2. Potential Legal Fees

Unless you have experience in the mortgage industry, you probably need to hire an attorney to prepare the legal documents such as the note and promise to pay. This means paying the legal fees.

Granted, you can pass those fees on to the borrower. But that limits what you can charge for your upfront loan fees.

Even hiring the attorney involves some work on your part. Keep this in mind before moving forward.

3. Loan Servicing Labor

Your responsibilities don’t end when the borrower signs on the dotted line.

You need to make sure the borrower pays on time every month, from now until either the balloon deadline or they repay the loan in full. If they fail to pay on time, you need to send late notices, charge them late fees, and track their balance.

You also have to confirm that they pay the property taxes on time and keep the homeowners insurance current. If they fail to do so, you then have to send demand letters and have a system in place to pay these bills on their behalf and charge them for it.

Every year, you also need to send the borrower 1098 tax statements for their mortgage interest paid.

In short, servicing a mortgage is work. It isn’t as simple as cashing a check each month.

4. Foreclosure

If the borrower fails to pay their mortgage, you have only one way to forcibly collect your loan: foreclosure.

The process is longer and more expensive than eviction and requires hiring an attorney. That costs money, and while you can legally add that cost to the borrower’s loan balance, you need to cough up the cash yourself to cover it initially.

And there’s no guarantee you’ll ever be able to collect that money from the defaulting borrower.

Foreclosure is an ugly experience all around, and one that takes months or even years to complete.

5. The Buyer Can Declare Bankruptcy on You

Say the borrower stops paying, you file a foreclosure, and eight months later, you finally get an auction date. Then the morning of the auction, the borrower declares bankruptcy to stop the foreclosure.

The auction is canceled, and the borrower works out a payment plan with the bankruptcy court judge, which they may or may not actually pay.

Should they fail to pay on their bankruptcy payment plan, you have to go through the process all over again, and all the while the borrowers are living in your old home without paying you a cent.

6. Risk of Losses

If the property goes to foreclosure auction, there’s no guarantee anyone will bid enough to cover the borrower’s loan debt.

You may have lent $300,000 and shelled out another $20,000 in legal fees. But the bidding at the foreclosure auction might only reach $220,000, leaving you with a $100,000 shortfall.

Unfortunately, you have nothing but bad options at that point. You can take the $100,000 loss, or you can take ownership of the property yourself.

Choosing the latter means more months of legal proceedings and filing eviction to remove the nonpaying buyer from the property. And if you choose to evict them, you may not like what you find when you remove them.

7. Risk of Property Damage

After the defaulting borrower makes you jump through all the hoops of foreclosing, holding an auction, taking the property back, and filing for eviction, don’t delude yourself that they’ll scrub and clean the property and leave it in sparkling condition for you.

Expect to walk into a disaster. At the very least, they probably haven’t performed any maintenance or upkeep on the property. In my experience, most evicted tenants leave massive amounts of trash behind and leave the property filthy.

In truly terrible scenarios, they intentionally sabotage the property. I’ve seen disgruntled tenants pour concrete down drains, systematically punch holes in every cabinet, and destroy every part of the property they can.

8. Collection Headaches & Risks

In all of the scenarios above where you come out behind, you can pursue the defaulting borrower for a deficiency judgment. But that means filing suit in court, winning it, and then actually collecting the judgment.

Collecting is not easy to do. There’s a reason why collection accounts sell for pennies on the dollar — most never get collected.

You can hire a collection agency to try collecting for you by garnishing the defaulted borrower’s wages or putting a lien against their car. But expect the collection agency to charge you 40% to 50% of all collected funds.

You might get lucky and see some of the judgment or you might never see a penny of it.


Options to Protect Yourself When Offering Seller Financing

Fortunately, you have a handful of options at your disposal to minimize the risks of seller financing.

Consider these steps carefully as you navigate the unfamiliar waters of seller financing, and try to speak with other sellers who have offered it to gain the benefit of their experience.

1. Offer a Second Mortgage Only

Instead of lending the borrower the primary mortgage loan for hundreds of thousands of dollars, another option is simply lending them a portion of the down payment.

Imagine you sell your house for $330,000 to a buyer who has $30,000 to put toward a down payment. You could lend the buyer $300,000 as the primary mortgage, with them putting down 10%.

Or you could let them get a loan for $270,000 from a conventional mortgage lender, and you could lend them another $30,000 to help them bridge the gap between what they have in cash and what the primary lender offers.

This strategy still leaves you with most of the purchase price at settlement and lets you risk less of your own money on a loan. But as a second mortgage holder, you accept second lien position

That means in the event of foreclosure, the first mortgagee gets paid first, and you only receive money after the first mortgage is paid in full.

2. Take Additional Collateral

Another way to protect yourself is to require more collateral from the buyer. That collateral could come in many forms. For example, you could put a lien against their car or another piece of real estate if they own one.

The benefits of this are twofold. First, in the event of default, you can take more than just the house itself to cover your losses. Second, the borrower knows they’ve put more on the line, so it serves as a stronger deterrent for defaults.

3. Screen Borrowers Thoroughly

There’s a reason why mortgage lenders are such sticklers for detail when underwriting loans. In a literal sense, as a lender, you are handing someone hundreds of thousands of dollars and saying, “Pay me back, pretty please.”

Only lend to borrowers with a long history of outstanding credit. If they have shoddy credit — or any red flags in their credit history — let them borrow from someone else. Be just as careful of borrowers with little in the way of credit history.

The only exception you should consider is accepting a cosigner with strong, established credit to reinforce a borrower with bad or no credit. For example, you might find a recent college graduate with minimal credit who wants to buy, and you could accept their parents as cosigners.

You also could require additional collateral from the cosigner, such as a lien against their home.

Also review the borrower’s income carefully, and calculate their debt-to-income ratios. The front-end ratio is the percentage of their monthly income required to cover all housing costs: principal and interest, property taxes, homeowner’s insurance, and any condominium or homeowners association fees.

For reference, conventional mortgage lenders allow a maximum front-end ratio of 28%.

The back-end ratio includes not just housing costs, but also overall debt obligations. That includes student loans, auto loans, credit card payments, and all other mandatory monthly debt payments.

Conventional mortgage loans typically allow 36% at most. Any more than that and the buyer probably can’t afford your home.

4. Charge Fees for Your Trouble

Mortgage lenders charge points and fees. If you’re serving as the lender, you should do the same.

It’s more work for you to put together all the loan paperwork. And you will almost certainly have to pay an attorney to help you, so make sure you pass those costs along to the borrower.

Beyond your own labor and costs, you also need to make sure you’re being compensated for your risk. This loan is an investment for you, so the rewards must justify the risk.

5. Set a Balloon

You don’t want to be holding this mortgage note 30 years from now. Or, for that matter, to force your heirs to sort out this mortgage on your behalf after you shuffle off this mortal coil.

Set a balloon date for the mortgage between three and five years from now. You get to collect mostly interest in the meantime, and then get the rest of your money once the buyer refinances or sells.

Besides, the shorter the loan term, the less opportunity there is for the buyer to face some financial crisis of their own and stop paying you.

6. Be Listed as the Mortgagee on the Insurance

Insurance companies issue a declarations page (or “dec page”) listing the mortgagee. In the event of damage to the property and an insurance claim, the mortgagee gets notified and has some rights and protections against losses.

Review the insurance policy carefully before greenlighting the settlement. Make sure your loan documents include a requirement that the borrower send you updated insurance documents every year and consequences if they fail to do so.

7. Hire a Loan Servicing Company

You may multitalented and an expert in several areas. But servicing mortgage loans probably isn’t one of them.

Consider outsourcing the loan servicing to a company that specializes in it. They send monthly statements, late notices, 1098 forms, and escrow statements (if you escrow for insurance and taxes), and verify that taxes and insurance are current each year. If the borrower defaults, they can hire a foreclosure attorney to handle the legal proceedings.

Examples of loan servicing companies include LoanCare and Note Servicing Center, both of whom accept seller-financing notes.

8. Offer Lease-to-Own Instead

The foreclosure process is significantly longer and more expensive than the eviction process.

In the case of seller financing, you sell the property to the buyer and only hold the mortgage note. But if you sign a lease-to-own agreement, you maintain ownership of the property and the buyer is actually a tenant who simply has a legal right to buy in the future.

They can work on improving their credit over the next year or two, and you can collect rent. When they’re ready, they can buy from you — financed with a conventional mortgage and paying you in full.

If the worst happens and they default, you can evict them and either rent or sell the property to someone else.

9. Explore a Wrap Mortgage

If you have an existing mortgage on the property, you may be able to leave it in place and keep paying it, even after selling the property and offering seller financing.

Wrap mortgages, or wraparound mortgages, are a bit trickier and come with some legal complications. But when executed right, they can be a win-win for both you and the buyer.

Say you have a 30-year mortgage for $250,000 at 3.5% interest. You sell the property for $330,000, and you offer seller financing of $300,000 for 6% interest. The buyer pays you $30,000 as a down payment.

Ordinarily, you would pay off your existing mortgage for $250,000 upon selling it. Most mortgages include a “due-on-sale” clause, requiring the loan to be paid in full upon selling the property.

But in some circumstances and some states, you may be able to avoid triggering the due-on-sale clause and leave the loan in place.

You keep paying your mortgage payment of $1,122.61, even as the borrower pays you $1,798.65 per month. In a couple of years when they refinance, they pay off your previous mortgage in full, plus the additional balance they owe you.

Of course, you still run the risk that the borrower stops paying you. Then you’re saddled with making your monthly mortgage payment on the property, even as you slog through the foreclosure process to try and recover your losses.


Final Word

Offering seller financing comes with risks. But those risks may be worth taking, especially for hard-to-sell properties.

Only you can decide what risk-reward ratio you can live with, and negotiate loan terms to ensure you come out on the right side of the ratio. For unique or other difficult-to-finance properties, seller financing may be the only way to sell for what the property’s worth.

Before you write off the returns as low, remember that your APR will be far higher than the interest rate charged.

Beyond the upfront fees you can charge, you’ll also benefit from simple interest amortization, which front-loads the interest so that nearly all of the monthly payment goes toward interest in the first few years — the only years you need to finance if you structure the loan as a balloon mortgage.

Just be sure to screen all borrowers extremely carefully, and to take as many precautions as you can. If the borrower can’t qualify for a conventional mortgage, consider that a glaring red flag. Seller financing involves risking many thousands of dollars in a single transaction, so take your time and get it right.

Source: moneycrashers.com

Solo travelers rejoice: Why I’m in favor of new Amex Centurion Lounge guest rules – The Points Guy


Solo travelers rejoice: Why I’m in favor of new Amex Centurion Lounge guest rules


Advertiser Disclosure


Many of the credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers. Please view our advertising policy page for more information.

Editorial Note: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Source: thepointsguy.com

7 amazing awards TPG staff are booking with Ultimate Rewards points this year – The Points Guy


How TPG staff are redeeming Ultimate Rewards in 2021 – The Points Guy


Advertiser Disclosure


Many of the credit card offers that appear on the website are from credit card companies from which ThePointsGuy.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers. Please view our advertising policy page for more information.

Editorial Note: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Source: thepointsguy.com

Robert Downey Jr. Lives in this Charming Windmill House in the Hamptons


I know. You were expecting Robert Downey Jr.’s home to be a massive, futuristic mansion similar to that of his iconic character Tony Stark.

But it turns out that the lovable actor is far more similar to us, regular humans, than to the eccentric billionaire philanthropist/playboy we’re used to seeing him as.

Robert Downey Jr. and his lovely wife, Susan, opened their doors to the Architectural Digest crew, which gave us a peak into the home life of Iron Man himself. And guess what? It’s neither futuristic, nor eccentric, but rather as cozy and charming as any family home you simply love stepping into.

But you don’t have to take my word for it! Watch the full video here:

[embedded content]

Hamptons windmill house overlooking the church spire

Robert Downey Jr. and his wife, producer Susan Downey live in a late-19th century windmill folly, originally built as a playhouse and later transformed into a full-fledged residence.

robert-downey-jr-windmill-house
Image credit: François Dischinger for Arch Digest

The magical home is set in the Hamptons, within minutes of East Hampton — though the address is never disclosed. One key clue to the location (if you feel like scouting the area hoping to get a glimpse of the actor) is the home’s proximity to a lovely church. In fact, RDJ points out that the location of the home was chosen in such a way that you can see the church spire.

SEE ALSO: You Can Book Tony Stark’s ‘Avengers: Endgame’ Cabin on Airbnb for $1,000/Night


Robert Downey Jr.’s favorite things around the house

Well, here’s where things start to run more in the direction of the RDJ we know and love: the quirky things he cares about most.

Before even stepping into the house, both Robert and Susan point out what appears to be a Halloween decor piece — a little Frankenstein monster windmill that faithfully guards their front lawn. According to the couple, it was the very first piece of decor they added to the home and they couldn’t bring themselves to take it down.

The first piece of art Downey showcases as soon as we enter his home is a little art project he made for Christmas — that he thoroughly enjoys to look at (but I’ll leave it to him to say when he does the ‘enjoying’).

robert-downey-jr-favorite-things
Footage credit: Architectural Digest’s Open Door

Just like every other good ol’ fashioned man, the actor loves his couch. However, not the big one in the living room where they welcome guests, but the one where he can watch the American Heroes Network all day long.

Curious about his favorite kitchen spot? It’s really not that hard to guess. After a good meal, his kitchen corner bench appears to be the perfect place to take a nap every now and then.

robert-downey-jr-stylish-kitchen
Image credit: François Dischinger for Arch Digest

And yes, the entire house is peppered with signs reminding its residents — Robert, Susan, and their two adorable children — to “not let the cats out.” If you take the time to watch the Architectural Digest video, you will also get a chance to meet RDJ’s two adorable cats.


Decor choices — from spotless design to glowing heads

robert-downey-jr-stylish-bedroom
Image credit: François Dischinger for Arch Digest

While designer Joe Nahem and the team at New York City–based Fox-Nahem Associates have rightful claim to the decor choices made when furnishing the place, there are a few rather Tony Stark-ish additions.

The one that stands out the most: a glowing transparent figure of Robert Downey Jr.’s head (and yes, it actually lights up.) Or, in his own words, a miniature “Greek god.”

“We didn’t set out to do something conspicuously wacky. We just enjoy a bit of whimsy and fun. And we definitely don’t like boring,” Robert tells AD.

The living room is placed just beyond the octagonal entry foyer at the base of the windmill and it’s the space they’ve spent the most time redecorating. Instead of going with a wall-sized TV to complete the decor, the Downeys chose to give their guests something more interesting to stare at — a massive wraparound fireplace wall made by ceramic artist Peter Lane.

robert-downey-jr-stylish-living-room
Image credit: François Dischinger for Arch Digest

Overall, the interior design details were carefully chosen so that they meet the family’s needs and taste. The result was a perfect blend between Robert’s playful spirit, Susan’s interest for functionality and efficiency, and their designer’s creativeness.

From pedigreed pieces to discreet luxuries, the place exudes modern elegance just as it should.

robert-downey-jr-stylish-bathroom
Image credit: François Dischinger for Arch Digest

Relatability factors

I’ll admit, I’m always surprised to step into the homes of celebrities and find how easy it is to relate to their lives through the intimacy of the homes they create for themselves. And I wouldn’t have expected RDJ’s home to have so many relatable elements. Some that stand out:

  • a “Why is everything stuffed here?” closet
  • the two adorable cats that seem to own the house
  • “Don’t let the cats out” signs spread throughout the house
  • a purple polka dots bathroom (which Susan says is Robert’s favorite room in the house)
  • a messy office full of things the couple procrastinates on packing
  • Downey’s cozy napping couch

More celebrity homes:

Is it Real? The Story Behind Tony Stark’s Insane Malibu Mansion in the Iron Man Movies
Kerry Washington’s New York Apartment Is Just as Stylish as You’d Expect
50 Cent’s House in Connecticut Sells After 12 Long Years on the Market
A Look Inside Kris Jenner’s House, Her Zen-like Refuge in the Hidden Hills

Source: fancypantshomes.com

8 Ways to Save Money on Magazine Subscriptions

Even in the digital age, magazines have something to offer. They provide a weekly or monthly deep dive into a topic that interests us — something we can’t get from a quick skim of our Facebook feeds.

And we have thousands of magazines to choose from. From science to sports to celebrity gossip, there are choices in every category and for every demographic, including magazines for kids.

The biggest downside of magazines is their cost. The cost per issue is significantly lower with a subscription than it is when you simply grab a magazine off the newsstand, but it still isn’t trivial.

At Discount Magazines, subscription prices for popular magazines range from around $1.50 to $5 per issue. Some weekly magazines cost as much as $190 per year.

Ways to Spend Less on Magazine Subscriptions

If you’re trying to save money on a tight budget, your first impulse might be to slash out all unnecessary “extras,” including magazine subscriptions. But cutting your budget to the bone this way can actually backfire by causing frugal fatigue.

A much better idea is to find ways to enjoy your favorite magazines for less.

1. Ask the Publisher

The first place to look for a better deal on your favorite magazine is with the publisher. For instance, many magazine publishers charge you significantly less per issue if you subscribe for more than one year.

This is a good way to save on a favorite magazine you know you’ll want to keep reading for at least a couple of years. Check your renewal notice or the little subscription cards tucked inside the magazine for offers.

Another way to save is to call up the subscription office and negotiate the price. If you’ve been subscribing to the same magazine for several years, you’re probably paying quite a bit more now for your subscription than you did when you first signed up.

Magazine publishers tend to offer their best rates to new subscribers in the hope they’ll get hooked on their content. They pay less attention to long-term subscribers because they assume they’re committed already.

However, you don’t always have to be a new reader to get the introductory rate. In many cases, all you have to do is call and ask to have your old rate reinstated.

This strategy tends to work best if your subscription is up for renewal, since you can threaten to cancel if you don’t get the cheaper rate. There’s a good chance the publisher will give it to you rather than risk losing your business.

To give yourself this leverage, make sure not to sign up for the “auto-renew” option when you first subscribe to a magazine. If you do, your automatic renewal will likely come with the highest possible rate.

2. Seek Daily Deals

From time to time, daily deal websites such as Groupon and LivingSocial offer magazine subscriptions at extraordinarily low rates. You can save as much as 90% off the regular price for a one-year subscription.

Typically, you can find deals on only a few magazines at any given time. You probably won’t be able to snag discounts on your particular favorites the first time you look.

However, if you check these sites regularly, you can spot deals on the magazines you love as soon as they pop up and snap them up before they disappear.

3. Use Your Rewards

If you use rewards programs and apps such as Swagbucks or Ibotta, you can often cash in rewards for magazine subscriptions. You can earn rewards points from these programs in a variety of ways, including shopping online, searching the Web, taking surveys, or even playing games.

Since many of these are things you’d do anyway, you might as well earn your way to a free magazine subscription at the same time.

You can cash in rewards from other sorts of programs for magazines as well. For instance, some credit card rewards programs allow you to redeem your points for a magazine subscription.

And if you’ve earned a bunch of frequent flyer miles you haven’t had a chance to use, you can visit MagsForMiles to exchange them for a magazine subscription. The site accepts unused miles from multiple major airlines: Alaska, American, Delta, Frontier, Hawaiian, Spirit, and United.

4. Check Magazine Discounters

The subscription price listed on the little cards inside the magazine or on the magazine’s website isn’t necessarily the best price you can get. There are various outlets that sell magazine subscriptions at discounted rates.

Sites to check include Magazines.com, Discount Magazines, DiscountMags.com, and Magazine Values.

If you don’t want to check all those sites individually, you can save some time by going to Magazine Price Search. This site doesn’t sell magazines directly. Instead, it compares subscription prices from a dozen magazine sellers and tells you where you find the lowest rate.

It’s also sometimes possible to find magazine deals on Amazon and eBay. However, some users warn to use caution when ordering from eBay or smaller online sellers, which can take six to eight weeks to process a magazine order.

If your magazine doesn’t arrive as promised when that time period is up, it’s usually too late to cancel the charges on your credit card. Still, if the price is low enough, it can be worth the risk.

5. Look for Free Offers

Discounted subscriptions are great, but free ones are even better.

The discount site ValueMags has a whole page devoted to the most special deal of all: subscriptions of up to a year long for absolutely no cost. Most of these free offers are for digital versions of a magazine, but occasionally you’ll find one for a print subscription.

Of course, like many things that are “free,” these subscriptions come with a catch. To get them, you have to sign up for promotional emails from the website.

If you actually want to receive emails offering discounts on magazines and various other products, that’s not a downside. But if you don’t, it’s up to you to decide whether the free subscription is worth its cost in spam email.

Another site that offers free subscriptions is FreeBizMag. All the magazines here are specialty publications focused on specific professions, from education to beverage manufacturing. These can be useful for business owners, but they’re not of much interest to the general public.

The site also provides access to free research reports and e-books. Along with reports on specific businesses, there’s some general-interest material here, such as shopping guides.

6. Go Digital

Part of what makes magazines expensive is the cost of printing and mailing them. Publishers can avoid these costs by releasing their magazines in digital form, and they pass on these savings to customers.

So, if there’s a magazine you love but don’t love the price of, check to see if there’s a digital version of it you can view on your phone or tablet. If there is, you can probably save a nice chunk of change by switching your subscription from pages to pixels.

Digital magazines have other perks besides their lower price. For instance, because they don’t have to go through the mail, they’re likely to be delivered sooner than a paper copy. They can also include extra features, such as links to videos, that a printed magazine doesn’t have.

Another nice feature of digital files is they’re easier to search. You can just type in a keyword to look for specific topics or terms that interest you. It’s also easier to bookmark a digital article for future reference than it is to tear some pages out of a printed magazine and try to find a place to store them where they won’t get lost.

As a final perk, subscribing to a magazine in digital form saves paper. This makes it a way for you to save money while going green.

7. Swap With Friends

Do you have a friend or neighbor who subscribes to all the same magazines as you? Do you love getting together and discussing the articles from the latest issue? If so, you can do more than just chat about your favorite magazines — you can share your actual subscriptions.

For instance, suppose you both read two magazines every month: Better Homes & Gardens and Family Handyman. In that case, you could decide to drop your subscription to Better Homes & Gardens and keep Family Handyman, while your neighbor does the opposite.

When you get your copy of Family Handyman each month, you read it first and then pass it on to your neighbor, who gives you the latest issue of Better Homes & Gardens in exchange. Each of you gets to read your two favorite magazines while only paying for one of them.

Another way to share your magazine subscriptions is to start a magazine swap at your workplace.

Choose a central location, such as the break room, to drop off copies of your magazines when you’re done reading them. Then encourage all your coworkers to do the same. You’ll get access to your own magazines and all the ones your coworkers read as well, at no extra cost.

If you commute to work by bus or train, you can even set up a magazine swapping station at the local bus or train station.

Just put out a small box or rack labeled “Take one, leave one” and use it to drop off the magazines you’re done with instead of tossing them in the recycling bin. Other passengers will get to enjoy your old magazines during their commute, and you can hopefully pick up the ones they leave behind.

8. Visit a Library or Bookstore

If you only tend to read through a magazine once before discarding it, maybe you don’t need your own subscription at all. If your local library subscribes to your favorite magazines, you can simply read them there.

Usually, there are comfy chairs and couches to sit in, so you can stop in and curl up with a magazine whenever you have a free hour.

Many bookstores also allow you to peruse their magazine offerings to your heart’s content without paying. Here, too, there are often cozy chairs to sit in as you read. Some bookstores even have cafes, so you can enjoy a snack or a drink to go with your reading material.

The one catch with this strategy is that you can’t take the magazines home. You can only stop in to browse through them when the store or library is open. This isn’t much help if you like to spend a few minutes paging through a magazine to decompress before bed.

However, there are ways around this problem too. For instance, libraries typically keep only the two or three most recent issues of a magazine on their racks and discard the older issues. If you ask, there’s a good chance the library will let you take these back issues home rather than simply tossing them in the bin.

Some libraries also provide digital access to the magazines they subscribe to, so you can download them to read on your tablet or e-reader.


Final Word

When you’re living paycheck to paycheck, even a few extra dollars a month for a magazine is sometimes more than your budget can handle. If you’re in that situation, you may have no choice but to let your magazine subscriptions lapse for a while.

Painful as it can be to give up your celebrity gossip or sports coverage, giving up on being debt-free would hurt even more.

Fortunately, dropping your subscriptions doesn’t have to mean giving up your favorite reads entirely.

You can browse through them at the library or borrow them from friends and neighbors. You can also get some content for free on the magazines’ websites. These freebies can tide you over until your budget loosens up and you’re able to subscribe again.

Source: moneycrashers.com

What to Know About Being an Authorized User on Someone’s Credit Card

Advertiser Disclosure: This post includes references to offers from our partners. We receive compensation when you click on links to those products. However, the opinions expressed here are ours alone and at no time has the editorial content been provided, reviewed, or approved by any issuer.

No one is born with perfect credit. It takes time to build a substantial credit history and even longer to achieve a credit score high enough to qualify for top-of-the-line cash-back and travel credit cards.

If you’re impatient to learn what life is like for high-rolling cardholders, consider a shortcut: convincing a friend or family member with excellent credit to add you as an authorized user to a new or existing card account.

But before you rush to convince a creditworthy friend or relative to add you to their account, take stock of the rights and responsibilities that come with authorized user status — and the potential downsides.

What Is Authorized User Status?

The rules vary by card and account type, but virtually all credit card issuers allow primary cardholders to add authorized users. In most cases, there’s no charge associated with authorized user status, although some high-end cards — mostly those with hefty annual fees for the primary user — do levy annual surcharges for each additional user.

Authorized user status allows you to accompany the primary cardholder on their credit journey, but it’s not exactly a free ride. For starters, you need to spend responsibly or jeopardize your status, which the primary cardholder can revoke at any time.

More importantly, you need to remember you’re not entirely in control of your fate. If all goes well, your authorized user account will build your credit history (or help rebuild it after bankruptcy) and could improve your credit score over time. If the primary user falls behind on their payments, however, expect something closer to the opposite.

Authorized user status has other notable benefits for primary cardholders and authorized users alike, including keeping little-used card accounts active and building credit for teens and young adults. But it also has notable risks.

Pros of Authorized User Status

With responsible use and timely payments, authorized user status help you build or rebuild credit and can improve your credit score over time. Designating an authorized user can be a boon for primary cardholders by increasing reward earnings and lowering credit utilization.

  1. Builds the Authorized User’s Credit. The most compelling case for authorized user status is its credit-building power for people without a history of credit, such as students and young adults. Provided the issuer reports the authorized user account to the consumer credit reporting bureaus, it helps build up the user’s credit — an essential prerequisite for future loan applications.
  2. Could Improve the Authorized User’s Credit Score. Over time, a pattern of timely repayments and responsible use (in other words, low credit utilization) can work to raise the authorized user’s existing credit score. Although the improvement is unlikely to be quick or dramatic, anything helps when you’re repairing damaged credit.
  3. Keeps Seldom-Used Accounts Active. By adding an authorized user to a seldom-used credit card account, the primary cardholder ensures the account remains active. Each older, still-active credit card account helps keep the primary’s overall credit utilization rate low and raises their average account age. Both factors work to raise credit scores over time in the absence of negative factors like delinquencies.
  4. Increases Reward Earnings. Two spenders are better than one — when it comes to racking up credit card rewards, at least.

Cons of Authorized User Status

Authorized user status is a potential credit risk for authorized users and primary cardholders alike. A breakdown in communication between users could have consequences for their personal relationship as well.

  1. Potential Risks to the Authorized User’s Credit. Although the primary cardholder is ultimately responsible for making timely card payments and keeping credit utilization in check, any lapses could negatively impact the authorized user’s credit if the account displays as delinquent on the authorized user’s credit report.
  2. Could Negatively Affect the Personal Relationship Between the Primary and Authorized User. Should the authorized user rack up more charges than the cardholders can repay on time, acrimony is all but assured. If you’re not certain you can live up to your obligations as an authorized user, think carefully before jeopardizing a close relationship.
  3. Higher Risk of Lost or Stolen Cards. A credit card is more likely to go missing or fall into the wrong hands when it has a copy. If your authorized user card has the same number and security code as the primary card, the primary cardholder will need to cancel and reissue the card in the event of a loss.

Your Rights & Responsibilities as an Authorized User

As an authorized user, your rights and responsibilities differ from the primary account holder’s. Your role is subordinate and you lack full control over the account, so it’s a stretch to call an authorized user account “yours.” But you’re still expected to keep up your end of the bargain.

What You Can (& Should) Do as an Authorized User

As an authorized user, you’re obligated to keep your card secure and use it responsibly. Here is what you can — and should — do:

  • Earn Rewards on Card Spending. Authorized user spending earns rewards at the same rate as the primary cardholder’s spending. It doesn’t hurt to ask your primary if they’re willing to share the spoils with you — if you don’t already live together, that is.
  • Enjoy Certain Card Benefits. Authorized user cards generally carry the same benefits and privileges as primary cards. For instance, the Chase Sapphire Reserve Card’s airport lounge access benefit — one of the card’s top selling points — applies to the primary card and all authorized user cards. The exceptions to this rule are benefits awarded on a per-account basis only, as is the case with travel credits such as The Platinum Card from American Express’s $200 annual airline fee credit.
  • Keep Your Physical Card and Card Number Secure. Using the card is a responsibility, not a right. Treat your authorized user card and its number with the same care as you would a credit card in your own name. If you misplace an authorized user card with the same number as the primary card, the primary will need to lock the entire account and reissue the card — a major inconvenience, especially if you or they are on the road.
  • Avoid Overspending. Although you’re not personally responsible for the charges you make as an authorized user, overspending could strain the primary’s ability to make timely repayments. That, in turn, could negatively affect your credit down the line.

What You Can’t Do as an Authorized User

As an authorized user, you’re forbidden from making changes to the primary cardholder’s account information or payment methods. Although you have the ability to make charges on the account (unless the primary revokes this), you’re not technically responsible for them — the primary is.

Here is what you can’t do as an authorized user:

  • Change the Primary Cardholder’s Information. As an authorized user, you’re unlikely to be granted your own account management login, which means you can’t change any account-related information without the primary cardholder’s credentials. If the primary account holder trusts you, they could always give you the password — although for obvious reasons that’s not recommended.
  • Close the Account. You’re not authorized to close the entire card account.
  • Redeem Rewards. You can earn rewards on the account, but you can’t redeem them. That’s the primary’s benefit, although they should be happy to spread the wealth.
  • Directly Pay Card Balances. Without your own login for the card account, you can’t directly pay card balances. However, nothing stops you from compensating the primary cardholder for your charges.
  • Take Responsibility for Card Balances. As an authorized user, you’re explicitly not responsible for card balances. If the primary cardholder always pays the bill on time, this is a good thing — you get the benefits of responsible credit use without being personally liable.
  • Disclaim the Primary Cardholder’s Account Activity. On the other hand, you can’t disclaim the primary cardholder’s account activity. Your fates are joined. If they go on a spending spree that they can’t afford, your credit could suffer.

What You Might Want to Do as an Authorized User

Although authorized user status obligates you to none of the following moves, some or all could benefit you.

  • Ask the Issuer to Report Your Authorized User Account to Credit Bureaus. Most credit card issuers report authorized user accounts to consumer credit bureaus, but it doesn’t hurt to confirm with your issuer. Without such reporting, your authorized user account is useless for credit-building purposes.
  • Help the Primary Make Timely Payments. Although the primary cardholder is solely responsible for all card balances, nothing stops you from helping them out if they can’t make a payment on time. Faced with a choice between credit-damaging delinquency or a temporary hit to your bottom line, you should choose the latter.
  • Set Usage and Spending Limits. Consider working out informal usage and spending limits with your primary cardholder with the aim of keeping the account’s credit utilization below 40% or so. Higher credit utilization could be detrimental to your credit score (and the primary’s).
  • Apply for an Entry-Level Credit Card. Leverage your authorized user account’s credit boost to apply for a credit card of your own — probably an entry-level card like the Petal Cash Back Visa Card or a low-limit secured credit card. You don’t want to be an authorized user forever, after all.

Final Word

In the early stages of your credit-building journey, one of the best moves you can make is to snag a supporting role as a credit card authorized user on a friend or family member’s account.

As long as the primary cardholder makes timely payments and you’re able to keep your own spending in check, your status as an authorized user will build your personal credit history and could increase your credit score over time.

Just be mindful of the risks — and remember that credit is a privilege, not a right.

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Source: moneycrashers.com