TIME

6 Surprising Reasons You Can’t Get That Credit Card

Even if you have good credit

Even if you think you have good credit, even if you get a “preapproved” credit card offer in the mail, you can still be shot down when you apply for a credit card. What gives?

Credit experts say there are a few obvious reasons — like blowing off bills regularly or having a recent bankruptcy — that can get you denied. There are also some more surprising reasons why you might have trouble getting a credit card.

You don’t have enough credit. Some people pat themselves on the back for having only a single credit card, or none at all. No credit cards or other obligations like mortgages or car loans, may mean you’re just frugal and really good with your money. But it makes you a cipher to credit card companies. “Lenders prefer being able to review a track record of how a person has managed credit in the past,” the National Foundation for Credit Counseling says. Without that, there’s a good chance they might not gamble on the unknown.

You’re going too fast. “It’s a red flag if a person is attempting to obtain too much credit at one time,” the NFCC says. Yes, this might seem counter to the idea that you need to build up your credit to get more credit. The key, though, is to build that credit history slowly. If an issuer sees that you just got a few new credit cards, they might wonder if you’re going to be able to handle one more.

You fell for that “preapproval” pitch. All that junk mail you get that says you’re preapproved doesn’t mean a thing, says Gerri Detweiler, director of consumer education at Credit.com. “Those offers are prescreened, but when consumers respond, an actual, full screening will take place,” she says. That more extensive look at your finances could catch a red flag the system’s earlier, less in-depth review missed.

You follow the 30% rule. The conventional wisdom is that you should keep your credit utilization ratio — that is, how much credit you have outstanding as a percentage of your credit limit — to 30% or lower. In reality, even a reasonable-sounding 30% might be too high for some skittish lenders. “The lower the utilization ratio the better,” says Curtis Arnold, founder of CardRatings.com. The amount of debt you have makes up 30% of your FICO credit score, so too much outstanding debt compared to your limit (that’s both per card and in the aggregate, FYI) can turn off a lender.

You’re double-dipping. “If you are trying to take advantage of the same bonus offer you already nabbed, your application may be denied,” Detweiler says. On a related note, if you already have multiple cards from the same issuer, you may not be approved for another one, Arnold says, especially if you’re trying to hit up the same bank for a balance transfer deal.

Somebody else messed up. Mistakes happen, and one on your credit report can keep you from getting a card, says Odysseas Papadimitriou, CEO and founder of Evolution Finance. Go to annualcreditreport.com to see your credit report for free. Don’t fall for similar-sounding sites; they might be trying to sell you an expensive credit-monitoring subscription. Go through the report and, if you find a mistake, Papadimitriou says sites like CardHub.com (which his company owns) offer guides for how to dispute credit report errors.

MONEY Investing

Here’s What Americans Would Do First with an Extra $1,000

Stack of money
iStock

MONEY asked you how you'd deploy a $1,000 windfall. Your answers made us laugh, made us cry, and made us proud.

Related: 35 Smart Things to Do With $1,000

Related: 24 Things to Do with $10,000

Related: 13 Things to Do with $100,000

Tell Us: What Would You Do With $1,000?

TIME Innovation

Five Best Ideas of the Day: August 27

1. A reimagined NATO – with rapid response capability – could balance the Putin doctrine.

By David Francis in Foreign Policy

2. Hold the bucket: Focusing on a single disease isn’t a good use of philanthropy dollars.

By Felix Salmon in Slate

3. The Navy’s audacious plan for a new warfighting vessel was too good to be true. The result is a ship that meets none of our needs well. Cancel the Littoral Combat Ship.

By William D. Hartung and Jacob Marx at the Center for International Policy

4. The conventional wisdom is that social media stimulates debate, but self-censorship online actually leads to a ‘spiral of silence.’

By Keith Hampton, Lee Rainie, Weixu Lu, Maria Dwyer, Inyoung Shin and Kristen Purcell at the Pew Research Internet Project

5. Better living through design: Injectable, long-acting birth control will revolutionize family planning in the developing world.

By Heather Hansman in Pacific Standard

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Saving & Spending

The Huge Mistake Most Parents Are Making Now

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Blend Images - Terry Vine—Getty Images/Brand X

Hey kids, hope you’re saving your pennies. They might not have gotten around to telling you yet, but there’s a good chance your parents expect you to fork over your own money to help pay for college. Even if they don’t, there’s a good chance you might have to dig into your own pockets anyway, because even though more parents are setting aside money for their kids’ college funds today, many are still way behind on their savings goals.

A new study from Fidelity Investment finds that just over a third of parents have asked their kids to set aside money to help pay for school, a jump of nearly 10 percentage points in only two years. Keith Bernhardt, vice president of college planning for Fidelity Investments, says there’s a serious disconnect between parents’ intentions and actions.

Even though 85% of parents think kids should kick in something towards their educational expenses, fewer than 60% of those with kids already in their teens have bothered to bring it up, and only 34% have actually come out and asked their kids to contribute.

“With the cost of college rising, it’s increasingly unrealistic for parents to cover the full cost of college,” Bernhardt says. “Families are still struggling. They are on track to save just 28% of their college goal.” Even though more families are saving, and the dollar amounts they are socking away are greater, that 28% is actually a drop compared to previous years.

In spite of these grim numbers, parents today are actually more optimistic about their goals. Respondents told Fidelity they expect to cover, on average, 64% of their kids’ college costs, up from 57% two years ago. What’s more, 44% think they’ll meet these goals, up from 36% in 2007, when Fidelity started conducting the survey.

Most of them won’t, which means today’s generation of kids could be equally unprepared when it comes time to paying for college. “It’s critical that families have open conversations and discuss together how they will approach funding their college education,” Bernhardt says.

Bernhardt calls a dedicated savings vehicle like a 529 plan “a great way for parents to keep their college savings separate from other savings goals.” Today, 35% of parents have a dedicated account for college savings, nearly 10 percentage points more than when the survey began in 2007. About half of the parents in Fidelity’s survey who said they have a plan for retirement savings have a 529 set up, versus only about 10 percent of those who don’t have a savings plan.

Having a strategy for accruing college savings makes a big difference. “Parents with a plan are in better shape with their college savings,” Bernhardt says.

These parents say they’ll cover an average of 71% of their kids’ college costs; those without a plan estimate that they’ll only be able to pay for a little more than half. On average, parents who have planned to save are already almost halfway towards their goal, while those without a plan have only scraped up about 10% of what they want to save. Parents with savings plans have an average of $53,900 socked away, versus the average $21,400 families without a savings plan have amassed.

TIME Saving & Spending

This 1 Mistake Could Cost You Hundreds of Dollars

istock

Read the fine print—or pay

Everybody hates bank fees, but what’s even more worse is not knowing when or why you’re getting dinged with those charges.

In a new study, the website WalletHub.com finds the average checking account has 30 different fees that can ding you, and banks aren’t always transparent about the details. “Some banks disclose their fees only after a customer has opened an account,” the site warns. “Others disclose their fees in inconspicuous sections of their websites.”

In particular, those $35 overdraft fees that can be triggered by buying something as small as a cup of coffee can really pack a wallop, yet many of us don’t bother paying attention to the fine print that spells out the details of how financial institutions process transactions. We should, though — a new interactive tool from the Pew Charitable Trusts shows how seemingly insignificant differences in transaction-processing practices can make the difference between having enough money in your account to tide you over until your next payday or getting socked with more than $100 in fees.

Pew looks at three different variables: Letting people overdraw their balances when they make purchases or ATM withdrawals versus declining these attempts, processing transactions in the order they happen versus in order of highest-to-lowest dollar amount and offering a $5 “grace period” threshold before an overdraft fee kicks in versus no threshold.

In a trio of scenarios, Pew follows three hypothetical customers in a scenario many Americans are all too familiar with: navigating the demands of daily expenses with less than $200 until the next paycheck comes. In each case, everything is identical for the variable under scrutiny.

The differences are huge. For instance, a customer whose bank processes transactions in the order they happen winds up getting hit with a single $35 fee — while her alter ego who banks with an institution that practices high-to-low transaction ordering gets nailed for FOUR $35 fees when conducting the exact same transactions.

The other two examples show a similar disparity. For many of us, the difference between ending the month 10 bucks in the black versus more than $80 in the red is huge, especially if our spending habits are such that this happens frequently.

Consumer advocates criticize banks for their overdraft practices, pointing out that the customers who pay the bulk of these charges tend to be younger, minority customers who are poorer to begin with and often don’t have the financial education to know a raw deal when they see one. Fewer than 10 percent of bank customers are responsible for three-quarters of overdraft charges, according to the Consumer Financial Protection Bureau. “[This] is especially pertinent as the CFPB continues to study overdraft and will release new rules based on these studies in 2015,” Pew says.

The CFPB says it’s still looking at how these fees impact bank customers. “We need to determine whether current overdraft practices are causing the kind of consumer harm that the federal consumer protection laws are designed to prevent,” CFPB director Richard Cordray said in a statement last month, saying the agency’s most recent research “compound[s] our concerns” about whether overdraft practices leave vulnerable customers at risk.

Until the CFPB acts, it’s buyer-beware out there, so don’t forget to read the fine print.

TIME Money

Bank of America To Pay Record $16.65 Billion Fine

Bank Of America Reports Loss Due 6 Billion Dollar Legal Charge
Spencer Platt—Getty Images

$7 billion of it will go to consumers faced with financial hardship

Updated: 10:14 a.m.

The Justice Department announced Thursday that Bank of America will pay a record $16.65 billion fine to settle allegations that it knowingly sold toxic mortgages to investors.

The sum represents the largest settlement between the government and a private corporation in the United States’ history, coming at the end of a long controversy surrounding the bank’s role in the recent financial crisis. In issuing bad subprime loans, some observers say, the bank helped fuel a housing bubble that would ultimately burst in late 2007, devastating the national and global economy.

“We are here to announce a historic step forward in our ongoing effort to protect the American people from financial fraud – and to hold accountable those whose actions threatened the integrity of our financial markets and undermined the stability of our economy,” Attorney General Eric Holder said at a news conference announcing the settlement.

Since the end of the financial crisis, the bank has incurred more than $60 billion in losses and legal settlements. Of the latest settlement, $7 billion will go to consumers faced with financial hardship. In turn, the bank largely exonerates itself from further federal scrutiny.

However, not all is forgotten. The New York Times reports that federal prosecutors are preparing a new case against Angelo Mozilo, the former chairman and chief executive officer of Countrywide Financial, which Bank of America acquired in mid-2008. As the country’s largest lender of mortgages, Countrywide Financial purportedly played a large role in distributing toxic loans. Mozilo has already paid the Securities and Exchange Commission a record $67.5 million settlement.

TIME How-To

3 Apps That Actually Pay You Money

fronto
Fronto

“Earn extra money simply by doing the things you do every day!”

Let’s be honest: You have good reason to be skeptical of “free money” claims. But there really are a small handful of legitimate advertising-powered smartphone apps that offer you money in exchange for being able to advertise to you.

That’s right, the following three apps won’t save you money — they’ll actually pay you money. None of them will make you a millionaire, but they could put an extra $20 or more in your pocket each and every month. And that’s not too bad just for playing around with your smartphone, right?

Fronto

Would you subject yourself to extra advertising if it meant more money in your pocket? If the concept seems appealing to you, check out the Android app Fronto.

Fronto works by placing ads and curated links to content on your smartphone’s lock screen. Every time you interact with this content, you earn points. Unlock your phone while an advertisement is being shown, for example, and you might earn 20 points. Download an app that Fronto suggests for you, and you might earn 100 or more. Fronto also doles out points for referring friends.

Points do take a while to accumulate, especially if you don’t take Fronto up on any of its special offers. But that’s okay – here, it’s worth the effort. Every 25,000 points can be exchanged for $10 in cold, hard cash, payable directly to your PayPal account.

You can download the free Fronto app on Google Play.

Perk

Want to take your earnings beyond the lock screen? Then check out Perk, a series of apps, browsers, search tools and more that converts virtually everything you do on your phone into points, redeemable for cash.

There are a lot of different apps in the Perk universe: Perk Shopping, Perk Search, Perk Screen, Perk Browser, Perk TV and Perk Pop Quiz. Each offers a function along with a small reward for using it. Search using Perk and you’ll get a few points. Watch an ad on Perk TV and you’ll get a few more. Buy something on 1-800-Flowers and other similar retailers via the Perk Shopping app and you’ll earn a ton.

Like with Fronto, Perk points can be redeemed for cash via PayPal. You’ll get the most bang for your points by redeeming them for gift cards instead. Minimum payouts with Perk are $5.

You can find out more about and download the Perk family of apps at Perk.com.

Shopkick

shopkick
Shopkick

Walking around your local mall may be a good way to get a little extra exercise, but it can also be a way to get a little bit of extra money, too. That’s the idea behind Shopkick, an app that rewards you simply for visiting stores.

When you open the Shopkick app at your local mall (or really, whenever), you can see a list of nearby stores that are willing to offer you “kicks” (points) just for walking through the doors. Most of the stores tempting you with points are the type you might walk into anyway, like Walmart, Macy’s, Target or Crate & Barrel. Once you’re in the store, the app might offer you a few challenges (e.g., find and scan a certain item) to earn bonus points. You can even link a credit card to the app to earn points for completing a purchase in-store.

You can rack up enough points to get a reward in a single trip, given the right mall. The minimum reward with Shopkick is a $2 Target gift card, yours for redeeming just 500 points.

You can get the free Shopkick app for iOS via the Apple App Store and for Android via Google Play.

This article was written by Fox Van Allen and originally appeared on Techlicious.

More from Techlicious:

TIME Virtual Currency

How Bitcoins Could Put Your Finances at Risk

Virtual currencies could cause you to lose "real" money, according to a new report

+ READ ARTICLE

The Consumer Finance Protection Bureau released a report Monday concluding that virtual currencies, such as Bitcoin, offer less protection than regular currencies and can be vulnerable to outrageous mark-ups, online scams and hackers.

In addition to publishing the report, the bureau has also added a virtual currency section to their complaint page where people who have run into problems with Bitcoin or other similar currencies can register their issues.

According to Bitcoin.com, there are more than 13 million units of virtual currency around the world.

TIME Earnings

U.S. Banks Have Reached Near-Record Profit Levels, Study Says

U.S. Stocks Fluctuate Amid Deal Activity After S&P 500 Record
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, June 9, 2014. Bloomberg—Bloomberg via Getty Images

In the second quarter of 2014, banks had the second-highest profit levels in 23 years

Six years after the financial crisis, profits at U.S. banks have reached near-record levels, according to a new study.

Income at U.S. banks reached $40.24 billion in the quarter of 2014 that ended June 30, according to research firm SNL Financial. That’s the second-highest quarterly level for the banking industry since SNL began collecting banking profitability data in 1991.

“The second quarter was an inflection point in the profitability story for banks,” SunTrust analyst Eric Wasserstrom told the Wall Street Journal. “The bad is starting to bottom out, the good is starting to gain momentum.”

The only more profitable period for American banks was during the first three months of 2013, when net income reached $40.36 billion. The third most profitable period was at the end of the real estate and mortgage boom during the last quarter of 2006, when banks made $40.21 billion.

 

TIME Security

The Government Is Trying To Explain Bitcoin to Normal People

US Government Issues Bitcoin Warning
A customer purchases bitcoins from the BMEX bitcoin exchange's Robocoin-branded ATM in Tokyo, Japan, on Wednesday, June 18, 2014. Bloomberg via Getty Images

Stepping into the Bitcoin market is like "stepping into the Wild West"

An independent government agency issued an exhaustive warning Monday about the risks of virtual currencies like bitcoin in an attempt to explain cryptocurrencies to the uninitiated.

The 6-page walkthrough from the U.S. Consumer Financial Protection Bureau outlined several of bitcoin’s potential dangers, including vulnerability to hackers, limited security, excessive costs and scams. It also announced a system that accepts virtual currency complaints. Though virtual currencies have become increasingly integrated into society, with states, companies, political organizations and even schools approving their use, the Internal Revenue Service has not granted it legal tender status in any U.S. jurisdiction.

“Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the market,” CFPB Director Richard Cordray said in the statement.

Bitcoin risks, the CFPB said, include hackers who steal users’ private keys—the password to your digital wallet—using viruses and other malware. Unlike banks or credit unions, in which deposits are protected by federal agencies in case of failure, bitcoin isn’t insured by any government agency. If you lose your bitcoin stash, then “you are own your own,” the CFPB warns, and “there is no other party to help you.” Some digital wallet companies promise reimbursements for fraudulent transactions, but if there’s a widespread fraud event, it would probably be hard for most of these firms to come through on that promise. So what’s a bitcoin user to do?

“Read your agreement with your wallet provider carefully,” the report states. “Really, read your agreement with your wallet provider carefully.”

The report also tries to clarify bitcoin ATMs, which the CFPB points out don’t actually spew out bitcoin. Rather, the ATMs allow you to insert cash to be transferred into bitcoin to be moved into your digital wallet. The ATMs’ transaction fees may run as high as 7% and exchange fees $50 more than what you’d get elsewhere — and perhaps even more given bitcoin’s high volatility, the warning said.

The CFPB additionally warned customers of scams enticing users to invest bitcoin on the promise of high interest rates and no risk. In actuality, their bitcoin may be funneled into something else entirely, like someone’s food, shopping and gambling habits. The U.S. Securities and Exchange Commission previously warned of these so-called Ponzi schemes involving virtual currencies, and noted that such “fraudsters are not beyond the reach of the SEC just because they use bitcoin or another virtual currency.” And while the SEC’s authority provides some comfort, there’s generally few safeguards for average folks who step into the so-called Wild West without their guns and bugles.

Moral of the story? Using bitcoin may have its benefits, but don’t let it be your fool’s gold. Because “if it’s too good to be true,” the report said, “it just may be.”

 

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