Best Credit Cards for Bad Credit

Creditors hear a lot of interesting stories from applicants with low credit scores:

You lost your job and couldn’t pay the student loan for a few months.  You thought you’d gotten a deferment but were too busy job hunting to find out for sure. 

Then your roommate moved out without paying the bills that were in your name.

And most of the time, creditors don’t care.

Your credit score — that little 3-digit number — has already answered the only question they ever wondered about your life.

Even the most convincing explanations won’t slow the denial message, which is frustrating for applicants with bad credit.

Credit cards can help rebuild your credit, offer advantages like cash back, make booking hotel rooms easier, or bail you out if your refrigerator goes out or your muffler falls off.

Guide to Credit Cards with Bad Credit:

1. How Bad Credit Affects Approval
2. The Downsides
3. Best Credit Cards
4. Tips to Improve Your Credit Score 
5. Should You Use a Credit Card to Rebuild?

How Bad Credit Affects Credit Card Approval

Wouldn’t it be great if credit card companies understood and made special exceptions to help people out?

As most of us already know, that’s not typically how credit works. Credit cards are backed by banks, and banks have rules for a reason.

Statistically speaking, someone with a low credit score is more likely to default on a credit card.

Since banks usually make unsecured loans when they issue most credit cards, they have little recourse if you don’t pay.

They can’t repossess what you bought the way a car dealership could. All they can do is hurt your already hurting credit score.

You can find a few exceptions, though. If you look around enough, you’ll find some credit cards specially designed for applicants with bad credit.

The Downside of Credit Cards with Bad Credit

There’s no magic bullet, though. While your odds of getting approved for one of the cards below may be high, expect some trade-offs:

• Higher fees: Someone with good credit can shop around for cards with no or low annual fees. Not so if you have bad credit. Expect to pay some of the highest fees out there.
• Higher interest rates: You’ll see ads about low or no interest for a set number of months with some credit cards. Cards for people with lower credit scores tend to charge the highest interest rates.
• No perks: Looking for features like cashback on purchases or points toward plane or movie tickets? You’ll need to wait until your credit score climbs back into “good” or “great” territory. Even if you can find a card for applicants with bad credit that offers cashback, your rewards won’t make up for the high fees.
• No balance transfers: If you’re looking for relief from other out-of-control credit card balances, look elsewhere because these cards don’t allow balance transfers.
• Low credit limits: These cards tend to start out in the $300 to $500 range with the possibility of increasing to $2,000 after a year of keeping the account in good standing.
• Paying a security deposit: Some of these cards may surprise you by asking for a security deposit. This isn’t necessarily a bad thing. By paying a deposit you may be able to reduce some of the high fees and interest rates since your creditor will be taking less of a risk.
• Having a checking account: Most new credit card accounts now require cardholders to pay bills online, which means you’ll need a checking account. Cards don’t usually allow you to pay a balance using another credit card.

Best Cards for Bad Credit

Looks pretty grim, doesn’t it? You may be wondering whether you should even consider getting a card like this.

I can think of one really good reason to go this route: To speed up your credit rebuilding process.

If you’re serious about rebooting your credit score so you can flex your borrowing muscles in the coming years (think new house or car), these cards can help:

1. Total Visa

First, the good news: You can qualify for a Total Visa credit card with a credit score as low as 300, and you’ll get an instant decision on whether you qualify.

Now for the not-so-good news: You’ll have to spend some money up front to get this card, and you’ll have to pay an annual fee to keep it.

Fees include:

• Application fee: Processing your application will cost $89. So don’t apply unless you know for sure you want the card and have a credit score of 300 or higher.
• Initial annual fee: A $75 annual fee that kicks in when you open the account.
• Ongoing annual fees: The annual fee goes down to $48 the second year, but a $6.25 monthly fee also begins.
• Late fees: Like most cards, you’ll be hit with a fee if you don’t pay your minimum balance on time. The fee for Total Visa will not exceed $38.

These fees may seem steep because, well, they are.

But when you have bad credit, you have fewer options from creditors. You’ll have to decide whether having the card will be worth the money.

Another disadvantage to a Total Visa Credit Card is its low credit limit. Normally the card starts with a $300 limit, minus the $75 annual fee, which means you’ll initially have only $225 in spending power.

Is that enough to make getting the card worthwhile? Not necessarily, if you’re getting credit to have in case of an emergency or to do a little more Christmas shopping than you can afford.

It could be worth it, however, if you’re working to rebuild your credit.

Improving your credit score includes making payments on time and having open credit accounts. This card can help give you the opportunity to make regular payments.

Someone working to improve a credit score should pay off the card’s entire balance every month. This approach will also help you avoid Total Visa’s high annual percentage rate of 29.99 percent.

At that rate, a card’s balance can get out of control pretty quickly if you don’t stay ahead of it.

2. FIT Mastercard

Looking for a little more spending power than the Total Visa?

Mastercard’s FIT program offers a $500 initial credit limit. Depending on whether you make regular payments for a year, you can get a credit limit increase to $2,000 after the first year.

Other than the higher spending limit, FIT Mastercard behaves a lot like Total Visa. You should have at least a 325 credit score to apply.

Unlike Total Visa, you won’t need to pay an application processing fee just to apply, but expect higher annual, then monthly, fees:

• Processing fee: If approved, you’ll be charged an $89 processing fee for your application.
• Annual fee: Fit Mastercard’s $125 annual fee for the first year is higher than Total Visa’s $75 annual charge. The fee goes down to $96 the second year.
• Monthly fees: After the first year, you’ll pay $10 a month, $3.75 more than Total Visa’s monthly fee.
• Late fees: Miss a payment? Expect up to $38, and remember you’ll pay interest even on fees. Fit Mastercard charges 29.99 percent.

Just like with Total Visa, you as the consumer should decide whether opening a Mastercard Fit account helps you. It can offer more spending power than Total Visa, but once again you’re starting in the hole because of the card’s high fees.

This card works best for someone trying to rebuild credit. Having an open account in good standing looks good to credit agencies.

Again, just be sure to keep the card’s balance paid off. At nearly 30 percent interest, the Fit Mastercard can get out of control if you let it.

If that happens, your credit score will probably get even worse.

3. Reflex Mastercard

The Reflex Mastercard, another credit card for applicants with bad credit, works almost exactly like the Fit Mastercard. It’s likely you’ll get approved for the card, either with an unsecured or a secured account requiring a deposit.

Your spending limit will start out at $500, and a chunk of that amount will go to your initial fees:

• Annual fee: Like Mastercard Fix, expect a $125 annual fee for the first year and a reduction to $96 at the beginning of year two.
• Monthly fees: Also like Fit, Reflex Mastercard charges $10 a month after the first year, which equals $120 a year.
• Late fees: The same $38 late fee applies, as does the high annual interest rate of 29.99 percent.

As with other credit cards for people with bad credit, the question becomes not whether you can get approved but whether you should. After getting approved you’ll face a three-digit balance to cover the annual fee, leaving $375 as an available balance.

So you wouldn’t be getting much of an emergency fund with a card like this. You would, of course, be getting a way to improve your credit score.

The Reflex Mastercard, like the Fit and the Total Visa, reports to the three credit agencies each month.

Getting the card, managing to pay off the fees and keep the balance paid down, would be a first step to rebuilding your credit score.

After a year, your credit limit could increase as high as $2,000. With the card’s high fees, though, you may want to consider another card at that point if your credit has increased enough.

4. First Access Visa

Applicants with bad credit, even scores in the low 300s, can often get approved for a First Access Visa. This card works a lot like the Total Visa card we’ve already discussed.

You’ll pay an $89 application processing fee just to apply. If approved, you’ll also pay:

• First annual fee: The card charges its initial $75 annual fee as soon as the account opens.
• Ongoing annual fees: The $75 annual fee goes down to $48 beginning in year two, but you’ll also pay a $6.25 fee each month beginning in the second year.
• Late fees: First Access Visa will charge up to $38 if you’re late making a payment.

Like Total Visa, expect a low initial opening limit of $300, $75 of which will be tied up in the initial annual fee.

No, it’s not a lot of spending power, but it can be a step toward a more stable credit score if you pay the balance down each month and avoid the 29.99 percent interest.

This card has been known to allow credit limit increases after six months of keeping the account in good standing.

First Access Visa reports to the three major credit bureaus each month, so you’ll get quicker results improving your credit score as long as you keep the card up to date.

5. Surge Mastercard

This card also fits the same mold: It’s accessible to people who are rebuilding their credit scores, but it costs money to open the account and to keep it open:

• Annual fee: Surge Mastercard charges a $125 annual fee which lowers to $96 the second and subsequent years.
• Monthly fees: Expect an additional maintenance fee of $10 a month ($120 a year) beginning the second year.
• Late fees: The card charges up to $38 for late payments and 29.9 percent interest, like most cards for people who are rebuilding their credit.

You can get up to $500 spending power when you open the account, but remember $125 will be already spent on the annual fee.

The main reason to apply for a Surge Mastercard, like any of the other cards we’ve reviewed in this post, is credit rebuilding.

Rebuilding your credit score can lead to a lot more opportunities for building a more stable financial future. Let’s get into that next.

Tips to Improve Your Credit Score

Benefits of Improving Your Credit Score

People with bad credit often consider their personal finances a lost cause. You may wonder if it’s worth it to bother improving your credit score.

Having a solid credit history has some obvious advantages:

• Higher credit limits: The better your score the more you can borrow.
• Lower interest rates: Higher credit scores mean creditors will take less of a risk lending you money, so your interest rates can be lower.
• Lower payments: Borrowing at better terms means you can usually get lower payments on a home loan or a car loan.
• Ability to shop for loans: When you’re an ideal candidate for a loan you can shop around to get the best deals on a credit card or secured loan.
• Ability to help others: If your kid wants to buy a car and has no credit history, wouldn’t it be nice if you could help by co-signing? If you have bad credit you won’t be much help there.

On top of those reasons, most insurance companies now consider your credit score when you apply for coverage: life, auto, and home insurance rates tend to be lower for people with higher credit scores.

Why? Because research has shown people with high credit scores tend to file fewer insurance claims.

Your credit score can also impact your ability to open a bank account or rent a new apartment.

When you sign up for public utilities such as electricity or water, people with lower credit scores often need to pay higher security deposits.

How to Improve Your Credit: Slow and Steady

When you have bad credit you have two options:

• Wait a decade or so until the bad marks age off your score: Depending on when your creditors give up and write off your debt, you may only have to wait eight years or so. At that point, you’ll have limited credit.
• Take action to add some good to the bad: You can recover sooner by giving the credit bureaus something good to digest, like making regular payments or having some available credit.

If you decide to take action, the credit cards on this page can help. They’ll give you an opportunity to show the credit bureaus that you’ve changed your ways.

It’s not all about having a credit card, though. Credit bureaus consider several factors when they calculate your score:

• On-time payments: Paying all your bills on time, including credit cards, makes up a sizeable chunk or your credit score.
• Outstanding debt: How much you owe matters, which is why paying off your credit cards each month or as often as possible helps your score.
• Available credit: If you have a $2,000 credit limit on a card but you’re using only $50, the credit bureaus take note — another reason to pay off those balances.
• New credit inquiries: Usually, applying for credit can lower your score a bit, so don’t apply for every card on this list.
• Balance of account types: Having a variety of open accounts impresses the credit bureau algorithm gods. So mixing in a credit card can help. If you already have four or five credit cards, back off a little.

Yes, it’s a lot to think about, but now you can get an app to do a lot of the thinking for you. Look into an app like Credit Karma, one of my favorite tools, to help you improve your credit score.

These apps keep your credit score at your fingertips and they analyze your score to make recommendations for ways you can improve it.

An added benefit to keeping an eye on your score with an app: If your score changes drastically, you’ll know it right away.

A fast-changing score could mean a lot has changed in your life, but it could also mean someone else is using your identity.

The sooner you know, the sooner you can report the fraud and limit its damage.

Should You Use a Credit Card to Rebuild?

Banks issuing credit cards to people with bad credit may seem like they’re doing you a favor. Closer inspection shows you’re paying enough in fees and deposits to remove much of the bank’s risk.

How you view these credit cards makes a huge difference:

• If you’re looking for spending power, these cards won’t help much, and I’d stay away from them.
• If you’d like to reboot your credit history, they can help and be worth your while.

Credit cards for people with bad credit won’t solve all your credit problems. In fact, they can make things worse if you don’t keep the account current.

But if you’re determined to improve your score, they can speed things along. Yes, the fees and terms are unattractive. But if they lead to a more stable financial future, they may be worth it.

The post Best Credit Cards for Bad Credit appeared first on Good Financial Cents.

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Best RV Insurance Available for 2019

No matter how well you plan it, your next RV adventure could include something unexpected.

And that’s OK. You’re on the road in an RV to escape your work clothes, your alarm clock, and those rambling staff meetings.

Why not make some unplanned stops and meet some new friends?

Sometimes, though, the unexpected isn’t so pleasant:

• collisions on the highway could injure you or your passengers and damage your RV
• you could be held responsible for damages or injuries to other drivers, or
• bad weather could destroy your RV while you’re far from home

This is why you may want to spend just a little time finding the best RV insurance you can before you spend a LOT of time on the side of the road.

Guide to the Best RV Insurance:

1. Types of RVs
2. Why RV Insurance
3. Types of Coverage
4. Class A, B, and C
5. Campers/Trailers
6. RV-Specific Insurance
7. Add-Ons
8. RV Renters
9. Save On Premiums
10. Best Providers

 

A mechanical breakdown, or even just a flat tire, could leave you stranded. An injury at a campsite could leave you responsible for someone’s medical bills.

Yes, these perils could stall your adventure, but more importantly, they can cost thousands of dollars and risk the money you’ve already invested in your RV.

So before you step on the accelerator, let’s learn about the insurance coverage you would need to protect yourself from these unexpected curves down the road.

If you’re already an experienced RVer, check your current policy to be sure it’ll protect you the way it should.

Even if your state doesn’t require your RV to have its own insurance policy, you should consider getting enough insurance to protect your investment and cover your liability.

First, The Different Types of RVs

Other than a brief blip during the Great Recession, the number of RVs on the road has steadily increased for the past 20 years.

You could attribute this increase to the obvious — that RVing is cool and lots of fun — but there’s a more statistical explanation, too:

RV manufacturers have done a great job making a wider variety of RVs, campers, and trailers, which has allowed more people to join the fun.

Roaming the great outdoors with your indoor comforts in tow no longer requires a life-changing commitment. Your RV type also has a direct impact on the kind of insurance coverage you’ll need, so let’s start there.

Two Main Types of RVs

Let’s break this down as simply as possible. There are two main types of RVs: RVs with steering wheels, also known as Motorhomes, and RVs you pull behind another vehicle, which we also call trailers or campers, or in some cases, Toterhomes.

Each type of RV calls for its own approach to insurance coverage.

You could add some towable RV models to your existing auto insurance policy, but a motorhome will need its own policy, mixing elements of homeowners and auto coverage.

Of course, RVs are too complicated to be confined by this neat little breakdown. Some towable RVs are bigger and more expensive than some motorhomes.

We’ll need to dig a little deeper into these broad categories to find out for sure what kind of coverage you need.

Three Types of Motorhomes

First, let’s look at motorhomes, the castles of the RV world. They’re huge, comfortable, and all-inclusive, and since you can drive them, they need their own insurance policies.

Not all motorhomes are created equally, though.

• Class A Motorhomes: If you’ve passed one of these guys on the highway, it probably took a minute or two. They’re huge — up to 75 feet long — and they can include all the comforts of home, from plumbing to an entertainment center. You can spend half a million dollars on something like this.
• Class B Motorhomes: Many Class B motorhomes could pass for a beefed-up van. The ceiling is usually raised to help passengers move around more easily, but space is at a premium. The price range here runs from $50,000 to $150,000 depending on amenities.
• Class C Motorhomes: Class C motorhomes cover the middle ground. They’re bigger than Class B models and are usually built on a truck chassis. They often have sleeping quarters above the driver’s cab, giving them a distinct look. You’d likely spend $100,000 to $200,000 on one.

The Wide Array of Towable RVs

If you thought motorhomes came in a variety of colors and flavors, wait until you see the variety of RVs you can attach to your SUV, pickup, or even sedan.

The list, which seems to grow every few years, includes:

• Conventional Travel Trailers: Think Motorhome without the motor: your pickup or SUV provides the power. Conventional travel trailers can be up to 35 feet long and sleep about 10 travelers. This can easily be a 6-figure investment.
• Fifth-Wheel Trailers: These guys look more like Class C Motorhomes with the bi-level layout. The higher level up front hitches inside the bed of your pickup. These typically sleep up to 6 and cost up to $150,000.
• Folding or Tent Trailers: If you’re looking for something easier to tow yet large enough to provide a little comfort on the road, a folding or tent trailer may be for you. About 6 people could probably sleep in one of these, but you’d want to plan on outdoor living for the most part. Expect to spend up to $30,000.
• Expandable Trailers: An expandable trailer works a lot like a folding or tent trailer, but you can expect more durability and protection from the elements since the hard-sided trailer itself expands. Prices can climb toward $50,000.
• Truck-Bed Campers: Take towing out of the equation by turning your truck bed itself into living space. These can be surprising elaborate and comfortable, sleeping up to 6 and costing up to $50,000.
• Teardrop Trailers: If you’ve seen one of these you know what inspired the name — they’re small and curved like a drop of water. If you’re traveling alone or as a couple, a teardrop trailer may do the job. You may even be able to tow it behind a mid-size car. You can find one for a few thousand dollars or spend well into the $30,000s depending on your tastes.

Why You Need RV Insurance

Traveling the countryside with your own personalized hotel room in tow should be fun and relaxing.

But like any kind of adventure, RVing does not always play out as imagined.

We can’t control everything, and there’s a chance you could face perils such as:

• Crime: The typical RV carries valuables — food, electronics, small appliances, tools, cash, firearms, jewelry — making them targets for seasoned burglars. Common sense precautions go a long way, but sometimes you’re just in the wrong place at the wrong time.
• Weather: Out there in the elements, expect to deal with… well, the elements. Most likely you’d reschedule a trip to avoid a hurricane or a tropical storm. But tornadoes and even common thunderstorms can do a lot of damage, and these storms can be harder to predict.
• Accidents: A car crash while on vacation is bad enough. A crash that also damages your living quarters can ruin any plans for adventure. You may even be stuck in a faraway place while you make other arrangements.
• Personal injuries: Since your RV can function as a home, it’s a place where you, your family, a friend, or even a random person wandering a campground, can be injured.
• Breakdowns: Even well-maintained equipment can fail. If your RV won’t start (or if the AC goes out or the expandable camper won’t expand) you may be looking at a big repair bill and a lot of hassle before you can get on the road again.

Insurance exists to protect your financial investment if something goes wrong and to protect you from being personally liable for accidents you legally caused.

If a wreck or a storm damages your RV, if a thief cleans it out, or if someone gets injured, for example, your policy should help pay for it. Whether your policy will cover all, some, or none of your losses depends on the coverage you have in place.

Most insurers also offer extras such as towing, roadside assistance, or even help paying for a hotel (use a hotel card, of course) if you can’t stay in your RV because it’s damaged.

Let’s look at various kinds of RV coverages to find out what you need.

What Kind of RV Coverage Do You Need?

To understand RV insurance it’ll help to first refresh our knowledge of car insurance.

Though you pay your auto insurer one payment, you’re actually buying several different policies:

• Liability: If you caused a wreck, this coverage should pay for the other driver’s auto repairs and medical bills. (It should also cover the other car’s passengers’ medical bills.)
• Collision: This would pay for your own repairs if you legally caused the wreck. (If you were not at fault, the other driver’s coverage should pay.)
• Comprehensive: For damage not related to a collision. Hail damage, theft, vandalism, and such.
• Medical payments: Also called MedPay, this coverage can help pay your medical bills if you caused a wreck. (If you’re not at fault the other driver’s liability should cover your medical bills.)
• Personal Injury Protection: Especially for states with no-fault accident policies, this coverage will pay for your own medical bills even if someone else hit your vehicle.
• Uninsured or underinsured coverage: If the other driver is at fault but has little or no insurance to pay for your repairs and medical bills, you can carry this coverage to help protect yourself.
• Extras: Many insurers offer AAA-style benefits such as roadside assistance, towing, and help finding alternative accommodations.

Having great auto coverage depends on finding the right mix of these coverages to match your car and your situation.

Your RV insurance should work similarly. You’ll need to take a look at each of these coverages and decide how much coverage to buy.

Your RV type and frequency of use will determine a lot about your coverage, and we’ll get into that below.

• If you’re buying a bonafide Motorhome — Class A, B, or C — you have the most to lose, and every state requires you to carry insurance to protect yourself and other drivers. We’ll look at this coverage first.
• If you’re buying a travel trailer or something simpler, your state probably will not require you to be a separate policy for your RV. It’s up to you to make sure you’re covering your investment and liability. (Your lien holder may require you to have a minimum amount of insurance.) We’ll get to that in a bit.

Insuring a Class A, B, and C Motorhome

Let’s face it. You can do a lot of damage with an RV, especially a Class A Motorhome which can be up to 75 feet long.

Any Motorhome, whether Class A, B, or C, is a moving vehicle and must meet your state Department of Transportation’s insurance requirements.

Just like with a car, you’ll need to address:

Liability

If you collide with another vehicle on the highway, or even in a parking lot, and investigators determine you were at fault, you’ll be personally responsible for the other driver’s injuries and for the damage to the other vehicle.

In an RV, you also have to consider liability while you’re parked. Someone could trip on a power connector and land on a hot grill, suffering second-degree burns, for example.

Whatever the case, if you don’t have enough liability insurance coverage, you will be personally responsible to pay the damages out of pocket.

If you can’t pay, a judge can order your assets be seized to compensate the people you’ve inadvertently harmed.

Your state will have a minimum liability coverage requirement, but some states’ limits just aren’t high enough to protect you from financial losses if you have an at-fault accident.

State limits also don’t always reflect the reality of RV living. They usually consider only on-the-road liabilities.

A lot of financial advisors suggest carrying enough liability coverage to cover your financial assets, regardless of what your state requires.

If you have $50,000 in the bank and own a $150,000 house, for example, make sure your insurance can cover $200,000 in liability.

If you’re worried about having enough liability coverage, ask your agent about an umbrella policy which pools liability coverages from a variety of policies: RV, home, auto, etc.

Collision

Collision, of course, covers damage to your own vehicle if you have an at-fault wreck while driving your RV. How much coverage you need depends in part on your lien holder.

If you’ve financed the RV, the bank or another creditor will want your policy to protect its investment. If you bought the RV outright, it’s up to you to decide whether you want to protect your purchase.

I recommend carrying at least some collision unless you have the financial flexibility to pay for expensive repairs. Even then, why pay out of pocket for expensive repairs when you can find affordable collision coverage?

Comprehensive

Comprehensive coverage pays to fix damages from perils other than a wreck:

• vandalism
• hail
• theft
• etc.

Just like with your collision coverage, your lien holder may require comprehensive in case someone steals your RV or something happens to damage its value.

Why do banks care about this?

If you failed to pay and the bank repossessed the RV, it would need to sell the vehicle. An RV in great shape brings a higher price. Basically, the bank wants to prevent future losses.

If you’ve paid outright or have paid off the RV, you have more freedom to decide about comprehensive.

However, losing the RV and everything in it to theft or a tornado would be a sad, sad day. It would be even worse if you couldn’t file an insurance claim to help pay you back for your losses.

That’s why an RVer needs to pay special attention to comprehensive coverage. In many ways, your comprehensive coverage should serve as a homeowners policy for your home away from home.

Or, if you’re a full-timer, you are essentially buying homeowners coverage and will need to give the purchase some close scrutiny.

We’ll get into some of those nuances below.

Other Coverages In Your Policy

MedPay: In most states whether you buy medical payment insurance to cover your own medical bills after an accident depends on you.

If you have solid health insurance you may not need to add this coverage to your RV policy. If you’re not so sure how much your health insurance would pay if you had an at-fault wreck, I’d consider adding MedPay.

If someone else causes the wreck his or her insurance should help pay for your medical bills. Unless, of course, the other driver doesn’t have enough insurance.

Uninsured or underinsured coverage: Getting coverage to fill in the gap if someone without insurance (or without enough insurance) collides with you can help prevent losses.

About 20 states require this coverage, and your independent agent (or captive agent) will let you know whether your state requires it.

If your state doesn’t require it, you can still opt in.

Personal Injury Protection: Ask about this coverage if you live in a no-fault state, especially if you don’t have good health insurance.

Insuring a Trailer or Camper

Though it may be bigger than a motorhome, your camper or trailer (also known as a Toterhome or towable RV) is not a vehicle.

As such your state will not require you to insure it. However, your lien holder will have other ideas.

If you owe money on your camper, the bank will want it adequately covered against losses in value, just like your mortgage company wants to know about your homeowner’s policy.

And most importantly, you’ll want to protect your own investment. Insurance exists to protect you from losing your hard-earned property.

An Endorsement Isn’t Enough

When you buy a towable RV and call your friendly auto agent, he or she may suggest adding an endorsement to your auto policy to cover the RV when you’re towing it.

An endorsement may be enough to protect a teardrop camper or a small folding camper while it is tethered to your insured motor vehicle.

An endorsement will not protect your investment in a travel camper or trailer, and it won’t address the liability issues connected to how you use your RV.

In other words, it’ll help cover the ‘V’ part of RV, but not the ‘R.”

To get fully protected, you’ll need an RV-specific policy, just like you would with a Motorhome.

RV-Specific Insurance Options Protect You Best

So let’s review:

A Motorhome has a motor so it needs on-the-road coverages like a car: liability, comprehensive, and collision in case you have an accident. MedPay, uninsured/underinsured motorist, and Personal Injury Protection coverages may be required, too.

A towable RV does not need these on-the-road coverages. Instead, you’ll need these coverages on the vehicle you’re using to tow your RV.

But remember: State laws exist to protect other drivers from damages you may inadvertently cause, not to protect your investment.

While it may meet the legal requirements, a simple auto policy for your motorhome, or an auto policy endorsement for your towable camper, will not necessarily protect your investment or shelter you from out-of-control liability.

For that kind of protection, we need to look at RV-specific insurance policies.

Full-Time Coverage For Full-Timers

Some people take RVing to the extreme and live in their vehicle year-round. The most committed RVers do not even own or rent a stationary home.

Their RV is their home. If you plan to use your RV for six months a year or more, you’ll need Full-Time RV Insurance.

Full-time coverage combines elements of a homeowners policy and an auto policy. You’ll be covered as a vehicle while in motion and as a home when roadside or at a campsite.

The homeowners-style coverage includes liability for personal injuries that happen in the RV and on the property the RV occupies, even though the policyholder doesn’t actually own the property.

Yes, you could possibly strengthen your comprehensive coverage on an auto-style Motorhome policy to address this reality. But, keep this in mind as you weigh options:

An insurance company can deny a claim if it didn’t know you were living in the RV full time. Insurance companies write policies based partly on how you plan to use the RV.

By getting Full-Time RV Insurance you’re declaring your intention to use the vehicle as your home. Since not all insurers offer full-time coverage, you can also narrow down your list of potential insurance carriers this way, saving time as you shop for coverage.

Storage Coverage Can Save Money

RVers on the other end of the spectrum may hit the road only occasionally or for just a few weeks out of the year.

For occasional RVers, Storage Coverage can save a lot of money. After all, if your RV is not on the road, it won’t be in a wreck, so you shouldn’t be paying insurance to cover a collision or for bodily injury related to a wreck.

You should, however, maintain comprehensive coverage because storms and thieves don’t care whether you’ve parked for the winter. They’re just as happy to wreak havoc on a stored RV.

A Storage Policy reflects this reality and can cut your premiums in half.

Just don’t take your RV out during the storage period without adjusting your insurance first. If you do, your lack of collision and liability coverages will leave you exposed. If you have a wreck your insurance company won’t help.

Personal Effects Coverage

Homeowners insurance policies cover personal property such as computers, jewelry, firearms, TVs, small appliances — basically, valuables which are not integrated into the home.

Homeowners policies usually extend coverage to personal belongings even when they’re away from home — even when they’re on vacation with you in the RV.

This simplifies things for RVers who have stationary homes with homeowners policies. But full-timers who don’t have a stationary home should consider adding Personal Effects Coverage to their RV policy.

You can add Personal Effects coverage to a Motorhome or a Toterhome.

Just like with a homeowners policy, you should keep an inventory of personal belongings, complete with photographs and serial numbers, to make it easier for your insurance company to pay your claim.

A personal belongings inventory can be a hassle to keep up with. Now, you can find apps that make this a lot easier.

Personal Attachments Coverage

The joy of RVing includes doing things your way — watching satellite TV while someone else drives or having drinks under an awning on a cool fall evening in the Smokies.

Attachments to your RV such as a satellite dish or an awning can be the first property damaged during a thunderstorm, or if that bridge back there was lower than you thought.

Such mishaps have inspired insurance companies to add Personal Attachments Coverage as a separate product. It’s certainly not essential, but it can simplify a claim.

Total Loss Replacement

Let’s say a tornado tears through your campground.

Fortunately, you and your family survive the disaster, but the RV takes a beating. Fixing it would cost more than replacing it.

And that’s why you have insurance. To replace your RV and your personal belongings. End of story. Right?

Not necessarily. Your insurance company’s idea of “replacing” your RV may not match your idea.

Unless stated otherwise, your policy probably replaces your property at market value. If you paid $150,000 for your Motorhome six years ago but it would now be worth only $100,000, your insurance company would reimburse you for $100,000.

With the payout, you could probably buy another 6-year-old RV, which is fine if that’s what you wanted to do.

What if you wanted your coverage to replace your 6-year-old RV with a new RV, though? You’d need to upgrade your coverage:

• Agreed value: With an agreed-value policy you can tell your insurance company what the RV is worth and insure it for that amount. Keep in mind you’ll pay premiums based on the agreed value, so don’t choose this option unless you really need it. This open can be particularly useful if you’ve restored a classic RV. Your agreed value can reflect the time and money you’ve invested in the restoration.
• Total loss replacement: Upgrading to total loss replacement value would pay you back the price of a new RV that’s comparable to your aging model. Read the fine print carefully if you choose this option. It usually lasts only five years and can be purchased only if the RV two years old or younger. After five years the coverage will reimburse you the purchase price of your RV. As more time passes expect more reductions in coverage.

Other RV-specific Insurance Products

As more and more people join the RV life, insurance companies have responded with a wider variety of insurance products. If any of these might help you, ask your agent about including them:

• Mexico coverage: With many policies traveling into Mexico automatically suspends your coverage. (This isn’t usually true for Canada.) Mexico coverage usually includes only comprehensive and collision coverages, and repairs must still be made in the United States. You’ll still need separate liability coverage while in Mexico.
• Fire department coverage: A local fire department responding to a fire at your parked RV may send you a bill since you’re not a property owner or taxpayer in the jurisdiction. This kind of coverage will help cover those costs.
• Gap coverage: Just like with a car, you can get gap insurance to pay back your lender if your market value reimbursement isn’t enough to pay off the loan. Your lender may require this.
• Vacation liability coverage: This coverage can help a part-time RVer who wants more robust liability coverage while parked at a campsite or parking lot.
• Storage shed contents coverage: For full-time RVers who keep belongings in storage. It protects your stored items if something happens to the storage facility and your stored contents are damaged, destroyed, or stolen.
• Pet coverage: Taking your pets along? You should probably have a separate pet insurance policy, but you could add coverage to your RV policy.

When You Need Help: Add-Ons Can Be Handy

Protecting you from liability while using your RV? Protecting your financial investment from loss if something unexpected happens? That’s plenty for your RV insurance to do.

But it can do more if you don’t mind adding on to your premiums.

Most insurance companies offer add-on benefits to make life easier if something goes wrong while you’re out there.

Roadside Assistance

The more miles you put on your motorhome or towable RV, the more likely you’ll need help along the way.

Flat tires, dead batteries, overheated radiators, broken air conditioning belts — a lot of small things can grind your adventure to a halt.

Roadside Assistance programs can help get you up and running again quickly and without out-of-pocket expenses.

Towing

Not all problems can be fixed while you wait beside the road. When your RV needs serious mechanical help, you may need to have it towed to a shop.

Towing coverage from your insurance company can take on the job of finding and paying for a reputable towing service.

When you’re towing a Motorhome or a larger camper or trailer, a little help can go a long way because not just any tow truck will do.

Rental Cars

If your RV needs to be towed in for service, you may not want to sit around waiting for the repairs.

When you opt for a rental car service, your insurance company can pay for your rental car so you can at least get from place to place while you wait for your RV.

If you’re towing your RV you may not need this service on your RV policy. Instead, you can add it to your auto policy.

And if you’re towing your own car behind your Motorhome, you may already have things covered.

Hotel Accommodations

An RV in the shop may mean you have nowhere to sleep.

With hotel coverage, your insurance company can pay for you to stay in a hotel while you wait for the mechanics to finish things up.

Before adding these sorts of extras to your policy, decide how much you need them and if you can get the same services elsewhere.

If you have AAA’s RV package, for example, you probably won’t need to add the same services to your insurance policy.

Insurance Coverage When You’re Renting an RV

Naturally, a full-time RVer will want to own his or her own rig. Occasional RV users, though, may consider renting an RV when they need it. Advantages to renting include:

• Avoiding property taxes.
• Ability to try different RV models without committing to one.
• Avoiding the need to store a large RV when not in use.

But what about insurance?

When you rent an RV, can you avoid paying premiums, too?

You most likely will have some liability coverage from the RV owner’s policy, especially if you’re renting from a company and not an individual.

But it’s up to you to find out for sure. Even if you’re covered as a renter, consider the ways your own insurance could provide better protection.

With liability, for example, you may need stronger coverage than the owner’s policy provides. You may also want more add-on coverages such as roadside assistance. It’s easy enough to find your own RV rental insurance if you need it.

How to Score The Lowest Premiums on Your RV Insurance

You probably have a good idea how much RV coverage you’ll need to protect your investment and to shield you from liability.

So it’s time to think about how much you should pay for this protection.

Traditionally, RVers haven’t been all that concerned about insurance costs.

If someone could afford to go on the road and take their way of life with them for several months at a time, they could afford just about any kind of insurance.

Plus, more mature drives often get better insurance rates anyway.

Now, as more people join the RV lifestyle at younger ages, RVers are paying more attention to what they’re paying for insurance coverage.

To keep your premiums down, compare quotes from several companies, and keep the following tips in mind as you shop:

Your Driving Record Matters

Insurance companies calculate premiums based partly on your driving history. If you’ve been cited for moving violations or have had a couple at-fault wrecks, be prepared to pay more.

You can’t erase your record, but you can prevent future problems by driving safely and obeying traffic laws. In many states, at least three blemish-free years on your driving record saves you money.

Your Credit History Matters, Too

When you apply for insurance in almost all states, your insurance company will run a credit check. It’s not because they’re worried about whether you’ll pay your premiums on time.

Instead, it’s because they’ve found a correlation: People with lower credit scores file more claims.

You can tell them they’re wrong about you, but they probably won’t listen. If you raise your credit score, though, you’ll have their attention, and you’ll probably see a decrease in premiums.

Need help? Check out Credit Sesame or Credit Karma.

How Much Coverage You Get Matters

As you can tell above, I’m all for having enough insurance coverage to protect your investment and to shield your personal property from a lawsuit.

The more coverage you have, though, the more you’ll pay in premiums. If you’re trying to keep premiums at a minimum, make sure you’re not buying more coverage than you need. Let’s say you’ve bought a 2-year-old Class C Motorhome for $100,000.

You won’t need $125,000 in comprehensive or collision coverages. Added-on services like roadside assistance or towing coverage can add a lot to your premiums, too.

If you’re OK making and paying for your own arrangements if something goes wrong, it’s OK to ditch these services and save money month to month.

Just think twice before reducing your liability coverage. An at-fault wreck that injures a group of people in another vehicle could clean you out financially if you don’t have enough coverage.

Look For Discounts While Shopping

Most insurance companies offer a wide array of discounts. The most common discount kicks in when you bundle policies.

If you have an auto and a home policy with one company, your agent can give you a discount when you add more coverages, such as an RV policy, to your account.

You can also get discounts when you’ve driven a specific amount of time with no accidents or when you have certain safety features installed on your RV.

Also, ask about low-mileage discounts for your RV or paid-in-full discounts which kick in if you pay your premiums annually instead of month to month.

Balance Your Deductibles

As anyone with health or auto insurance already knows, a higher deductible can save you money on premiums.

A deductible is the amount of money you pay out of pocket to unlock the insurance coverage you’ve bought. (It typically doesn’t apply to your liability coverage.)

It can be tempting for a careful shopper on a tight monthly budget to opt for high deductibles since they result in lower monthly premiums.

Careful, though: If you buy a policy with a deductible so high you’d never be able to pay it, you may not be able to use the insurance coverage you’re buying.

Instead, you may choose not to repair a dent which can lead to rust which can lead to more expensive repairs down the road.

Look for balance: You should be able to afford to meet your deductible, but it shouldn’t be so low you can’t afford your monthly premiums.

What About Disappearing Deductibles?

Some RV insurance plans offer a program called disappearing deductibles. Each year without an accident results in a percentage reduction in your deductible.

If enough time goes by without an accident, your deductible could reach $0 even while you’re paying premiums based on a higher deductible.

Not all companies offer this option, but companies specializing in RV coverage tend to have it.

Your RV Itself Makes a Difference

Just like with cars, nicer and newer RV models cost more to insure.

If you’re shopping for an occasional use RV and want to save money on insurance premiums, consider a 5-year-old model. This will save money on property taxes, too.

RV Storage Coverage

I mentioned this above under RV-specific insurance coverages, but it fits here too since it can save you money.

If you park your Motorhome for most of the year, storage coverage can save you some real money. In essence, this coverage allows you to pay premiums based on how often you use the RV.

If it’s parked out behind your house for 9 months out of the year, you don’t have to pay collision or liability rates during that time.

Again, not all companies offer this option, but I’d make a point of finding it before buying a policy for an occasional use RV.

Top 5 Best RV Insurance Companies

And, of course, the company you choose for your insurance impacts your premiums as well as the quality of your coverage.

As you shop around, look for a company whose policies meet your specific needs. Cost matters, but the lowest quote doesn’t always mean you’ve found the best company for you.

Only you can decide whether a company meets your specific requirements. But as a shopper looking for RV insurance, I’d consider these companies first:

1. Good Sam Insurance Agency

For more than 50 years Good Sam Insurance Agency has specialized in RV insurance. They know campers and trailers from the hitch to the brake lights. They know Motorhomes, too.

You’ll find just about any RV-specific insurance coverage mentioned in this post at Good Sam, and you’ll also get some of the best rates out there. Good Sam has solid marks from the independent insurance rating agencies, which means they’re likely in great shape financially.

Discounts include disappearing deductibles, low mileage, and bundled policies. Good Sam also offers boat, motorcycle, and auto policies. Good Sam’s RV club includes benefits such as roadside assistance and towing, and membership gives you a discount on your premiums.

Best for: An RV owner looking for an insurer who specializes in RV coverage and the RV lifestyle.

2. RVInsurance.com

Judging by its name, you’d think RVInsurance.com may be new to the market and might not have the experience you’re looking for.

But National General backs the site, and it also works with other insurance stalwarts such as Safeco, Nationwide and Foremost. So you’re getting experience and decades of financial stability.

You’re also getting great customer service and a slick online interface which should make changing your policy or filing a claim simpler. RVInsurance.com specializes in finding you the precise coverage you need. It includes just about every kind of RV-specific insurance coverage, including Mexico coverage and disappearing discounts.

Best for: A shopper interested in customizing RV coverage to meet his or her specific insurance needs.

3. Progressive

For more than 75 years Progressive has insured cars, boats, motorcycles, and RVs. The company has grown steadily and now is the fifth-largest insurer in the country.

Progressive has top financial health ratings and stresses customer service.

But what about its RV-specific options?

They are pretty robust, though not as thorough as the earlier entries on this list. If you already have policies with Progressive, you can save by bundling in your new RV policy.

Best for: If you’re looking for a solid choice that offers the most opportunities to save through bundling with your other policies, Progressive deserves a close look.

4. SafeCo

SafeCo has been around for almost a century. Its partnership with Liberty Mutual gives it credibility in the marketplace.

You can find companies with more diverse options for RV insurance, but if you’re looking for low premiums while still working with a reliable company, SafeCo can fill that niche.

These savings will depend in part on your RV’s safety features and your driving record. Paired with the company’s disappearing deductibles plan you can save even more.

Best for: The owner of a newer RV looking for solid insurance on a budget.

5. Foremost

You’ve probably heard of Foremost’s parent company, Farmers Insurance. Foremost extends Farmers’ coverage into the RV and mobile home market.

While its RV-specific coverage is not as thorough as Good Sam’s or even Progressive’s, Foremost covers a wider variety of towable vehicles than most companies, and that’s why they made this list. Foremost also offers an Emergency Expense Allowance for trips that caught my attention.

However, customer service could be an issue if you like dealing with your insurance company online. The Better Business Bureau has given Foremost an F for failing to respond to customer complaints online.

Best for: The owner of an uncommon type of camper or trailer who is most likely to seek help via phone instead of online.

Like the First Humans, You’re a Wanderer

I’m guessing if you’ve read this far you’re serious about actually doing it — about taking your life on the road in a recreational vehicle.

If so you’re doing something people have done for thousands of years. Long before we developed cities and jobs, people wandered the countryside with their friends, family, and pets.

They sat around campfires and were awoken by the rising sun. They gathered food along the way and existed as part of the landscape.

OK, maybe I am romanticizing it a little. The modern world has given us a lot, including insurance so you can wander without wondering so much what would happen if the RV broke down or if someone collided with you.

Take a few minutes to find the right insurance. It can help give you back your freedom.

The post Best RV Insurance Available for 2019 appeared first on Good Financial Cents.

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How to Manage and Avoid Ecommerce Chargebacks

Chargebacks have become a growing problem for ecommerce companies. In fact, credit card chargebacks are rising at a rate of 20% each year.

Statistics show 40% of consumers who file chargebacks will do so again within 60 days. And 50% of those people will file another one within 90 days.

Banks and credit card companies make it easy for their customers to dispute charges on their accounts. Ecommerce companies are paying the price for this behavior.

Those of you who have an ecommerce shop know what I’m talking about. I’m willing to bet you’ve had to deal with these situations in the past.

They are a real pain, to say the least. On your end, you thought you did everything right.

A customer placed an order online. You fulfilled the order and got paid.

Only later, you see that the transaction was nullified. You probably weren’t even notified of this chargeback until after the fact.

What happens now? Why are you being punished for fulfilling an order? How far do you need to go to optimize the customer experience?

Chargebacks have become a hot topic lately in my consulting work. And nobody seems to know how to handle them.

That was my inspiration for writing this guide.

First, I’ll explain what you need to do once a chargeback has been filed. Then, I’ll show how you can prevent this from happening again in the future. At the very least, you’ll be able to minimize your chargeback rates moving forward.

Here’s what you need to know.

Don’t waste time disputing chargebacks

Everyone I’ve talked to has the same first instinct when it comes to chargebacks.

Dispute it.

They feel their ecommerce business was not in the wrong, so if they file a dispute, the situation will be rectified.

Unfortunately, that’s rarely the case.

Sure, in theory, it sounds like a good plan. But banks and credit card companies design the chargeback process to protect the consumer, even if the retailer isn’t at fault.

I know you don’t want to hear this, but disputing chargebacks will be a waste of your time. You don’t want to deal with this headache.

As you can see, the overwhelming majority of merchants are disputing chargebacks they feel are illegitimate.

What is considered illegitimate?

Well, research shows that 80% of consumers have filed a chargeback simply because they didn’t have time to communicate with a merchant to receive a refund.

This is an example of friendly fraud. The customer commits fraud without realizing what they’re doing is wrong. Or maybe they knew this was an illegitimate reason but didn’t care.

Regardless of the reason, just 18% of merchants say they win the majority of their disputes against friendly-fraud chargebacks.

Banks and credit card companies are still siding with the consumers.

What is the takeaway here? Don’t waste your time.

Sadly, in the long run, this will be a losing battle for you. You’re much better off putting more effort into avoiding chargebacks in the first place.

In certain instances, it’s worth disputing a chargeback, but I’ll discuss that later.

Ship orders on time

It’s possible your customers are filing chargebacks if their orders weren’t received when promised. There are a couple of different reasons for this.

First of all, if the package hasn’t arrived, they might think they got ripped off by the merchant. This is especially true if you’re a new, relatively unknown business.

That’s why you need to understand the top elements that add credibility to your website to make your company appear more trustworthy.

It’s also possible the customer thinks the package was stolen from their door or potentially misdelivered. Either way, if there’s no delivery, the customer won’t want to pay for the order.

But what if it’s none of these reasons?

Maybe the order is still on the way and hasn’t been delivered yet.

In this case, the customer could start the chargeback process and then receive their package a few days later. By then, the damage is already done.

Do not promise a shipping deadline you can’t meet.

With Amazon offering two-day free shipping on many orders, it makes anything longer than that seem unacceptable. That’s why customers with Amazon Prime memberships have higher expectations for free shipping timelines.

Furthermore, in 2017, 35% of consumers said they expect businesses to have much faster delivery times.

And in 2018, that number has increased. Now, 43% of people say they expect faster deliveries. I’m expecting that number to continue rising each year.

If you can ship orders fast and make sure they get delivered on time, you will reduce the chances of getting chargebacks filed for this reason.

But sometimes delays happen for reasons that are out of your control.

Winter storms, other acts of nature, or truck breakdowns could cause delays in the shipping process.

In this case, you need to let your customers know their orders will be late ASAP.

Let them track the shipping. This should be a standard part of your ecommerce process.

Once an order has shipped, you should immediately send the customer an email with the tracking number so they have access to this information.

Monitor transactions for fraudulent activity

Don’t assume every purchase on your ecommerce platform is legitimate.

You need to check each transaction and look for red flags of fraud.

I recommend setting up a fraud metric system to help you with this process. This system would set parameters to flag orders that appear to be suspicious.

For example, if you have an abnormally large purchase shipped to an address different from the billing address, you may need to require further verification to complete the order.

In addition to credit card numbers, your ecommerce shop should also require billing addresses. This is called an AVS, short for address verification system.

You’re probably familiar with this since I’m sure you’ve had to do it in your personal life to complete some transactions.

With an AVS, a criminal with an access to a stolen credit card can’t make a purchase without knowing a zip code associated with the card. If you don’t have this added security measure in place, you’ll be out of luck when a cardholder files a chargeback for a purchase made by a credit card thief.

According to Experian, businesses are experiencing an increase in fraud losses in 2018:

Only 40% of business owners say they are very confident in their abilities to detect fraudulent activity.

Furthermore, 45% of business executives say they are significantly more concerned about the risk of fraud becoming a growing problem.

This is no surprise. That’s because the cost of fraud is adding up quickly.

On average, fraud is costing retailers 2.1% of their annual revenues.

I know this may not seem very high at first glance, but this adds up faster than you might think.

If you’re doing $2 million in sales, that means you’re losing $42,000 each year to fraud.

That’s assuming you’re within the average. If you’re not taking steps to prevent fraud and chargebacks, these numbers can be even higher.

And 2.1% doesn’t sound small when you put it in terms of dollars.

As you can see from the graph above, only 27% of businesses say they’ve experienced fewer fraud losses over the last 12 months. You need to take steps to put your ecommerce business in this category.

Provide exceptional customer service

As I said earlier, sometimes customers file chargebacks for the wrong reasons, such as wanting a refund.

While this is not an appropriate reason to take that action, the customer can still win. Plus, you probably won’t win a dispute.

To avoid this scenario, you need to make sure you have easily accessible customer service options.

Take a step back, and analyze in what ways your customers can reach you if they have problems.

If a general call center is the only option, chances are your customers are frustrated and dissatisfied.

As you can see, 43% of consumers think it’s difficult to reach customer support agents.

People are busy. They have better things to do than waste time being on hold, waiting for someone to address their concerns.

It’s likely very easy for them to dispute charges by opening their credit card mobile apps. This can probably be done in a couple of clicks.

That’s why you need to improve your customer service by implementing live chat.

Now if someone has a problem with their order or product, or has a general question, they can reach a customer service representative as fast as possible.

This gives you the ability to offer a solution much quicker. You want to give your customers complete peace of mind.

You’re there to help them. Be available for assistance on as many channels as possible.

Monitor your social media comments. Shockingly, 79% of customer complaints online are ignored by businesses.

It’s unacceptable if your ecommerce business is part of the majority in this case. That’s terrible customer service.

When someone complains, look at it as a chance to make things right. If you ignore them, it could be the reason why they file a chargeback.

It’s also important to make sure that everything you’re selling meets a quality standard and is not falsely advertised. High-quality products that match the online description won’t have as many chargebacks.

Send post checkout notifications and follow-up emails

Once someone completes a purchase online, you want to let them know how the order will be billed.

Explain how the charge will read on their credit card statement if the name of your ecommerce shop does not match your billing statement name.

If your customers don’t recognize a description on their credit card statement, they could file chargebacks without realizing they purchased from your company.

It’s easy to avoid confusion by being transparent. Take a look at this confirmation email from Tropicfeel:

The company highlighted how the charge will read on credit card statements. Because it’s a startup still building its reputation, it’s important it makes its name clear for the customer.

Take your email strategy one step further. Send a follow-up message once the order is delivered.

This email will be a great opportunity for you to ask for customer feedback.

If something is wrong, invite the customer to share their problems with you. Remind them of your fast and easy return policy.

Now you can stay ahead of any issues and rectify the situation before the customer has a chance to file a chargeback.

Choose a processor with great merchant support

How are you currently processing payments for your ecommerce shop?

If you’re not happy with your current situation, you should consider switching to a payment processor that offers friendly merchant services.

The cheapest option isn’t always the best. You won’t get good support that way.

Earlier I said you shouldn’t dispute chargebacks, but depending on the circumstances, it may be necessary at certain times.

If you have a couple of chargebacks for $100 or $200, it’s best to just let them go. But if you have illegitimate chargebacks totaling tens of thousands of dollars from just a few transactions, you’ll likely want to follow up with a dispute.

Under these circumstances, you’ll want to make sure this process is as smooth as possible for you. That’s why I recommend using a processor such as PayPal or Stripe.

As you can see, it’s easy to manage your merchant support options through the Stripe dashboard.

All you need to do is upload evidence to the platform, and it’ll submit everything to the bank.

For this added service, you’ll be charged a dispute fee. But I think it’s worth it.

Good payment processors will make your life much easier in difficult circumstances.

Again, you shouldn’t expect to have a high success rate with your disputes. But if you’d like to deal with this process, it’s best to have a processor do the heavy lifting for you instead of dealing with the banks directly.

This will save you time and minimize your stress.

Conclusion

Chargebacks are starting to become a wide-spread problem for ecommerce businesses.

Your company needs to know how to deal with them and prevent them from happening in the future. Otherwise, it’ll cost you a lot of money in the long run.

For the most part, it’s not in your best interest to dispute chargebacks. Most merchants aren’t winning these disputes, so choose your battles wisely.

In the event that you want to go through this process, it helps to have a good relationship with your payment processor.

To avoid chargebacks, you need to provide excellent customer service.

Ship your orders on time. Make sure customers have easy access to representatives through as many channels as possible, including live chat.

Monitor transactions for fraudulent activity. Implement an address verification system to curb criminal activity.

Send post checkout emails to customers, explaining how their purchases will be billed. Then, send another message asking for feedback once the order has been delivered.

If you follow the advice in this guide, your ecommerce business will have an easier time managing and avoiding chargebacks in the future.

What steps is your ecommerce company taking to avoid chargebacks?

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Life Stability and Financial Choices

Personal finance is often a “numbers game.” A person can sit down with a calculator and a piece of paper or with a spreadsheet and go through countless models and ideas about their financial future and, for the vast majority of those ideas, come up with some reasonable conclusions.

For example, if you’re paying off debts, you’re always going to end up paying the least total amount overall if you make all of your extra payments on the debt with the highest interest rate.

If you’re investing for the very long term future, the investment with the highest historical average annual return is probably the one that’s going to give you the best return over that very long time period.

These types of ideas (and many like them) are pretty easy to calculate if you have a bit of time and a bit of a head for numbers.

The problem is that they don’t take into account the uncertainty of the future, at least not in any reliable way.

No one knows what the future will hold. No one knows what the stock market will do. No one knows what the economy will do.

Most of all, no one really knows what’s in their own personal future.

I often look at a person’s future, at least in terms of personal finance, in terms of potential weak points. How many aspects of their life are “weak,” in the sense that they add another potential point of failure that could cause that person to encounter unexpected and significant financial difficulties?

For example, having children (or dependents of any kind) is a financial weak point. Dependents by default require financial resources without contributing financial resources in return, and sometimes their cost can spike.

Having an unstable job is a weak point. A job where you have a significant likelihood of being let go is a direct route to financial instability.

Poor health is a weak point. If you have poor physical or mental health that may lead to a condition that can disrupt your ability to earn an income, that’s definitely a weak point.

Simply being older is a weak point. Not only is your long term investment window inherently shorter, many of the other risks listed here are a little more likely and a little more devastating.

Not having an emergency fund is a weak point. It means that smaller emergencies have a much easier chance of snowballing into a big crisis in your life.

Living a paycheck to paycheck lifestyle is definitely a weak point. Although this one is definitely correctable, a lifestyle where all of your cash goes into your checking account and then right out of it without contributing to investments or significantly paying down debt puts you on a tightrope that’s easy to fall off of. This is particularly true if you’re living that lifestyle while mostly just keeping the bills paid.

Having an unreliable social network is a weak point. If you don’t have friends and family you can turn to in a crisis, that crisis is likely to amplify.

Not having a lot of marketable skills is a weak point. Marketable skills enable you to quickly find a good paying job if you lose your current one. Not having a good set of marketable skills means that it might not be easy to find another job and, even if you do, it probably won’t be comparable to your older one.

There are many other smaller weak points as well. Things like having an unreliable car or having people who are partially dependent on you can easily turn into a major issue in the right situation, though it’s usually not a crisis.

Having a lot of “weak points” can absolutely change the optimal financial choice before you.

For example, let’s look at that old dilemma of contributing more to retirement versus making big extra debt payments. Which one is better?

My argument is that the fewer weak points that a person has in their life, the better off they are investing in retirement, and the more weak points they have, the better off they are paying off that debt early.

Why? Investing for retirement is a long term investment that works best when you’re more certain of long term stability. The more weak points you have, the more likely it is that serious instability is going to hit your life before retirement savings can really pay off. Remember, most good investments are long term investments, and if a weak point breaks in the short term, there’s a good chance that you’ve lost money by investing for retirement.

On the other hand, paying down that debt is better in the short term because it moves you quickly to a point where you no longer have those debt payments. You can quickly eliminate smaller debts if you really focus on them, and that gives you some life flexibility because you’re much farther away from living paycheck to paycheck. The “weak point” of your job or an illness or something like that has a lot less impact on your life if you’ve got your debts under control and some healthy breathing room in your monthly budget, and paying off debt is a very strong route to that point.

So, if you’re a single twentysomething with no children and great health and you use mass transit to get to work and you have a bunch of marketable skills in a stable career path, you’re better off saving for retirement over paying off every single debt.

On the other hand, if you’re in your forties, married, with kids, with a job that might not be as stable as you like, perhaps without as much health as you’d like, and without a hot resume in a hot field, you’re probably better off getting rid of those debts as soon as possible.

Now, this isn’t a perfect dichotomy. The person in their twenties should probably get rid of really high interest debt first by eliminating the credit card debt and any payday loan debt. Similarly, the person in their forties should be making sure that they’re contributing a little to retirement, at least enough to get every drop of matching contributions from their employer and ideally contributing at least 10% of their salary.

However, beyond those basics, the person with fewer weak points should probably accelerate retirement and the person with more weak points should probably accelerate debt repayment.

It’s always useful to consider the stability of your life when making financial decisions. The more weak points you have, the more valuable it becomes to stabilize your day-to-day situation. The fewer weak points you have, the more valuable it becomes to do things that have big long term benefits. That basic principle will always help guide you toward better decisions.

The post Life Stability and Financial Choices appeared first on The Simple Dollar.

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Fidelity MoneyBuilder Income Fund Sajiv Vaid and Kris Atkinson

Sajiv Vaid (left) and Kris Atkinson, co-managers of Fidelity MoneyBuilder, give Stephen Little the lowdown on their fund – a Moneywise First 50 Fund for beginner investors

What is the Fidelity MoneyBuilder Income Fund?

The fund aims to achieve an attractive level of risk-adjusted return from a richly diversified portfolio primarily invested in Sterling-denominated bonds.

The strategy is designed to generate an attractive income and maintain a relatively low level of risk to other asset classes such as equities and property.

It is invested in corporations that have access to bond markets to fund their business. These include banks, such as Lloyds, firms in the retail sector such as Tesco or utility companies such as Severn Trent or Thames Water.

It is not just UK companies: we also have a lot of international companies that issue in Sterling as well. We have around 300 holdings and around 170 issuers. While this may seem a lot, we are confident in having that type of coverage, as our research team is one of the largest in the City.

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What do you look for in companies?

Given the focus of the fund on downsize protection, the fund has a structural bias to non-cyclical sectors such as regulated utilities, consumer goods and secured bonds. A good example of this is housing associations in the Sterling bonds market. We look for sectors that should outperform in a downturn or in a recession, so we have very little exposure to retail or cyclical sectors such as commodities.

What are your top holdings?

As opposed to other retail funds in this space, the top holdings are really dominated by asset-backed securities, utilities or quasi-national European investment banks.

Our exposure to UK government bonds accounts for around 12% of the portfolio. Other top holdings include EDF, Thames Water and Aspire Defence Limited, a bond secured on cash flow from the Ministry of Defence for military barracks in the South West.

What have you recently bought and sold?

Mostly, we have been quite defensive. We have increased our government exposure on UK gilts and also participated in a few new deals in the property sector, such as the housing association, Peabody.

We have been very cautious on the banking or financial sectors because of the volatility and the high correlation to equities. Given the defensive nature of that, we have actually been paring down some of our exposure in that sector. We have reduced our exposure to Axa, Vodafone and EDF.

“We look at many sources for our exposure”

Investment jargon explained

Downside protection: Strategies that aim to reduce the impact of losses

Non-cyclical sectors: Stocks that do well during economic downturns

Concentrated position: When a share or stock represents a large percentage of the portfolio

A bottom-up perspective: Where investing focuses on a company’s performance rather than predictions of what will happen in the industry

How do you manage risk?

Our risk profile is quite asymmetric, but you can balance that by running quite a lot of diversification in the portfolio. So you are looking at multiple sources of income as opposed to concentrated bets.

An equity portfolio can have 20 to 30 stocks where one stock can fall 10% to 15% and then on the flip side another can go up 60%, so it can totally offset that. We don’t usually have that with corporate bonds. If you have a concentrated position and it goes wrong, it is very hard to recover from that. That is one of the reasons why we run diversified portfolios.

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How do you identify companies to invest in?

Price and valuation are the key things when we make an assessment about whether we should be investing or not.

Our team of analysts is 30-strong and they spend a lot of time on a bottom-up perspective identifying opportunities.

Companies have to demonstrate a clear strategy regarding capital structure and we look at the cashflows to determine whether the balance sheet is sustainable. How it engages with stakeholders is also important.

Companies which have really ambitious growth strategies that are entirely dependent on raising debts in the capital markets are less sustainable than those that don’t rely on access to them in stressed environments.

What’s been your worst investment decision?

There has not been a particularly bad decision. We were exposed during the financial crisis but the fund’s defensive nature and its underweight exposure to financials really stood it in good stead.

In contrast to how equity investors look at things, we don’t just identify one opportunity to deliver a return - we look at multiple sources in our exposure.

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If you had a top tip for a new investor, what would it be?

For me, investors have to understand why they want to be in an asset class.

If you want modest volatility and a low correlation to equities, you should consider exposure to fixed income as part of a diversified portfolio.

As we are late cycle, investors need to adjust their risk profiles as returns going forward are likely not just to be lower from fixed income but also across other asset classes.

The Fidelity MoneyBuilder Income Key Stats:

• Launched: September 1995
• Fund size: £3,641 million
• Ongoing charges (OCF): 0.56%
• Yield: 2.7%

Sources: Fidelity.co.uk and Fidelity MoneyBuilder Income September 2018 Factsheet

The managers behind the fund

Sajiv Vaid has managed Fidelity MoneyBuilder Income since 2015.

Sajiv was previously at Royal London Asset Management where he managed its flagship retail and institutional corporate funds.

He has also previously managed money at Gerrard Group and Fuji Investments, where he managed global fixed income portfolios.

Co-manager Kris Atkinson joined the fund this year. He started at Fidelity in 2000 as a credit analyst and has over 14 years of investment experience.

Ian Spreadbury, who co-runs the fund, is set to retire at the end of the year.

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Five-year discrete calendar performance of Fidelity MoneyBuilder Income Y

Year	2014	2015	2016	2017	2018
Fidelity MoneyBuilder Income Y	5.7%	3.0%	9%	3.3%	-0.1%
Sector average	5%	2.2%	8.8%	4.3%	-0.2%

Source: FE, 1 November 2018

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