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الاثنين، 2 ديسمبر 2019

10 Roth IRA Rules to Know in 2020

You’ve probably heard by now that Roth IRAs have magical money-growing powers. OK, maybe they’re not quite magic.

But there’s a lot to love about Roth IRAs: The tax-free growth. The flexibility to access your contributions in an emergency. The fact that once you reach age 59 ½, you get to withdraw your money on your schedule — not one that’s made up by the IRS.

But while we could sing the praises of Roth IRAs all day long, let’s be real: Whenever the IRS gives us tax breaks and flexibility, it sets up a lot of rules.

So let’s talk about the Roth IRA rules you need to know.

What’s a Roth IRA? A Quick Introduction

A Roth IRA is a type of individual retirement account. Like a traditional IRA, a Roth IRA is a retirement account that you set up for yourself to invest and save. Unlike a 401(k), an IRA isn’t connected to your job.

Here’s the most important thing you need to know about Roth IRAs vs. traditional IRAs: With a Roth IRA, you pay taxes now. As you continue to contribute (ideally to the max each year!), your money compounds. Then, when you reach retirement, that nest egg is all yours. You’ve already given the government its cut.

A traditional IRA reduces your taxable income now. But your taxes come due when you start withdrawing your money.

For a long time, 401(k)s were like traditional IRAs in that you got the tax break up front but paid taxes in retirement. But a growing number of employers are jumping on the Roth bandwagon and offering a Roth 401(k).

10 Roth IRA Rules to Know About in 2020

Now that you know the Roth IRA basics, you’re ready for a rundown of the Roth IRA rules.

Note: The IRS updates the Roth IRA limits on income and contributions for inflation each year. But beyond that, the rules don’t change much.

1. You Can Contribute Up to $6K if You’re Under 50

The maximum contribution for both Roth and traditional IRAs in 2020 is $6,000 if you’re under 50. (Sound familiar? That’s because it’s the same as it was in 2019.) You can have both a Roth IRA and a traditional IRA, but your total contributions between the two accounts can’t exceed $6,000.

2. Over 50? You Get an Extra $1,000 Contribution

The IRS allows taxpayers 50 and older to make an IRA catch-up contribution. In 2020, that amount will remain at $1,000.

3. You Can’t Contribute if Your Income Is Above These Limits

Anyone with taxable income can contribute to a traditional IRA, but you can’t contribute to a Roth IRA if your earnings are above a certain threshold. (There’s a way around the income caps, but we’ll get to that shortly.)

The IRS adjusted the 2020 income limits for inflation, meaning you can earn slightly more than you did in 2019 and still qualify for a Roth IRA. Here are the 2020 income limits.

2020 Roth IRA Income Limits

Tax filing status	2020 Income	Maximum contribution
Single, head of household or married filing separately	Under $124,000	$6,000 ($7,000 if 50 or older)
	$124,000-$138,999	Reduced amount
	Over $139,000	Not eligible
Married filing jointly or qualifying widow(er)	Under $196,000	$6,000 for each individual ($7,000 if 50 or older)
	$196,000-$205,999	Reduced amount
	Over $206,000	Not eligible
Married filing separately (lived with spouse at some point in tax year)	Under $10,000	Reduced amount
	$10,000 or higher	Not eligible

4. … but You Can Get Around Income Limits With a Backdoor Roth IRA

If you earn too much to directly fund a Roth IRA, you can open what’s known as a backdoor Roth IRA. You fund a traditional IRA, then convert it to a Roth IRA.

You’ll owe taxes on the amount converted (remember, you haven’t paid taxes yet on those traditional IRA dollars), along with taxes on any gains from investments in your traditional IRA.

Opening a backdoor Roth IRA is complicated and can have serious tax consequences, so we’d always advise consulting with a tax professional and financial planner first.

Pro Tip

If you have a 401(k), you can also lower your taxable income by increasing your contributions. The 2020 limits are $19,500 if you’re under 50, or $26,000 if you’re 50 or older.

5. There’s a Penalty for Contributing Too Much

If you contribute more than the Roth IRA rules allow, you’ll pay a 6% penalty every year that extra money remains in your account.

6. You Can Access Your Contributions at Any Time

Since you’ve already been taxed on your Roth IRA contributions, that money is yours at any time. That means you can access your contributions in an emergency, though we recommend building an emergency fund separately so you can let that Roth IRA keep growing fatter.

7. You’ll Be Penalized if You Touch Your Earnings Early Before Age 59 1/2

You’ll typically owe income taxes plus a 10% penalty if you withdraw Roth IRA earnings (but not your contributions) before you’re age 59 ½.

Then there’s the Five-Year Rule: You need to have had your account open for at least five years before you can withdraw your earnings without paying taxes and the 10% penalty.

Pro Tip

If you’re withdrawing money from a Roth IRA, your contributions will always be taken out before your earnings.

8. But Wait! There Are Exceptions

You can withdraw up to $10,000 of your Roth IRA earnings for a first-time home purchase without penalty before you’re 59 ½ if you’ve had the account for at least five years.

Some other times you might be able to use your earnings early without taxes or fees:

You’re using it for certain education expenses for yourself or a family member.
You have medical expenses that add up to more than 10% of your adjusted gross income.
You become unemployed and use the money for health insurance premiums.

9. You Can Contribute Forever if You Have Taxable Income

With a traditional IRA, your contributions have to stop when you reach age 70 ½. But with a Roth IRA, you can keep those contributions coming, so long as you have taxable income, like a salary, hourly wages, bonuses or tips.

10. You Never Have to Withdraw Your Own Money

Traditional IRAs and 401(k)s require you to start withdrawing your money when you’re 70 ½ by taking what’s known in tax speak as a required minimum distribution, or RMD.

But with a Roth IRA, you never have to withdraw money. You can keep saving your money, or you can pass it on to your heirs tax-free when you die. If you leave your Roth IRA to your spouse, they won’t face RMDs, but if you leave it to someone else, they’ll eventually have to take distributions.

Ready, Set, Go Fund Your Roth IRA

If you’re ready to take full advantage of that Roth IRA magic, you may have more time than you think.

The deadline for funding a Roth IRA for any calendar year is tax day of the following year. So you can keep working to max out your 2019 contribution until April 15, 2020.

Cheers to funding your future in 2020 and beyond.

Robin Hartill is a senior editor at The Penny Hoarder. She edits and writes stories about bank accounts, credit scores, home buying, insurance, investing, retirement and taxes. She is also the voice behind the Dear Penny personal advice column, which is syndicated in the Tampa Bay Times Sunday business section.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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How to Break Past the Feeling of Slow Financial Progress

One of the hard truths about turning your financial life around, particularly if you don’t have a high income, is that financial progress feels really slow. You do make progress in the right direction, but there’s a lot of “three steps forward, two steps back” mentality and the steps forward are incredibly slow. You can make good financial choices for months and feel as though you’re barely making any forward progress on your goals.

There are a lot of reasons for this. Here are three big ones.

First, many financial goals are quite big compared to the resources available. If you’re trying to pay off debts that add up to a year’s worth of income or more, it’s going to be slow paying it off no matter what you do. If you owe $50,000 in debt and work really hard to free up an extra $100 a month, you’ll get rid of that debt faster, no doubt, but the reality is that you’re only cutting away 0.2% more of that balance each month. It’s like chipping away at a boulder and knocking off pebbles with each swing.

Second, our forward progress is often hindered even further by unexpected events. It’s the whole “three steps forward, two steps back” problem. You nail everything for a couple of months, then your car breaks down or a bill you forgot about arrives in the mail, undoing a lot of your progress and leaving you feeling like you’re back at square one. It’s hard to feel like you’re making much progress when you’re taking almost as many steps back as you’re taking forward.

Third, even for people with a lot of income, financial success is achieved on a timescale of years and decades rather than weeks and months. People often want to feel success in a matter of weeks, but unless you have a huge income, you’re not going to feel a big financial change quickly. It takes months and years to fix financial issues for the vast majority of us. Our brains aren’t really wired to view our personal lives in that kind of timescale. Most of the time, we’re fixated on the next few days or the next week, not three years from now. That distance can feel like forever.

It’s no wonder that progress feels slow. It’s not uncommon for someone to have a big goal of paying off a $100,000 debt, but you can only cut $200 a month from your spending, no big leaps forward in your career are coming any time soon, and after three months you’re hit with a $500 unexpected bill. It can feel hopeless.

I won’t lie: financial progress is a long road. There’s no magic recipe that’s going to pay off your six-figure debt on an average salary in six months. That’s just reality.

So what can you do to break out of this feeling? Here are some strategies that have worked really well for me over the years.

Imagine what things would be like if you hadn’t been making good financial choices recently.

You make good financial decisions for three months, then you’re suddenly hit with a big unexpected bill, which gobbles up all of the money you accumulated over those three months. You’re back where you started, or you might even be behind where you were when you started. It all feels miserable and hopeless.

If you feel that way, ask yourself one simple question: where would you be right now if you hadn’t been making good financial moves recently? Let’s say you were able to save $300 a month for three months, then you were hit with a $900 bill. Yeah, you’re back where you started, but where would you be if you hadn’t saved that $900? Rather than being back where you started, you’d be $900 behind.

That’s progress. Good progress. That’s the kind of progress that isn’t glamorous at all, but it’s the kind of progress that is life-changing over time. Yes, that big step back stings, but if you weren’t taking steps forward all the way along, that big step back would take you into a very bad place.

Look at your financial state compared to a year or a quarter ago.

One of my favorite things to do is to take a monthly snapshot of my financial state. I’ll add up the value of all of our assets, subtract all of our debts (basically zero, because I usually pay off our credit cards in full just before doing this), and that remaining total is our net worth.

Why do I do this every month? It’s simple: I love comparing my state right now to how things were a year ago — or a decade ago. It reminds me that all of these little steps are really adding up to something big. It reminds me that my financial state today is better than it was a year ago and far better than it was a decade ago.

That glance into the past reminds me that all of those little choices are worth it, that it’s building into something life-changing.

Fill in a big piece of graph paper.

If you’re focused on a specific big goal, like paying off a debt, a really good way to visualize it and see your progress is to record it on a piece of graph paper.

Take a piece of graph paper and along the top write what your big goal is. Then, make a giant rectangle that fills up most of the rest of the page, containing many, many small squares on the graph paper. Figure out how many squares are in the rectangle by multiplying the length and the width. Then, take the total balance of your goal and divide it by the number of squares, and write that number somewhere on the sheet.

Each time you move toward your goal by that many dollars, fill in a square on the sheet. For example, if you have a goal of paying off $80,000 in debt, and your big rectangle is 80 by 100 squares, that means you have 800 squares to fill and each one represents $100 ($80,000 divided by 800 is $100). Whenever you move $100 toward your goal -—your total debt goes down by $100, or you have $100 more in your account — fill in a square on that sheet.

This serves as a nice visual reminder of your goal. The practice of filling in a square makes the progress toward your goal feel a lot more tangible than just watching numbers changes on your bills. It also creates a pretty sweet visual record, too.

You don’t have to color everything in using the same color or row by row or column by column, either. Color things in using Tetris pieces of different colors, or fill them in randomly like colorful stars in the sky. Do it however you like.

Focus on daily routines, not big numbers.

Many big goals that people have are actually best handled by having a daily system of routines and habits that guide you toward your big goal. If you set up a daily routine that constitutes a small step toward your goal and you stick to that routine every single day, then the goal becomes inevitable and all you have to really focus on is achieving that daily step. It turns the focus from the big goal to today.

Rather than worrying about your progress toward your goal, instead focus on whether or not you took the steps you need to do today. One great method for this is to get a wall calendar and put a giant X on each day when you achieve your daily steps. Soon, you’ll have a chain of those steps, that chain will feel really good, and you won’t want to break it.

What kind of daily routine lends itself to financial progress?

“Today, I won’t spend any money on anything frivolous outside of my pocket money (which I budget for each month).”

“Today, I won’t consume or buy any soda/junk food/alcohol.”

“Today, I will buy only generic brand household products and pantry staples.”

“Today, I won’t eat food prepared outside of my home unless I’m eating with a close friend.”

Figure out a few rules that point you in the right direction, one day at a time, and focus on achieving those things each and every day. Mark them with a big fat X on your calendar and watch that chain of Xs get bigger and bigger. Your progress toward that big goal will start happening automatically while you don’t even notice it.

Take on projects that will accelerate your progress.

This is another useful way to change your focus from the slow progress toward your goal toward something else while still moving toward that goal. Just figure out a smaller project that, if successful, will help you move a little faster toward your big goal.

For example, you might choose a side project that involves, say, selling off the 50% of your possessions that you use the least, or perhaps you might have a side project that involves getting a professional certification that will net you a small raise at work. Maybe your side project is to read one book a week from the library for a year — that’s a great goal that will cost you nothing but can fill up your hobby time and perhaps improve you in other ways.

As long as you’re focused on a secondary goal that will result in net financial improvement in your life if you succeed at it, you’ll find that progress toward your big primary goal comes naturally. You might be focused on selling off 50% of your possessions, but when you’re done with that goal you’ll discover you have a lot of cash in hand that you didn’t expect. You might be focused on reading books from the library but when you’ve achieved it you’ll find you’ve spent a lot less on hobbies this year and you’ll have more money in hand that you expected.

Reflect frequently on why you’re doing this.

Personally, I find this to be incredibly powerful, and it’s a technique I use all the time for various self-improvement projects. Why am I doing this? What is it that I’m hoping to achieve?

For me, it usually centers around a clear picture of what I want my life to be like in a year, or five years, or 10 years. Whenever I feel like a goal is too much work, that my progress toward the goal is too slow or I feel some other type of frustration, I sit down and think about why I’m working toward this goal and what that vision of my future is like.

For a financial goal, for example, I might think about no longer being stressed out about money and no longer having debt bills coming in the mail, or I might think about retiring while my wife and I are still relatively young so that we can spend our time on other life goals.

The more detailed those pictures of the future, the more inspirational they are to me, and the more drawn I feel to stick with my big goals, even if they’re going slowly.

Integrate a few “sprints” into the goal.

If you feel like your progress toward your big goal is going slowly, try “sprinting” toward that big goal for a short period. Set yourself up with a 30-day challenge that will accelerate your progress for a short time.

Perhaps you can give yourself a 30-day challenge of not eating out at all, nudging yourself into cooking more at home so it becomes a more natural choice. Try a 30-day challenge of not spending any money on entertainment, so that you explore some free options. Give yourself a 30-day challenge of going without cable/satellite, so you can figure out whether or not you can easily cut it out of your life. Maybe give yourself a challenge of filling a big box of stuff to get rid of, then selling off the contents of that box to accelerate your savings.

You can throw yourself wholeheartedly into these sprints and let them absorb your focus for a while, and then when you finish up and apply the results of that sprint to your big goal, you will have taken a larger step forward.

Look at a big change to turbocharge the goal.

Another approach that works well for kickstarting a big goal is to look at a big single change in your life and executing it. If you make a big change, one that either produces a big single burst of money or causes a significant cut in your bills, you can drastically increase your rate of progress toward your big goal.

For example, you might consider moving into a less expensive apartment or home. You might consider getting rid of a car and using mass transit, cycling or your feet for commuting. You might consider dropping your cable or satellite service. You might consider shopping around for all of your insurance packages and bundling them to get a far cheaper rate.

All of those changes will result in a serious decline in your monthly bills, an enormous burst of cash or both. In either case, your progress toward your big goal will start zipping along a lot faster!

A long journey takes a long time, and that’s okay.

In the end, nothing can really escape the fact that it takes a while to achieve anything worth achieving. If personal finance success were easy, we wouldn’t live in a situation where four in five adult Americans live paycheck to paycheck, and there would be no personal finance section at the bookstore or the library and The Simple Dollar wouldn’t exist. The ideas might be simple, but they’re not easy to execute.

Personal finance success needs patience above all else. The above strategies can simply help you make the journey more palatable.

Good luck!

The post How to Break Past the Feeling of Slow Financial Progress appeared first on The Simple Dollar.

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الأحد، 1 ديسمبر 2019

How to Make a Living Online

Surely anyone with a laptop and a few wits about themselves would like to make a living online. I mean, we probably spend half of our waking lives with some sort of device in front of our faces, if not more, so why not get paid to do it! Whether you want to make a […]

The post How to Make a Living Online appeared first on The Work at Home Woman | Legit Work From Home Jobs.

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How to Repay Student Loans When You Don’t Know Where to Start

If you graduated from college this year, congratulations!

Also, your first student loan payment is due. (Cue sad trombone.)

If you borrowed federal student loans to cover your college expenses, you get a six-month grace period from Uncle Sam before he starts pestering you for payment.

If it’s any comfort (I know, it isn’t), you’re not the only one who owes. Outstanding student loan debt clocked in at $1.48 trillion in the second quarter of 2019, according to the New York Federal Reserve.

It’s easy enough to feel overwhelmed — you just graduated, started that first job (hopefully), moved out of your parents’ place and into your own (maybe).

But besides the obvious benefit — getting out of debt — making on-time student loan payments will reflect well on your credit score, which will follow you long after your dorm life memories have faded.

Ready to tackle that student loan debt? Good, let’s get started.

A Guide to Student Loan Repayment

When you’re ready to start repaying your student loans, it’s best to create a plan to avoid wasting time, money and energy. Here’s what you need to do before you make that first payment.

1. Know How Much You Owe and Who You Owe

If you’re like most grads, you took out multiple student loans over your multi-year college career — the average borrower has 3.7 student loans, according to a 2017 Experian report.

So it’s best to start organizing by figuring out who you owe, how much you owe and when it’s due. Oh, and interest rate is important, too. Need some help figuring it all out? Then check out this article that explains how to find out how much you owe in student loans.

2. Pay Off Your Interest Before the End of Your Grace Period

If you have the cash, pay off at least the accrued interest on your federal student loans before your grace period runs out. It can save you a bundle of money by helping you avoid interest capitalization — when the interest gets lumped in with your principal amount and you start getting charged interest on the total amount.

Wondering where to find extra money before the deadline? Consider taking up a side hustle to make some extra cash to throw toward the payment.

3. Come Up With a Plan… a Repayment Plan

Didn’t land that six-figure job — or maybe any job? Rather than sticking your head in the sand and avoiding your student loan payments, you need to ask for help. That means getting yourself on an income-driven repayment plan.

These plans cap your monthly payment typically somewhere between 10% and 20% of your discretionary income. Contact the loan servicer for your loan to find out which plans you can qualify for.

4. Think About Forgiveness

It’s possible that you can get your student loans forgiven. But it’s not easy or fast… or likely (cue the second sad trombone).

But if you work in specific fields — like teaching or nursing — you could be eligible for loan forgiveness after a set number of years. There are typically a lot of hoops to jump through — including making sure your loan repayment program and your employer qualify — so be sure you know the requirements of your forgiveness program.

5. Avoid Delinquency and Default

Remember that part where I told you not to stick your head in the sand? This is why: If you miss your payment by even one day, your federal loan becomes delinquent. If you’ve missed payments on your Federal Family Education Loan (FFEL) or direct student loan for 270 days, your loan is considered to be in default.

If you can’t afford your monthly payment due to unemployment or an approved economic hardship, you might qualify for deferment or forbearance. You can also qualify for deferment if you’re enrolled in an approved graduate fellowship program.

During deferment, you won’t owe monthly payments on your federal loans and your subsidized loans won’t accrue interest (but all the rest will).

A high or good credit score allows you to qualify for better loans and credit cards with lower interest rates and more favorable terms. A poor credit score may not even qualify you for a loan.

If you don’t qualify for deferment, the other option is forbearance, during which your lender allows you to stop making payments or reduces your monthly payments for up to one year. However, during forbearance, interest will continue accruing on all of your loans.

Both options are only temporary fixes, and you’ll probably end up owing more money in the end. But at least you won’t wreck your credit score.

6. Consider Life After College (and Student Loans)

It can be tough to see beyond that soul-crushing debt, but remembering that there is more to life than student loans is important for your financial future.

First, while throwing every available dollar at your student loan might help you feel like you’re making progress in that arena, don’t sacrifice your present financial state by pillaging your emergency fund (you have one, right?). It’s there to cover those unexpected expenses — like a new set of tires or unexpected vet bill — without sending you into credit card debt.

Additionally, you shouldn’t sacrifice your future for today’s debts. Instead of paying every dollar toward student loans, start saving for your retirement now. With plenty of years to go, you’ll be able to build an impressive nest egg future you will thank you for.

Bonus: Socking away your money in a 401(k) or IRA reduces your taxable income. So if you do decide to apply for an income-driven repayment plan, the federal government won’t count the money you’re saving for retirement.

Cue the big brass band. You deserve it.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.

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السبت، 30 نوفمبر 2019

Haunted by Zombie Debt You Don’t Even Owe? Here’s How to Get Rid of It

Brains. Braaaaaains.

Sorry, just channeling my inner zombie. But if you’re in the mood to chop off something at the head, forget the fictional walkers and consider taking a whack at zombie debt.

Zombie debt is way less fun than it sounds but potentially scarier than the undead. It’s the debt — maybe a medical bill or store credit card you never paid — that’s so old you can’t be sued to pay it. But debt collectors buy up the debt and then try to trick or convince you to make a payment on it, which restarts the clock on the debt, allowing them to start hounding you again.

In the United States, 71 million adults — or about 31.6% — had debt in collections reported on their credit score in 2017, according to an Urban Institute study. Even at pennies on the dollar, that’s a lot of potential money for zombie debt collectors — aka debt scavengers — to scare out of unsuspecting victims.

And it’s not just that zombie debt is annoying. Negative items, like unpaid debts, must be removed from your credit report after seven years, according to the Fair Credit Reporting Act. If your debt is resurrected, it could be reported to the credit bureaus again and wreck your credit score.

So use that ol’ noggin of yours to stop debt collectors in their tracks with these strategies to fight zombie debt — no machetes required.

How Zombie Debt Is Born

Debt begins its life when you don’t pay your bill — it doesn’t matter if it’s because you can’t or won’t.

After a debt is 180 days past due, it enters collections — meaning the original creditor can sell your debt to a collections agency to recover at least some payment for the bill. The agency will in turn contact you (often repeatedly) to collect as much of the debt as they can.

But debt is rarely sold once, paid off and buried. One collection agency might sell your debt to another and then the next agency will resell it. That can take awhile.

Zombie debt isn’t necessarily old debt — it could be one that you’ve already settled, one that was wiped out in a bankruptcy or one that was misidentified and belongs to someone else.

Depending on your state and type of debt, after three to six years without any payments or activity, a debt is considered past the statute of limitations, meaning you can’t be sued for it. But collectors may pay bargain-basement prices for debt that they know is old in the hopes of recovering even a small portion of the money.

Even if the debt is past the statute of limitations, collectors can still contact you, and if the collection agency can get you to make just a small payment, they can restart the clock on your debt.

And thus zombie debt is born.

How to Fend Off Zombie Debt Collectors in 3 Steps

If a debt collection agency starts calling you about a bill you don’t recognize, it’s important to develop a clear plan of attack to avoid paying money you don’t owe. Don’t be a victim: Here’s how to fight back.

1. Demand a Debt Validation Letter

As unpleasant as it might be, answering a debt collector’s call is the first step to getting zombie debt off your back.

Yes, it can be overwhelming and scary, but this is your chance to take control of the situation. Rather than letting it harass and intimidate you, demand that the collection agency send you a debt validation letter.

Pro Tip

If you do still owe on the debt and you want to pay it off, ask for a secure website where you can make your payment and keep the receipt as proof — just in case the debt is zombified later.

A debt validation letter is a legal document outlined in the Fair Debt Collection Practices Act (FDCPA), a 1977 federal law that provides consumers with legal protection from abusive debt collection practices. Third-party debt collectors are required by law to send the letter to you upon request. They must include how much you owe, who you owe it to and what options you have for taking action.

Read the letter carefully for mistakes. By having the information in writing, you can begin your attack.

2. Send a Debt Verification Letter

They sound similar, but here’s the difference between debt validation and debt verification letters: A debt collector sends a validation letter saying what you owe, while you send a verification letter saying why you don’t.

By law, you have 30 days after receiving a debt validation letter from a collector to respond.

The key here is to address specifically what was in the debt validation letter — this isn’t the time to overshare financial info or try to explain your situation. If you’re not sure where to start, we have a debt verification letter template you can add to your zombie-fighting arsenal.

After you send the letter, the collection agency must cease collection activity until they mail you a verification of the debt information or a copy of a court judgment. You’ll then have the option to fight the case in court or set up a payment arrangement.

If you don’t get a response, there’s a good chance the debt collector was a scam artist.

But hold onto all your records in case another agency buys up the zombie debt and tries to pursue you again.

3. Fight Back: Know Your Rights

If you’ve done your due diligence to prove you’re not responsible for a debt, but the collections agency continues to hound you, it’s time to escalate the battle with the undead.

Here’s what to do and who to contact if you’re the victim of unfair debt collection practices:

Submit a complaint with the U.S. Consumer Financial Protection Bureau.
File a complaint with your state consumer protection agency through the state attorney general.
Register a complaint with the Better Business Bureau.
File a civil suit — you can find a lawyer in the National Association of Consumer Advocates directory.

If you do indeed still owe the debt and cannot pay the amount owed, reach out to the collection agency to ask about a repayment plan. By dealing with the debt collector directly, you could negotiate a lower amount since the agency didn’t pay the full amount for your debt anyways.

If the collection agency isn’t willing to deal or makes an offer that’s still beyond your means, consider reaching out to credit counselor — check out the Financial Counseling Organization of America or the National Foundation for Credit Counseling (NFCC) for their directories of member organizations.

With some diligence, hard work and meticulous record keeping, you can bury that debt once and for all.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.

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الجمعة، 29 نوفمبر 2019

6 Easy Ways to Outsmart Porch Pirates and Protect Your Holiday Packages

The porch pirates got me good one holiday season.

I arrived home after a long day at work to find two empty packages on my front stoop. The thermal sweatshirt that was supposed to be a Christmas gift for my dad? Gone. The pricy face cream I bought for myself? Gone. And the townhouse I was living in, which was on a residential street, didn’t have security cameras.

There were plenty of places to tuck the packages out of sight, but the delivery person was either too busy or had done so only to be foiled later by the thieves.

That was years ago. Now I can simply install a smart lock on my front door and have Amazon or Walmart deliver items directly to my living room. Thieves can’t steal your packages if there’s nothing on your doormat to yoink.

But what if you’re trying to receive packages and deliveries without allowing our e-commerce big brothers to let themselves in on a regular basis?

6 Ways to Stop Porch Pirates Once and for All

In a 2017 report, insuranceQuotes estimated that 25.9 million Americans had a holiday package stolen from their front porch or doorstep that year. And across the United States, 36% of consumers have reported having a package stolen at least once, at an average cost of $109.

Don’t want to be a part of that very sad group of people? Try one or more of these methods to deter package thieves when you’re doing your online holiday shopping.

1. Make Delivery Requests

Some online ordering systems allow you to make delivery requests, like putting the package in a secure area. Making a request doesn’t guarantee that it will be met, but you may be surprised at how attentive delivery people are when dropping off your goods. “Leave on basement steps” or “upstairs neighbor can sign” are simple instructions that can help ensure your package gets to you.

If you happen to run into your regular local USPS, UPS or FedEx carrier, you may be able to make requests in person. But keep in mind that your neighborhood delivery person may have the best intel on which bushes are ideal for concealing packages.

2. Work With a Neighbor

If you know your neighbors — come on, go meet your neighbors — you can work together to thwart package theft. If you have alternating or overlapping schedules, swiping a package off their stoop — for good, not evil — means you can make sure it gets into their hands after dinner or whenever they get home.

3. Get Packages Delivered to Your Workplace

Not every employer will welcome your holiday shipments with open arms, so check with your office manager to see if they’d mind signing for packages you don’t want to risk having delivered at home.

Hauling items home can be cumbersome later, but if you want eyes on a package ASAP, your workplace may be your best bet.

4. Pay for a Package Receipt Service

This isn’t the cheapest option, but it may be the most secure. Some businesses offer to receive packages for customers for a small fee.

I once lived around the corner from a dry cleaner that always had a line at the counter. Why so popular? Not only did it offer quick cleaning services, but you could pick up your dry cleaning and your packages in the same trip — and the hours were convenient, too.

5. Get Your Stuff Delivered to an Amazon Locker

It’s not quite as convenient as home delivery or the corner store, but if you’d rather have your Amazon package delivered to a secure location, add an Amazon Locker location to your account.

Amazon will deliver the package to the locker and when it’s ready for pickup, you’ll receive an email with a six-digit code to pick up the package from the self-service kiosk.

Lockers are located in stores, apartment buildings and malls across the United States, which offers you convenient times to pick up packages on in the evenings or on weekends.

And if you’re a Prime member, you get to use the lockers for free.

6. Watch Your Tracking Info Like a Hawk

Ah, the beauty of technology. I can see the exact moment my package went from a warehouse plane to another warehouse and onto a truck. And I can see the moment it finally lands at my home. Tracking services may not prevent you from losing packages to theft, but the available tools can help you stay up to date on its path and estimated arrival so you can plan accordingly.

Frequently, you can sign up for text or email updates on your package’s journey, and if you miss a delivery you need to sign for, you can sometimes have the package rerouted to a shipping service center, like the UPS Store, so the delivery person doesn’t spend three days knocking on your door.

Pro Tip

If you have the Ring doorbell camera, sign up for reports on the Neighbors App, where you can share info about package thieves if they hit your area.

The postal service even offers Informed Delivery, which sends you images of small pieces of mail that are on their way to your mailbox that day.

If you’re willing to make a bigger investment, home security systems like the Ring can also let you monitor your front door — and the police department can use the footage to track down the porch pirates.

If the worst-case scenario happens, detailed tracking information and video can help make a case to your credit card company, which may reimburse you for lost or stolen packages, or it could help you get a replacement item from the retailer.

Lisa Rowan is a former senior writer and producer at The Penny Hoarder.

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Spread Holiday Cheer Without Overspending. 7 Ways to Save on Gifts

Buying holiday gifts for all your loved ones can add a bunch of financial stress to what’s supposed to be a joyous time of year.

The commercialism of the season encourages you to buy-buy-buy, meaning many of us overspend or even go into debt. Your gifts might put a smile on someone’s face — but at what cost?

Rethink some of your holiday shopping plans if you’re trying to survive Christmas on a budget. Here are seven tactics you can use to spend less.

7 Gift-Giving Strategies to Celebrate Christmas on a Budget

1. Shop with cash.

Embrace a cash envelope budget for holiday spending. Figure out how much you feel comfortable spending on gifts this year, and withdraw that amount from your bank account. Then pay for gifts only with that cash. Once the money’s gone, that’s it. Leave your debit and credit cards at home if you think you’ll be tempted to swipe. You’ll be forced to be strategic about what you buy but thankful that you don’t go over budget.

2. Limit your Christmas list.

Be selective about who you buy presents for. Maybe you get something for your parents but skip giving gifts for your siblings. Let your loved ones know you’re doing Christmas on a budget this year. If you want to minimize some of the awkwardness of not having something to exchange, you could get a box of holiday cards, write a sweet personal message inside and tape a candy cane to the envelope.

3. Get in on group giving to whittle down your Christmas shopping list.

This can be done a few different ways. You can select one gift to give a group of people — like a family board game for your nieces and nephews — rather than buying everyone individual gifts. You could participate in a Secret Santa or similar gift exchange with a nominal spending threshold. Or you can get a group to chip in on a bigger purchase. For example, if you want to buy a gift for your child’s teacher, get a bunch of parents to contribute a few bucks to get something nice.

4. Try the four gift rule.

If you tend to overspend on your kids, take a more lean approach to giving this year. Instead of checking everything off your children’s wish lists, buy only four things — something they want, something they need, something to wear and something to read. Your kids will still get a variety of presents (and probably extra things from the grandparents, too) and you won’t be swimming in credit card charges come Dec. 25.

5. Shop second-hand.

A gift doesn’t have to be brand new to be new to the recipient. Think vintage clothing for your fashion-forward friend or gently-loved toys for your toddler who won’t even know they’re preowned. A recent survey by the second-hand selling app Mercari found three in five Americans said they’re comfortable receiving something second-hand as a gift. One thing about second-hand treasures: You don’t even have to buy anything. Regift unused items you have at home or check to see if there’s anything interesting up for grabs from your local Buy Nothing Group.

These dos and don’ts to holiday shopping at a thrift store will help you select the perfect used gift.

6. Make your own gifts.

There’s a DIY Christmas gift (or DIY stocking stuffer) for every skill level. Add hot cocoa mix to Mason jars for an easy way to do Christmas on a budget. Knit a scarf if you’re an experienced crafter. Though you’ll still spend money on supplies, you’ll likely pay less than store-bought equivalents. And homemade presents show the thought you put into the gift — and it’s the thought that counts.

7. Rethink the “experience” gift.

Opting for experiences rather than material items has grown in popularity, but concert tickets or theme park passes are no easier on the wallet. Instead, reflect on your skill set to see what you could offer up family and friends that can’t be wrapped and tied with a bow. Redo your best friend’s resume or host a one-on-one cooking class for your brother.

Nicole Dow is a senior writer at The Penny Hoarder.

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Overcoming Unintentional Shopping

Last year on Black Friday, I made this agreement with myself that I was going to utterly ignore it (aside from a bit of investigating that I felt I needed to do for an article or two that I was writing). I wasn’t going to buy anything. I wasn’t going to go out shopping. Rather, I was going to spend the day playing some games with my kids, working on a homemade gift for the holidays, and getting some reading in.

At three different times during the day, I found myself looking at Black Friday sales. I actually took note of it at the time, thinking it would make for an interesting post someday.

So, how did that happen?

The first time, I was reading social media and I noticed that a person I knew was posting about an item on deep discount, and I clicked through to check it out. I didn’t buy anything.

The second time, a friend texted me about three separate items that he thought I might be interested in. I clicked through the links without a second thought. I didn’t buy anything.

The third time, my wife and I were quietly talking about Christmas gifts for people and she started looking for a few items on her phone, with me looking over her shoulder. I believe my wife bought one item as a gift.

This isn’t to say that my goal was some kind of failure. During the day, I never went directly to seek out sales on anything, online or off. Rather, I came to those sales through secondary influences: social media, a friend sharing things he thought I’d like, my wife wanting to find good holiday gifts for our kids.

Social media got me to a Black Friday sale, even though I wasn’t intending to shop.

A friend got me to a Black Friday sale, even though I wasn’t intending to shop.

My wife did the same.

In each of those cases, I didn’t have any intent to do any shopping. I sat down to see what a few distant friends were up to on Thanksgiving and the day after, and yet that got rerouted into a shopping experience. I read a message from a friend, and that got routed into a shopping experience. Even sitting down with my wife on the couch for a bit, as innocuous as that was, got routed into a shopping experience.

The point is this: we’re often led in subtle and unintentional ways to situations where we can spend money on things we might want, and it happens more often than we realize. I didn’t really leave the house all day long last year aside from going on a rural walk, and I never picked up a device once with the intent of shopping online, but I wound up checking out at least three different retailers.

And, truth be told, I probably would have forgotten those visits had I not made note of them, and there’s a good chance I would have made at least one purchase if I wasn’t being extra aware of my choice to avoid Black Friday entirely.

They would have been forgotten visits and possibly forgotten purchases.

Here’s the take-home message from this: we’re often subtly influenced to buy, particularly in online settings, even when we don’t really intend to be shopping, and often those encounters are forgotten quickly thereafter, even if we make a small purchase. We’re tempted by products to the point that we’re actually in the store considering a purchase — and sometimes we even make a purchase – when we’re not planning to do so at all, and we often forget about it shortly thereafter.

What’s the harm in that? We’re often left with a little remnant of the temptation that took us there in the first place. We thought enough about the item to take action, to visit that online shop or to step into that convenience store, and even if we didn’t make a purchase, that doesn’t change the fact that we were tempted into going there.

Even if we have the best of intentions, we can still find ourselves falling into unintentional shopping, tempted into spending money when we’re not even really thinking about it. It’s easy to see how we can be tempted into it online, but it can happen when we’re anywhere.

We’re strolling by a vending machine and feel a bit thirsty so we slip a couple of dollars in the machine.

We have to stop for gas and need to go to the bathroom, but then we spy something when we’re in the convenience store and swipe our card to get it.

We’re going somewhere with a friend but they need to make a “quick stop” for something.

Those are instances of unintentional shopping, and whenever you’re shopping, particularly without any intention at all, there’s a chance that you’re spending money on something that you really don’t need or even want at all.

The easiest thing to do to avoid this is to simply avoid all instances of unintentional shopping, but that’s a lot easier said than done. If you’re on a road trip and you stop for gas, it’s pretty silly to not go into the gas station to use the bathroom because of a chance that you might buy something. It’s pretty nonsensical to never read a message from a friend because they might be sending you a link to an online store.

So, what can you do instead?

First, be aware of it. If you’re not intending to shop for anything right now, then that means if you go into a shop, it’s pretty silly to buy anything, even if it looks cool. That item you just saw would have never been on your radar at all if you hadn’t just unintentionally went shopping, so it’s completely unnecessary to buy it.

For me, I try to keep the purpose of what I’m doing in mind. If I’m browsing social media, I’m trying to keep up with some friends, not buy something. If I’m reading a text, I’m communicating with a friend, not buying something. If I’m going into a convenience store, I’m using the bathroom, not buying something. My intent is not to buy, so I’m not going to buy.

Second, just don’t click through. If someone sends you a link to an online store, don’t click through. If you see a link to an online store on social media, don’t click through. There’s no worthwhile reason to do so. Just keep moving along.

It’s actually a pretty useful habit to build. If you see a link on social media and it’s not truly important to you in any way, just don’t click it. The same is true if a friend sends you a link or if you get a link in your email. Just. Don’t. Click.

Third, don’t take the means to easily spend money with you. If you aren’t going with the intent to spend, don’t take money with you. Don’t take credit cards with you. Leave that stuff at home in a secure place.

That way, if you do find yourself unintentionally shopping, you don’t have the means with which to buy anything anyway, so it becomes a moot point.

Fourth, pare down your social media. Stop following companies and retailers. Stop following “influencers.” Instead, stick just to people you know well. Anything beyond that circle is just throwing junk at you anyway.

Over the last year or two, I’ve eliminated all but two social media platforms from my non-professional life and the things I’m following on there have been drastically cut back. This has resulted in a big cutback in terms of the time I spend on social media and certainly the number of links of all kinds I’ve clicked through and products I’ve been exposed to.

Finally, don’t share e-commerce links yourself. Don’t tell friends about big sales. Don’t share the latest products. Doing so encourages your friends to share things like that back with you.

The only time you should share things to buy with people is if they’re requesting it. Otherwise, keep those product suggestions to yourself. This gradually and subtly nudges your friends to do the same, meaning there are less opportunities for you to unintentionally shop online.

Unintentional shopping brings almost no value into your life while bringing a hefty financial cost along for the ride. You can’t completely stop it, but it’s pretty easy to slow it to a crawl, and your wallet will thank you.

The post Overcoming Unintentional Shopping appeared first on The Simple Dollar.

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Dear Penny: I Just Got a Balance Transfer Offer. Is It Too Good to Be True?

Dear R.,

Banks want you to pay attention to that dazzling low APR and ignore all the bank-speak.

Consider that credit card agreements average nearly 5,000 words. They require a reading level about two grades above that of the average American. Banks make a lot of money because most people will focus on the 1.9% introductory APR and ignore the other 5,000 words.

So I applaud your skepticism and urge you to look at any credit card offer through that “is this too good to be true?” lens.

With a balance transfer credit card, you transfer your debt from one or more cards onto a card with a low introductory rate, sometimes zero percent. Lots of people successfully use balance transfer cards to get out of debt faster and save on interest.

But by offering you a balance transfer card, your bank is trying to lure you away from your current card companies. You’re paying a lot of interest to those companies. Your bank wants the pleasure of charging you all that interest, and they’re willing to fight for it. So they give you a temporary low interest offer in hopes that you’ll still have debt when those nine months are up.

To determine whether you want to play this game, you’ll need to be on the lookout for a few things in all that banking mumbo-jumbo.

The first thing to look for is the fees. You’ll typically pay a fee of 3% to 5% of the amount you transfer. That means if the balances you’re transferring total $5,000 and you have a 3% fee, you’re starting with $5,150. Many balance transfer cards charge an annual fee on top of that.

Still, these are typically pretty straightforward. And considering that at the higher end, credit card APRs are often over 20%, you stand to save a lot of money on interest as long as the fees are reasonable.

Where banks really get sneaky is with all the APRs.

That 1.9% rate you mention probably only applies to the transferred balances. There’s probably a way higher APR that applies to any new purchases you charge to the card.

Also look for the regular APR, i.e., the interest you’ll be charged once those nine months are over. Many people find that the regular APR on their balance transfer card is a couple points higher than the APRs on their existing cards.

Many agreements also state that the bank can cancel your promotional APR if you make late payments or miss them altogether.

Because of all the baiting and switching surrounding APRs, I suggest pursuing a balance transfer card only if you can budget enough each month to wipe out your debt completely during the promo period. You also need to solemnly swear that you will not make additional purchases on this card.

If you do decide to go this route, I recommend shopping around before you take up this offer. Nine months is a relatively short promo period — many cards offer between 12 and 21 months, and a longer low-interest period gives you more breathing room to nix this debt. Bonus points if you can qualify for a zero-interest promotion.

But if you know that you won’t be able to pay off your debt during the introductory period, a debt consolidation loan may be a better option. Sure, you’ll pay more than 1.9% interest, but you’ll get the simplicity of a fixed monthly payment and you won’t have to juggle multiple APRs.

Just remember that banks make a lot of money because people don’t know what they’re signing up for. Don’t be one of those people. Approach future credit cards and loans with the same scrutiny you’re bringing to this offer, and you’ll do just fine.

Robin Hartill is a senior editor at The Penny Hoarder and the voice behind Dear Penny. Send your questions about credit cards to AskPenny@thepennyhoarder.com.

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Can my husband give me a property tax-free?

My husband owns an investment property worth around £200,000. Can he transfer it to me without paying stamp duty or capital gains tax?

Patrick Connolly Fri, 11/29/2019 - 00:54

From

JH/via email

A transfer of an asset between spouses, or civil partners is treated as a ‘no gain, no loss’ disposal. This means that your husband won’t have to pay CGT on his ‘disposal’ to you and you won’t have to pay stamp duty on your acquisition from him.

However, for CGT purposes, you will be deemed to have acquired the property at the same cost that your husband originally bought it for. This will be taken into account if you dispose of the property in the future when working out any potential CGT liability that you may have.

It is important to note that transfers between spouses are only treated in this way if the spouses are living together at some point during the tax year in which the transfer takes place.

Patrick Connoly, certified financial planner at Chase de Vere

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Account switching: challenger banks hot on the high street’s heels

Over six million people have switched their current account since 2013. So is it time you changed banks?

Stephen Little Fri, 11/29/2019 - 00:22

Nationwide, HSBC, NatWest and Monzo attracted the most current account switchers between April and July this year, according to the latest data from Bacs, which administers the Current Account Switch Service.

Nationwide was the clear winner with 26,466 current account customers joining.

One reason may be its FlexDirect account, which offers 5% interest on balances up to £2,500. This offer lasts for one year and when it ends the rate drops to 1%. Agreed overdrafts are free for the first year but you’ll need to pay in at least £1,000 a month.

HSBC, which includes figures from its subsidiaries First Direct and M&S Bank, had a net increase of 15,782 current account customers.

The HSBC Advance Account has a generous switching bonus of £175, but you must pay in a minimum of £1,750 to keep it open.

It is also linked to a regular savings account, which pays an interest rate of 2.75%.

With the First Direct 1st Account you will get a £50 bonus if you switch. To qualify, you’ll need to transfer via the Current Account Switching Service, transfer your direct debits and deposit at least £1,000 in the first three months.

If you open an M&S Bank Current Account you will get a £100 M&S gift card plus an additional £80 after 12 months if you choose to switch.

NatWest had a total of 15,735 current account switchers between April and June, marking a reversal of fortune from last year. This is likely down to its switching bonus – £150 and 2% back on household bills. You have to pay in a minimum of £1,500 each month. If you want to take advantage of the switching bonus you will have to get in quick as the offer ends on 6 December.

Challenger banks are also proving to be increasingly popular with people looking to switch current accounts.

Monzo Bank had an increase of 13,453 people switching to its current account, while Starling Bank gained 6,686 new customers. Both banks offer the best rates for spending and cash withdrawals abroad, while Starling Bank offers 0.5% interest on current account balances.

Both also come with a slew of in-app third party financial products, although it is best to shop around before deciding to take advantage of them.

Halifax had the most customers leaving between April and June, with 12,058 people switching. It was followed by Barclays (10,988) and RBS (10,440).

Despite 8,110 customers leaving TSB, it offers the second highest paying current account, at 3%. You’ll need to pay in at least £500 a month, register for internet banking, and opt in for online bank statements and paperless correspondence to get this headline rate.

Featured product

Nationwide FlexDirect Current Account

This account comes with 5% interest on balances up to £2,500 and a free overdraft for the first year. Note, however, that the interest rate drops to just 1% after 12 months.

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How you can gift a games console now… or a cruise later

Imagine handing over a beautifully wrapped Christmas present to an excited child. Picture the delight on their face as they wrestle off the ribbon, rip off the paper only to reveal… an empty box

Rachel Rickard… Fri, 11/29/2019 - 00:08

At this time of year lots of financial experts do the rounds telling us to spend less on presents and invest in our loved one’s futures instead.

I’ve already received emails suggesting investing in gold on behalf of family and friends rather than buying them jewellery, or saving money for a child’s university years rather than giving them presents they’ll likely discard by new year.

But even though many of us know that saving or investing for loved ones is a prudent thing to do, it is hard to do in practice.

It is hard to give up the joy on someone’s face as they open a gift you’ve bought them.

I am not seriously suggesting we all gift empty boxes containing scraps of paper saying ‘Happy Christmas! I’ve set up a pension for you!’ But even so, there are few young people who would act as grateful on hearing you’ve invested for them as upon handing them a wrapped gift.

It is also hard to give up something tangible for something abstract.

There is an old experiment that psychologists do to measure children’s self-restraint.

They tell young participants they can either have a marshmallow now, or two in an hour – and see which one they choose.

Many children struggle to find the self-restraint to opt for two later. But at least in this experiment they can comprehend and visualise what they will gain in the long term for the short-term sacrifice.

Gifting investments for the future does not have this advantage. It is the equivalent of giving up one marshmallow now for an unspecified number of marshmallows to be received in an uncertain amount of time later on.

So I’ve been thinking: what if we made the trade off more equal, by giving up something concrete for something else just as tangible?

I tried it out, and the results are stark. Instead of giving someone a games console this Christmas, you could pay for their rent and living costs for a month at university – or a luxury holiday in retirement.

This is calculated on the cost of a Nintendo Switch (cost around £299 with one game), and investing for a 13-year-old for 10 years in a Junior Isa (which would make around £440 at 4%),or in a pension to age 68 (which has the added benefit of tax relief from the government and would make around £3,230).

Similarly, you could buy a four-year-old a Juno My Baby Elephant (one of the most popular gifts for young children this year) for £89.99 – or give them £1,384 to spend in retirement if you put the cost in a pension instead.

I’m not saying we shouldn’t give presents at all – where would be the fun in that. But just holding a little back for later can make a huge difference to your recipient’s future. Fifty pounds becomes £100 when invested for 18 years (assuming returns above inflation of 4%). Imagine how this would build up if you did it every year.

You may not necessarily be around for them to thank you, but you can be sure they will be grateful for your foresight. Maybe true selflessness comes from giving up their gratitude.

And with the Scroogiest column I’ve ever written out of the way, it only remains for me to wish a merry Christmas to you all.

Email editor@moneywise.co.uk

Twitter @rachel_spike

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HSBC and Santander to refund millions to customers after breaking overdraft rules

The competition watchdog says both banks broke rules requiring them to contact customers before they go overdrawn

Stephen Little Fri, 11/29/2019 - 10:11

HSBC and Santander have agreed to refund hundreds of thousands of customers after they broke bank overdraft rules.

The competition regulator, the Competition and Markets Authority (CMA), says that both banks broke a legal order that requires them to send text alerts to customers before they go into unauthorised overdrafts.

HSBC broke the rules twice and is refunding £8 million to 115,000 customers.

Santander broke the order six times and has agreed to issued a refund, but it has not yet worked out how many customers were affected or how much they will be paid.

The CMA says the breaches first occurred in February 2018. The refunds will cover all fees incurred by customers who went into unarranged overdrafts and did not receive a text alert.

Since 2018 banks have been required to send text messages to customers when they go overdrawn to help them avoid paying unnecessary charges.

HSBC says it will be contacting customers who incurred overdraft charges to refund them.

An HSBC spokesperson says: “We apologise to those customers who for different reasons did not receive an alert. We will continue contacting customers who incurred overdraft charges as a result of these issues to apologise and provide a refund.”

Santander says it “working to identify and refund all affected customers as quickly as possible”.

A spokesperson from Santander says: “We are very sorry that some customers in certain circumstances were not sent the required overdraft alerts. The introduction of these alerts is a move we welcomed and believe is a real support to customers.

“We have carried out a detailed review to understand why the errors happened and have taken steps to fix the issues.”

The CMA it is also directing HSBC and Santander to do an independent check of their compliance with the order between February 2018 and December 2019.

Earlier this year, Nationwide Building Society agreed to refund £6 million to its customers after it failed to send them correct text warnings.

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