These and more are the burning questions we wanted answered. So we went directly to the people and surveyed 1,000 working professionals across the U.S. to uncover exactly how private Americans are with their money and personal finances.

Key Findings

It’s no secret that talking about money — especially salaries, debt, and credit scores — is taboo in American culture. Many Americans try to keep their finances as secret as possible, sometimes even going as far as to safeguard this information from their partners. 

In our survey of working Americans regarding their financial attitudes, we discovered that:

• Only 3 in 10 Americans are comfortable talking about their finances with others.
• On average, American men claim to be more comfortable discussing their finances than American women.
• 30% of Americans have admitted to lying about their income at least once.
• Only 41% of employed Americans know how much their colleagues make, and 25% of those have used that information to negotiate their own pay.

Let’s dive deeper into the specifics of how private Americans are with their money.

Americans’ Privacy With Their Money

To accurately depict the extent to which Americans like to keep financial information under wraps, we’ve divided our survey results into 3 categories: privacy with finances at work, at home, and with others.

Privacy With Finances at Work

Regarding the workplace, finances are rarely discussed among colleagues, with nearly half of employed Americans (43%) stating they are uncomfortable openly discussing their salary with their coworkers. Money conversations at work being viewed as inappropriate could be attributed to a few factors, such as leadership discouraging financial discussions and workers being afraid of making their colleagues uncomfortable or underappreciated by their employer. According to our survey results:

• Less than half of employed Americans (41%) know how much their colleagues make.
• Of those who know their coworkers’ salaries, about 25% have used that as leverage for negotiating their own. 30% of male respondents claim to have done this, compared to only 20% of female respondents.
• About 1 in every 3 Americans (36%) have lied in a job interview about how much they currently make.
• Only 24% of Americans reported feeling indifferent concerning comfortability discussing their finances at work.
• Younger generations are more comfortable discussing their salary with colleagues than older generations. Nearly half of Gen Z (45%) and millennial respondents (41%) stated they feel comfortable discussing their finances at work. In comparison, very few Gen X (22%) and baby boomer respondents (21%) reported they would be comfortable doing so.

Privacy With Finances at Home

Financial privacy extends beyond work and into their home lives for some Americans. They hide details from debt to annual income to even how much is in their savings accounts from romantic partners, family members, and housemates. This desire for financial privacy runs so deep that about 1 in 5 Americans (22%) stated they would rather share their sexual history with their parents than their current bank statement. While feeling the need to keep finances a secret at home stems from many sources, the recurring theme is a fear of being judged by loved ones. From our respondents, we found that:

• About 1 in 4 people in relationships are hiding that they have debt from their partner.
• A slim 14% of those making $150K+ annually hide their debt from their partner, whereas a striking 31% of those who make under $40K annually keep their debt hidden from their partner.
• A quarter of millennials say their parents know exactly what’s in their savings.

Privacy With Finances With Others

The area in which Americans maintain the most financial privacy is within their social lives. This includes keeping their financial details under lock and key, even from the friends they trust—over 70% of Americans don’t share their annual incomes with their closest friends. As with maintaining financial privacy at home, many Americans likely avoid discussing their finances within their social circles out of fear of judgment. Upon asking working Americans about their financial privacy habits with others, we uncovered that:

• Only 3 in 10 Americans feel extremely comfortable discussing their finances with others, with men claiming to feel more comfortable than women.
• Gen Zers are the only generation that would rather share their financial history than their DMs.
• With just a slight majority (57%), Americans would rather share their search history than their financial history.
• Of the 30% who admitted to lying about their income at least once, men claimed to most frequently lie to friends (69%), coworkers (44%), and job interviewers (32%). Comparatively, females lied most often to friends (55%), job interviewers (38%), and then coworkers (34%).

Methodology 

We conducted a survey involving 1,000 employed (full-time or part-time) Americans. This survey aimed to reveal valuable insights about Americans’ habits and tendencies regarding their comfortability when talking about finances. The questionnaire covered various aspects, including privacy specifics based on audience or financial details, privacy habits (lying, for example), and comfortability scores. Our survey was administered from January 3 to 4, 2024.

Final Thoughts

Our research confirms that working Americans greatly value their financial privacy. With only 30% of professionals feeling completely comfortable speaking openly about their finances, it’s clear that discussing money remains a touchy subject for many. From lying about debt at home to the lack of salary transparency in the office, our results show that Americans keep money private in all facets of their lives.

Let’s find out how long you can expect negative information to stay on your credit report, what you can do about it, and how to improve your credit so the positives outweigh the negatives.

What Is Negative Information on Your Credit Report?

Negative credit report information, also known as derogatory marks, is any information that lenders or creditors might consider unfavorable. Generally, negative credit report information drags down your credit score and indicates you haven’t kept up with your financial obligations.

Serious credit issues such as bankruptcy, foreclosure, or repossession can severely impair your credit history. Account defaults, charge-offs, collections, and late payments can also negatively impact your credit report and score. Hard credit inquiries are also negative marks but to a lesser extent than negative information that indicates you haven’t paid as agreed.

What Negative Credit Report Marks Do to Your Credit

Derogatory marks on your credit report typically drag down your credit score. These marks indicate you haven’t paid bills on time and can suggest that you’re a risky borrower. 

Lenders are less likely to offer credit products such as credit cards or loans to borrowers with negative marks on their credit reports. You should anticipate paying higher interest rates and costs than borrowers without adverse credit marks if you are approved for credit cards or loans.

Negative credit report items could also affect your ability to get housing, utilities, and, in some cases, employment. 

How Long Negative Credit Report Information Lasts

Having negative marks on your credit report can strain your financial well-being, but derogatory marks don’t last forever. Typically, negative credit report information stays on your credit report for 7 years from the date of first delinquency, though the details depend on what type of derogatory mark you’re dealing with.

Late Payments: 7 Years

A late payment can stay on your credit report for up to 7 years from the delinquency date. But there’s good news: a late payment only appears on your credit report if it’s over a month late. If you’re just a few days behind, you’ll pay a late fee and interest, but it’s just between you and your credit card company — no credit reporting involved unless you let your bill go unpaid for weeks. 

Also, late payments tend to affect your credit score less as time goes on. While the late payment will stay on your credit report for up to 7 years, it will have less impact on your credit than the on-time payments you’ve made in more recent history.

What you can do about it: You can’t undo late payments, but you can do better next time. Focus on making on-time payments, even if you’re just paying the minimum.

Charge-Offs: 7 Years

Expect a charge-off to stay on your credit report for up to 7 years from the date you first missed your payment. Charge-offs occur when a lender deems your account an uncollectible debt. A charge-off is considered a loss for the creditor, which usually sells the debt to a collection agency. Most charge-offs happen when you’re severely late making payments on your account, usually between 120 to 180 days of delinquency, so your charged-off account also involves late payment marks on your credit report. 

What you can do about it: It helps to pay the charged-off account in full or negotiate a settlement. Even if it takes you a long time to get around to it, lenders always prefer to see that you’ve paid your debts.

Collections: 7 Years

Collection accounts generally stay on your credit report for up to 7 years from the first delinquency. A collection account may appear on your credit report when an account becomes severely late and the creditor sends your account to a collection agency. Collection accounts often coincide with charge-offs. And as with charge-offs, you’ll likely have late payment marks associated with the collection account on your credit report. 

What you can do about it: Paying collection accounts can reflect positively on your credit report even if the negative account remains on your credit report for several years. Some collection agencies may accept pay-for-delete arrangements, where the agency promises to remove the derogatory account from your credit report if you pay an agreed-upon amount.

Bankruptcy: 7 or 10 Years

Expect bankruptcy to stay on your credit report for 7 years if you file Chapter 13 or 10 years for Chapter 7. The months or years leading up to bankruptcy undoubtedly include late payments, collections, and charge-offs, so you should expect those to affect your credit, too. Many people feel shame about turning to bankruptcy to manage serious debt problems, but it could be a more positive move for your long-term credit than dragging out poorly managed debt for years. 

What you can do about it: Rebuilding credit should be your goal after bankruptcy. While your options may be limited, you could qualify for credit-builder loans or secured credit cards to help you build credit. Building a positive payment history and demonstrating responsible credit use with credit cards and loans can go a long way to rebounding after bankruptcy.

Foreclosure: 7 Years

A home foreclosure will stay on your credit report for up to 7 years from the first missed payment. Foreclosures occur when you default on your home loan, and the bank takes your home to repay your mortgage balance. Like bankruptcy, a foreclosure is a severely negative mark on your credit report. 

What you can do about it: Avoiding a foreclosure is ideal, and foreclosure prevention programs may offer counseling and assistance to help you stay in your home. But if it’s too late and you have a foreclosure on your credit report, focus on rebuilding your credit by staying current on your accounts and maintaining low balances as much as possible.

Repossession: 7 Years

A repossession can stay on your credit report for up to 7 years from the first late payment. Lenders may seize or repossess collateral property, such as a vehicle, if you default on your loan by missing payments. Like a foreclosure, repossessions are severe negative credit marks. 

What you can do about it: As with a foreclosure, you can move on from repossession by getting or staying current on your other financial responsibilities, especially loans and credit cards.

Student Loan Default: 7 Years

Delinquency or default on student loans can stay on your credit report for up to 7 years. A late student loan payment can appear on your credit report after 30 days for private student loans and 90 days for federal student loans. Private student loans may go into default after 3 months, and federal student loans after 90 days.

What you can do about it: As with a foreclosure, prevention is best. The U.S. Department of Education has various federal student loan repayment programs, and private lenders may offer deferment or forbearance if you’re experiencing hardship. If you have a student loan default on your credit report, do what you can to pay the balance and stay current on your other financial obligations.

Unpaid Child Support: 7 Years

Unpaid child support may reflect on your credit report for up to 7 years. Child support enforcement agencies may report overdue child support amounts, usually when child support arrears reach $1,000 or more. The agency may agree to remove some or all negative information after you pay in part or in full.

What you can do about it: Getting current with child support can help keep the negative information off your credit report in the future.

Hard Inquiries: 2 Years

Hard credit inquiries may stay on your credit history for up to 2 years. While hard credit inquiries aren’t particularly negative credit information like bankruptcy or serious account delinquency, inquiries can temporarily lower your credit score. Lenders may hesitate to extend credit to borrowers with several recent hard inquiries, as it may indicate that you’re getting in over your head with credit.

What you can do about it: Try to limit how many hard inquiries you get on your credit report by prequalifying for credit cards and loans before you apply. That way, you can be fairly certain you’ll be approved, and the hard inquiry will be worth it.

Removing Negative Marks From Your Credit Report

If you’d like negative information off of your credit report sooner than later, there are a few approaches you can try:

• Review your credit report to identify derogatory marks.
• File a dispute for errors, such as accounts that aren’t yours or the wrong date or amount.
• Negotiate with creditors or debt collectors and ask if negative accounts can be removed if you pay the balances off.
• Write a goodwill letter to ask for the removal of negative credit information.
• Wait for the negative credit mark to fall off your credit report.

In general, it’s a good idea to pay down your debt, even if it’s gone negative on your credit report. According to Experian, paying a negative account doesn’t re-age the debt. An account that was past due but has been paid looks much better on your credit report than one that remains delinquent.

Be wary of anyone claiming they can fix your credit and remove negative but accurate information. The Consumer Financial Protection Bureau warns against companies that promise to fix your credit for an upfront fee. You can dispute inaccurate information on your credit report for free. 

Keep in mind that negative credit reporting limits are different than the statute of limitations on debt. Negative credit reporting limits cap how long a derogatory mark can stay on your credit report. In contrast, statutes of limitations limit how long a creditor or debt collector can sue you to collect a debt.

Most states have statutes of limitations between 3 to 6 years for debts, though some debts, such as federal student loans, aren’t subject to a statute of limitations.

Improving Your Credit History

The best strategy for dealing with negative credit report information is often focusing on actions you can take to build a more positive credit history. While you should remove inaccurate negative information, it can be challenging to remove accurate derogatory marks. 

These are just some of the ways you can move forward and improve your credit despite negative information on your credit report:

• Pay your bills on time, making at least the minimum payment.
• Pay more than the minimum whenever you can so you can lower your credit utilization.
• Reduce balances as much as possible so you have less overall debt.
• Keep old credit card accounts open to maintain the longest credit history you can.
• Limit new credit applications to products you need, prequalifying before formally applying.

Final Thoughts

Generally, negative information can stay on your credit report for up to 7 years. Still, derogatory credit marks gradually lose their impact over time, especially when your more recent credit behavior is positive. You can dispute errors, negotiate with creditors, and replace derogatory credit information with responsible credit use, such as paying your bills on time and reducing your balances.

Millennials faced a tough economic outlook in their early working years. The impacts of the Great Recession, unprecedented levels of student loan debt, and stagnant wage growth made it difficult² to find good jobs and build wealth. But over time, the outlook has improved. Millennials are now the largest segment of the labor force.³ Within the last few years, they have also become the largest share of homebuyers.⁴ And other unique characteristics of the generation⁵ — like higher educational attainment levels, especially for women — also contribute to economic advancement.

The COVID-19 economy also created some new opportunities for the millennial generation. Tightness in the labor market for much of the pandemic allowed many workers to change jobs in the last few years — sometimes multiple times — in search of higher wages or better working conditions. A wave of early retirements among older workers during the pandemic opened up opportunities for younger workers to move into higher-earning roles. And after working remotely during the pandemic, many workers have since successfully pushed for permanent work-from-home or other flexible arrangements that give them more control over where they work.

Because of these trends, the U.S. experienced a sharp rise in the rate of people moving across state lines from densely populated and expensive states to those offering some combination of more affordable housing, space for home offices, lower taxes, and better recreational opportunities. Such moves were common among wealthy millennials.

Out-of-State Migration Over Time

Out-of-state migration is rising after reaching historic lows. Image Credit: Upgraded Points

While out-of-state migration as a percentage of the total population remains near historic lows, out-of-state migration as a percentage of those who moved has increased significantly in recent years.

In 2000, nearly 1 in 5 people who have moved left 1 state for another. This rate fell off sharply as the housing bubble burst and the Great Recession set in, making it harder for people to find economic opportunities that justified an interstate move.

The out-of-state migration rate fell to a low of 11.5% in 2010 but began to move upward as the economy recovered in the following decade. But in the wake of the COVID-19 pandemic, out-of-state migration has risen sharply, jumping from 14.2% in 2020 to 17.3% in 2022.

Characteristics of Out-of-State Movers

Younger and lower-income Americans were more likely to move out of state. Image Credit: Upgraded Points

Typically, however, rates of migration are higher during workers’ younger years. Workers have fewer major family or financial obligations at this stage of life, which allows them to be more mobile in pursuing job opportunities.

According to individual tax return statistics from the IRS, nearly 6% of those under age 25 moved out of state between 2020 and 2021, as did 4.5% of those aged 26 to 34 and 2.7% of those aged 35 to 44. In contrast, fewer than 2% of those in the 45+ age cohort migrated out of state.

Income was also a factor: lower earners moved between states at higher rates, with 3.7% of those earning $10,000 or less doing so. The highest earners — those making more than $200,000 — also moved at a slightly higher rate than most middle-income workers.

Where Are Wealthy Millennials Moving?

While Florida and Texas gained the most wealthy millennials, Vermont saw the largest percentage gain. Image Credit: Upgraded Points

Between COVID-19-related changes in the labor market and the preexisting tendency of younger and highest-earning workers to be mobile, millennials in the top income brackets have frequently been on the move. 

In total numbers, Florida and Texas have been the greatest beneficiaries, each adding more than 15,000 millennials who earned more than $200,000 in 2021. California and New York — where the high cost of living, especially for housing, is a persistent challenge — fared worst, losing around 31,000 and 27,000 wealthy millennials, respectively. 

On a percentage basis, however, states in New England, the Mountain West, and the Southeast added wealthy millennials the fastest. Vermont (+8.5%) and Maine (+5.5%) led in New England, Idaho (+7.4%) and Montana (+6.7%) in the Mountain West, and Florida (+5.6%) and Tennessee (+4.5%) in the Southeast.

For a breakdown of all 50 U.S. states, here is the report’s complete data table:

Methodology

To determine the states attracting the most wealthy millennials, researchers at Upgraded Points analyzed the latest data from the IRS Statistics of Income Division’s 2021 U.S. Population Migration Data.

The researchers ranked locations according to the net inbound migration of wealthy millennials as a percentage of wealthy millennial residents the year prior. For the purposes of this analysis, net gain or loss of wealthy millennials was defined as the difference between those millennials who moved into and those millennials who moved out of a given state based on individual tax return data spanning 2 years.

Additionally, wealthy millennials were defined as those ages 26 to 45 in the year 2021 who reported earning over $200,000 on their 2021 federal income tax returns. In the event of a tie, the location with the larger net inbound migration of wealthy millennials was ranked higher.

Final Thoughts

The millennial generation, aged 27 to 42, is becoming a dominant force in America’s economy as they enter their peak earning and spending years. Despite facing economic challenges early in their careers, including the Great Recession and high student loan debt, their economic outlook has improved. They now make up the largest share of the labor force and homebuyers, with higher educational attainment levels contributing to their economic advancement, especially among women.

The COVID-19 pandemic has created new opportunities for millennials. A tight labor market allowed many to change jobs for better wages and conditions, and early retirements among older workers opened up higher-earning roles. Remote work also provided flexibility, leading to an increase in interstate migration, rising from 14.2% in 2020 to 17.3% in 2022. Younger workers were more mobile, with 6% under 25 and 4.5% aged 26 to 34 migrating between states. Income also played a role, with lower and higher earners being more mobile than middle-income workers.

In terms of migration patterns, Florida and Texas gained the most high-earning millennials, while California and New York saw significant losses in part due to high living costs. States in New England, the Mountain West, and the Southeast saw the largest percentage changes in wealthy millennial populations resulting from interstate migration, with Vermont, Maine, Idaho, Montana, Florida, and Tennessee leading the way on a percentage basis.

References

1. Pew Research Center. (2020, April 28). Millennials overtake Baby Boomers as America’s largest generation. https://www.pewresearch.org/short-reads/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/. Retrieved September 19, 2023.
2. Federal Reserve Bank of St. Louis. (2021, March 29). Millennials Are Catching Up in Terms of Generational Wealth. https://www.stlouisfed.org/on-the-economy/2021/march/millennials-catching-up-earlier-generational-wealth. Retrieved September 21, 2023.
3. Pew Research Center. (2018, April 11). Millennials are the largest generation in the U.S. labor force. https://www.pewresearch.org/short-reads/2018/04/11/millennials-largest-generation-us-labor-force/. Retrieved on September 21, 2023.
4. National Association of Realtors. (2023). Home Buyers and Sellers Generational Trends Report. https://www.nar.realtor/sites/default/files/documents/2023-home-buyers-and-sellers-generational-trends-report-03-28-2023.pdf. Retrieved September 21, 2023.
5. Pew Research Center. (2019, February 14). Millennial life: How young adulthood today compares with prior generations. https://www.pewresearch.org/social-trends/2019/02/14/millennial-life-how-young-adulthood-today-compares-with-prior-generations-2/. Retrieved September 21, 2023.

So, where is the best place to exchange money? Should you exchange money before you leave or while you’re on vacation? And what do you do with leftover currency when your trip is over? We’ll answer all these questions and give you some great tips for exchanging money on your next trip.

How Does Currency Exchange Work?

An exchange rate is the value at which one currency can be exchanged for another. Frequently, this value is variable and dependent on the market, but sometimes the value can be fixed, or pegged, to another currency.

Banks and currency exchange stores tack on some sort of charge in addition to the market rate, and these fees can vary significantly.

What does this mean for you? Your spending power on your vacation depends on the value of the U.S. dollar and the currency of the country you’ll be visiting. As these values fluctuate over time, planning a trip when the dollar is favorable can benefit you. Also, where you choose to exchange your money matters!

Exchanging Money Before You Leave

You have the best opportunity to get the best exchange rates before you ever leave home.

What To Do

The best place to exchange money is at your local bank or credit union. You will get the best currency exchange rates as rates will closely resemble the market rates, with only minimal added costs added on.

You’ll obviously need to do this before you leave unless your bank has an international presence in the country you’ll be visiting, so plan ahead!

The pro of exchanging money before you leave is that you can hit the ground running when you arrive. You can also generally save some money if you get the money from your bank or credit union.

Knowing your destination’s currency conversion in relation to U.S. dollars is important! We recommend using an offline currency conversion app, such as Currency (iOS) or Currency Converter Plus (Android). You can also just plug it into Google, but it is helpful to have access abroad even if you don’t have an internet connection.

What Not To Do

You might be tempted to exchange money at the airport before you leave, but we generally recommend against this. Airport exchange kiosks and stores are convenient but also tack on big fees and unfavorable rates. This can end up costing you!

You might not need as much cash as you think. Most places accept credit cards, and then you could be stuck carrying excess cash around (and exchanging it back). Try not to take out more than you need.

Regarding traveler’s checks, while they have been popular in the past, they have fallen out of favor. It is increasingly difficult to find a place that will cash them — if your bank even offers them. We don’t recommend exchanging money for traveler’s checks as credit cards (and even debit cards) offer a level of security once only provided by traveler’s checks.

Exchanging Money While You’re Abroad

If you’ve already left home and need some tips on exchanging currency, we’ve got you covered!

What To Do

If you’re wondering how to get local currency when traveling, the easiest way is by using your debit card at an ATM. It’s best to use your bank’s ATM network in order to avoid fees, but any ATM will work. These fees generally range from 1% to 3%. There are cards that will waive (or reimburse) international ATM withdrawal fees, though!

Try to limit your withdrawals and take out the maximum you think you’ll need each time, as there are per-transaction fees as well (generally about $5). In addition, if you’re planning to get money out abroad, knowing your ATM limit is important. You can call your bank to request an increase if it is low.

Also, consider using your credit card when you travel abroad. Most stores and restaurants accept credit cards, which is the easiest and most convenient way to get the best currency exchange rate! Just be sure to select “local currency” and not “pay in U.S. Dollars.”

If you’re looking for a card with no foreign transaction fees, consider popular rewards cards like the American Express^® Gold Card or the Chase Sapphire Preferred^® Card. Both cards also offer a ton of other valuable travel-related benefits!

What Not To Do

Whatever you do, don’t get money from a foreign ATM using your credit card. This is considered a cash advance — the fees can be high, and the interest begins to accrue immediately.

Also, we don’t recommend using those currency exchange stores and kiosks (i.e. Travelex) you see at the airport, hotels, and other major tourist destinations. While they might seem convenient, the rates are not favorable, and the fees are much higher than other options.

For example, let’s say you have $100 to exchange for euros and the current market rate for the exchange is €92.64. Your bank might offer you €92, while a currency conversion kiosk might offer €87. Extra fees could also be tacked on that eat away further at your exchange’s value.

Exchanging Money When You Get Home

If you have some leftover cash, you’ll likely want to convert it back into U.S. dollars. The best way to exchange foreign currency for U.S. dollars will be at your bank or credit union. Unfortunately, they may not buy back all types of currency.

Those currency exchange stores and kiosks we advised against before might be a good option for less-common currencies. The fees are higher, but at least you won’t be stuck with currency you won’t use again!

Another option might be to donate currency to UNICEF’s Change for Good. American Airlines offers envelopes on its planes and at its Admirals Club and Flagship Lounge locations, but you can also mail currency to the following address:

Change for Good
UNICEF USA
125 Maiden Lane
New York, NY 10038

Best Tips To Tackle International Spending

While exchanging money for cash is a good start, having a good plan in place for all your international spending is important. That’s because it’s just not feasible to pay for all your large expenses (such as hotels, train travel, etc.) with cash. Here is what we recommend:

• Use your debit card to get out cash from an ATM when you’re abroad or bring money from home.
• Bring along a credit card that has no foreign transaction fees and don’t use your credit card to get out cash from an ATM.
• When using your credit card, be sure you choose to pay in local currency.
• Avoid currency stores and kiosks if possible.
• Be aware of the current currency exchange rate to avoid any surprises!

Final Thoughts

Where you choose to exchange your currency can have an impact on how much money you’ll receive. The best rates are found at banks and credit unions. Even if you exchange money when you’re abroad, you can save money by using your debit card to take cash out of an ATM. Be sure to bring cards that are meant for international travel and you’ll be sure to save!

The Digitalization of Banking Services

As a large share of the population shifts to online banking, banks have been closing branches and ATMs. The number of brick-and-mortar bank branches — including credit union locations — peaked in 2011 at just over 105,000 and has been steadily declining since then. In 2021, there were fewer than 94,000 brick-and-mortar bank branches nationally. Fewer branches can mean longer wait times for those who rely on the bank locations that remain open. For some, this can mean having to spend additional time away from their daily obligations such as work or childcare.

The Impact of Digitizing Banking Services

The shift to the digital economy and the rise of online banking has made it easier and more convenient for many Americans to do their banking. However, many do not have the necessary infrastructure to access online banking reliably. While the majority of households own devices to access the internet, 10% of households don’t have a smartphone, nearly 20% don’t own a desktop or laptop, and more than one-third don’t own a tablet. An even larger share of households do not have internet subscriptions — 16% do not have cellular data plans, almost one-quarter don’t have broadband internet, and nearly 10% have no internet subscription at all.

These disparities in reliable access to online banking are even more pronounced after accounting for education and income. According to the U.S. Census Bureau, less educated households are much less likely to own a computer than households with a college degree — nearly 11% of households without a high school degree do not own a computer, compared to just 1% of those with a bachelor’s degree or higher. And lower-income households are much less likely to have an internet subscription. More than 26% of households with less than $20,000 in annual income do not have an internet subscription, compared to less than 4% of households who have an annual income of $75,000 or more.

Brick-and-Mortar Banking by Demographic and Location

Although online banking has provided a new level of convenience for banking customers, many of the most vulnerable populations still rely on brick-and-mortar locations for their banking needs. In particular, lower-income households (those with less than $15,000 in annual income), households without a high school degree, and older households are much more likely to rely on brick-and-mortar banks. These households will suffer the most due to the decline in brick-and-mortar bank branches.

Reliance on brick-and-mortar banking also varies by location. States like Oregon, Arizona, and Florida — whose populations include large concentrations of people over 65 — are among the states with the most households that use brick-and-mortar banks. Other states that have low rates of computer and internet access, such as North Dakota and Iowa, are also among the states most reliant on traditional banking. Alternatively, Georgia (76.4%), Alaska (76.4%), and Louisiana (76.7%) have the lowest share of households that use brick-and-mortar banks.

For a breakdown of all 50 U.S. states, here is the report’s complete data table:

Methodology

To determine the states where people still rely on brick-and-mortar banking services, researchers at Upgraded Points analyzed the latest data from the Federal Deposit Insurance Corporation’s 2021 National Survey of Unbanked and Underbanked Households, the National Credit Union Administration’s December 2021 Call Report Quarterly Data, and the U.S. Census Bureau’s 2021 American Community Survey. The researchers ranked states according to the share of households that use brick-and-mortar banks, among banked households that accessed their account(s) at least once in the year prior to the survey. In the event of a tie, the state with the larger share of households that only use brick-and-mortar banks was ranked higher. Researchers also calculated the share of households with a bank account and the total population per bank branch. Brick-and-mortar banks include both banks and credit unions.

Final Thoughts

While the rise of the digital economy and online banking has been a boon to many households, those Americans who still rely on brick-and-mortar banks are being left in the digital dust. Brick-and-mortar bank branches are on the decline, and those who prefer to visit their local bank in person either by need or necessity are hurting as a result.

The number of brick-and-mortar bank branches has been steadily falling for more than 10 years. Fewer bank branches can mean longer travel times to get to the bank and longer wait times once there. Rural households and those that rely on public transportation can be particularly impacted.

Some households do not have the means to access online banking. Nearly 20% of households do not own a computer, and 10% do not have a smartphone; additionally, a significant share of households do not have a cellular data plan (16%) or broadband internet (24%). These households are more likely to be reliant on brick-and-mortar bank branches for their banking needs.

Over 95% of American households have a bank account, and few rely solely on brick-and-mortar banks — nationally, about 10% of households report only using brick-and-mortar banks. However, the households that only use brick-and-mortar banks tend to belong to vulnerable population segments; a disproportionate number are lower income, less educated, and over age 65.

As online banking becomes more prevalent, traditional brick-and-mortar bank branches will continue to decline. While many households welcome the added convenience that online banking offers, those households that rely on visiting banks in person will be adversely impacted.

References

1. Pew Research Center. (2022, October 5). More Americans are joining the ‘cashless’ economy. https://www.pewresearch.org/short-reads/2022/10/05/more-americans-are-joining-the-cashless-economy/. Retrieved August 8, 2023.

As a result, many Americans were able to save money during the pandemic. When stimulus checks and other financial relief began reaching bank accounts — from the first payment in March 2020 to the third round in March 2021 — many households were able to improve their financial situations by increasing savings and paying down debt.

The Impact That the Pandemic Had on Delinquent Loan Balances

As businesses closed down during the pandemic, a large number of Americans also experienced financial difficulties due to layoffs and furloughs from their employers. With recent memory of the financial crisis in 2008 — when delinquent loan balances of nearly all types skyrocketed — state and federal governments offered additional types of financial relief to help ease financial burdens caused by the pandemic, such as forbearance on several types of loans. For example, student loan forbearance has been extended for over 3 years, with payments to resume in October 2023. Delinquent student loan balances decreased dramatically, from more than 9% of student loan balances being transitioned into delinquency in Q4 2019 — the final quarter before the COVID-19 virus was confirmed in the U.S. — to a low of just over 1% in Q1 2022.

Additionally, many auto lenders provided this same type of relief, permitting their borrowers to skip several monthly payments and make them up at the end of their loan. As a result, auto loans also saw a decrease in delinquency, from nearly 7% of loan balances in Q4 2019 to a low of less than 5% in Q4 2021.

The Change in Credit Score Broken Down by Generation

Delinquencies on credit card balances and loans can quickly impact an individual’s credit score. Experian reports that 35% of a FICO credit score is calculated based on payment history. And as delinquencies on loans decreased, Americans saw large increases in their credit scores. 

Millennials benefitted the most, with an increase of 19 points between 2019 and 2022, but they were followed closely by Generation X with an increase of 18 points over the same time period. The Silent Generation — the generation with the highest average credit score — saw the lowest change in credit scores with an increase of just 3 points.

Looking at the Change in Credit Scores at the State Level

Many COVID-19 regulations and relief options varied by state, leading to varied financial impacts around the country. Additionally, the virus — and its effects on public health — spread unevenly across the U.S., sometimes contributing to prolonged restrictions in some areas more than others. While the average credit score in the West region of the U.S. increased by nearly 1.9%, the Northeast, once home to the early epicenter of COVID-19 in the U.S., was slower to lift pandemic restrictions and experienced a slower economic recovery.

At the individual state level, Idaho, Alaska, Arizona, and Nevada led the nation with average credit score increases of 2.3% — an increase of 16 points. At the other end of the spectrum, North Dakota (+0.8%) and South Dakota (+1.0%) had the smallest credit score increases, but both had an average credit score of 727 in 2019, the highest credit scores at that time behind only Minnesota.

For a breakdown of all 50 U.S. states, here is the report’s complete data table:

Methodology

The data used in this analysis is from Experian’s What Is the Average Credit Score in the U.S.? research and the Board of Governors of the Federal Reserve System’s Household Debt dataset. To determine the states with the biggest increase in credit scores during COVID-19, researchers at Upgraded Points calculated the change in average credit score from full-year 2019 to September 2022. In the event of a tie, the state with the greater total change in average credit score during the same time period was ranked higher.

Final Thoughts

Despite the difficult circumstances of the COVID-19 pandemic, many Americans saw their finances improve. Decreased spending and loan forbearance improved credit scores by decreasing credit utilization rates and preventing borrowers from being penalized for late or missed payments. Stimulus checks also helped individuals pay off outstanding debt, further preventing delinquent loan balances and improving credit scores.

Millennials saw their credit scores increase the most, with an average increase of 19 points. The Silent Generation — the generation with the highest average credit score — saw the lowest change in credit scores with an increase of just 3 points.

Changes in credit scores during COVID-19 varied by region. The West region of the U.S. saw the largest credit score benefit in the nation with an increase of 1.9%. Idaho, Alaska, Arizona, and Nevada all saw their residents’ average credit score increase by 16 points.

References

1. U.S. Bureau of Labor Statistics. (2022, May 20). Beyond the Numbers, Recovering from the pandemic: A bright outlook for the personal care service industry. https://www.bls.gov/opub/btn/volume-11/recovering-from-the-pandemic-a-bright-outlook-for-the-personal-care-service-industry.htm. Retrieved July 27, 2023.

However, credit card use has its benefits — including travel rewards, financial flexibility, and helping individuals establish and build their credit scores. Having a healthy credit score is often necessary for big purchases like a down payment on a house or a car, and can also be helpful when applying to rent an apartment. Still, credit card usage can be a slippery slope for those unable to pay off their balances each month, especially as concerns of economic recession continue to grow.

The Impact That the Pandemic and Inflation Has Had on U.S. GDP Expectations

Inflation and signs of a looming recession are likely contributing to America’s record-high credit card debt, and the expectation amongst experts is that an economic downturn is increasingly imminent. Real GDP is an inflation-adjusted measure of the value of goods and services produced by an economy, and the Survey of Professional Forecasters from the Federal Reserve Bank of Philadelphia estimates the probability of a decline in real GDP occurring in Q3 2023 to be 45.2%.

Prior to the COVID-19 pandemic, the estimated probability of a real GDP decline was rising but still only pegged at 14.2% in Q4 2019. As the pandemic made its way stateside and forced many businesses to close their doors, fears of a recession grew and the probability of real GDP decline spiked to 43.8% by Q3 2020. Then, the federal government quickly stepped in with emergency financial support, causing the probability to sharply decline, only to rapidly rise again with the onset of inflation.

It’s Becoming Increasingly Expensive To Carry a Credit Card Balance

The ramifications of rampant inflation can also be felt in the credit card space. In an attempt to curb inflation, the Federal Reserve continues to raise the federal funds target rate, which can drive up credit card interest rates and make it more expensive to carry a credit card balance.

For over 25 years, the average commercial bank credit card interest rate has roughly hovered between 12% and 16%. But in the past year, the average rate skyrocketed to over 20%, leaving credit card consumers in a uniquely difficult financial situation. The combination of inflation and rising interest rates makes it more expensive to pay down credit card balances in full each month, which can ultimately cause more people to live with unanticipated credit card debt.

The Viability of Paying Down Credit Card Debt Varies by Location

Collectively, American consumers carry nearly $1 trillion worth of balances on their charge cards, but certain areas of the country owe more than others. Southern and Rust Belt states have the highest share of residents with delinquent credit card debt, or consumers who have fallen behind on making their required monthly payments.

The 10 states with the highest share of residents with delinquent credit card debt are all located in the South, with Mississippi having the highest share at 6.2%. Arkansas and Georgia tie for second at 5.1%, and Alabama and Louisiana fall just behind, with 4.7% each. Rust Belt states like Ohio, Indiana, and Missouri also have a significant share of residents with past-due credit card debt. In Ohio, 3.7% of all residents are living with delinquent credit card debt, while Indiana and Missouri are just behind at 3.6% each.

Paying down credit card balances can be very difficult, but certain metro areas are better suited for those looking to resolve their debt. Namely, high wages, low cost of living, and especially strong job opportunities make certain areas stand out. Out of the large U.S. metropolitan areas with populations of 1 million or more included in this study, Birmingham, Alabama, is ranked as the top location to live for paying off credit card debt. A lower cost of living of 9.1% below the national average, full-time employment rate of 68%, and median earnings of $41,290 after adjusting for cost of living make Birmingham an ideal place to chip away at outstanding debt.

The metro areas of Kansas City (across Missouri and Kansas) and Nashville, Tennessee, rank just behind Birmingham as realistic places to live for paying down credit card debt. Both locations have cost-of-living-adjusted earnings higher than the national median and unemployment rates under 3%. Salt Lake City is the only metro outside of the South and Midwest that ranks among the top 15 large metros for paying off credit card debt.

For a breakdown of nearly 350 U.S. metros and all 50 U.S. states, here is the report’s complete data table:

Methodology

To determine the best locations to live for paying down credit card debt, researchers at Upgraded Points analyzed the latest data from the Urban Institute’s Debt in America 2022 report, the U.S. Bureau of Economic Analysis’ Employment by County, Metro, and Other Areas dataset, the U.S. Census Bureau’s 2021 American Community Survey, the U.S. Bureau of Economic Analysis’ Regional Price Parities datasets, and the U.S. Bureau of Labor Statistics’ Local Area Unemployment Statistics. The researchers ranked metros according to a composite score comprising the following factors and weights:

• Cost of living compared to average (35%)
• Cost-of-living-adjusted median earnings (20%)
• Unemployment rate (20%)
• Percentage of employees that are full-time (15%)
• Share of residents with delinquent credit card debt (10%)

In the event of a tie, the location with the lower cost of living compared to the national average was ranked higher. To improve relevance, only metropolitan areas with at least 100,000 residents were included. Additionally, metros were grouped into cohorts based on population size: small (100,000 to 349,999), midsize (350,000 to 999,999), and large (1,000,000 or more).

Final Thoughts

American consumers now owe nearly $1 trillion in credit card balances and have been relying on them to cope with the effects of stubborn inflation and rising interest rates. While credit card use has many benefits, it can also be a slippery slope, especially as concerns of economic recession continue to grow.

Economic forecasters estimate the probability of real GDP decline in Q3 2023 at 45.2%, squeezing household budgets even more than usual. When inflation outpaces incomes, it’s normal for consumers to feel pinched by their budget, and many individuals may need to rely on their credit cards to make ends meet.

Credit card interest rates are rising, in large part due to actions taken by the Federal Reserve to help curb inflation. In February 2023, the average commercial bank credit card interest rate was over 20%, drastically diverging from the roughly 12% to 16% of previous decades. Although it’s best practice to pay credit card balances in full each month, the combination of inflation and rising interest rates makes it more expensive and can even delay well-intentioned consumers from fully eliminating their balances.

While American consumers owe nearly $1 trillion in credit card balances, certain areas owe more than others. Areas in the South and the Rust Belt have the highest share of residents with delinquent credit card debt. Fortunately, areas in the Midwest are particularly well-suited for paying off credit card debt. Metropolitan areas like Birmingham, Kansas City, and Nashville rank among the top large metros for paying down credit card balances due to their low costs of living and low unemployment rates.

References

1. Urban Institute. (2023, March 21). As Inflation Squeezed Family Budgets, Food Insecurity Increased between 2021 and 2022, Findings from the Well-Being and Basic Needs Survey. https://www.urban.org/research/publication/inflation-squeezed-family-budgets-food-insecurity-increased-between-2021-and-2022. Retrieved June 14, 2023.

2. Federal Reserve Bank of New York (2023, May). Quarterly Report on Household Debt and Credit. https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q1. Retrieved June 14, 2023.

Sometimes the only thing you can do to get a derogatory mark off your credit report is wait. But if the derogatory mark is in error or you can negotiate with the creditor, you may have options for removing it from your credit report sooner. And in any case, you can still do other things to improve your credit, so any derogatory marks have less impact on your credit with time.

Let’s look at derogatory marks, how they affect your credit, and what you can do to get past them.

What Derogatory Marks Are

Derogatory marks are negative entries on your credit report that can stay on your credit report for up to 7 or 10 years. 

These negative entries indicate you have struggled to pay your creditors on time and may not have managed your credit responsibly. Generally, a derogatory mark hurts your credit, making getting approved for credit products with good terms (or at all) difficult.

Some examples of derogatory marks on your credit report include:

• Late Payments: When you’re more than 30 days late making a payment it will be reported to the credit bureaus and reflected on your credit report. The longer your payment is late, the worse it is for your credit.
• Charged-off Accounts: When you haven’t paid an account for a few months, it may be charged off, which means a creditor doesn’t think you’ll pay what you owe.
• Collection Accounts: After an account is charged off, it may be sold to a debt collector and become a collection account.
• Debt Settlement: A debt settlement agreement may get a creditor off your back and eliminate the risk of being sued for payment. However, it will stay on your credit report for up to 7 years unless you negotiate with the creditor to remove it.
• Bankruptcies: If you file for bankruptcy, it will be reflected on your credit report as a derogatory mark.
• Foreclosures: When a lender takes possession of your home after you default on your mortgage payments, it’s a foreclosure that will reflect as a derogatory mark on your credit.
• Repossessions: Like foreclosures, a repossession that happens when a lender takes possession of your vehicle after default will stay on your credit report for up to 7 years.

What Derogatory Marks Do to Your Credit Score

Any derogatory mark can drag down your credit score, but how much it hurts your credit depends on various factors, such as how severe the negative entry is, how long it’s been on your credit, and what the rest of your credit report looks like.

For example, a derogatory mark from a late payment is far less severe than a foreclosure or bankruptcy. And a derogatory mark that’s just a few months old will hurt your credit more than a years-old entry. 

Payment history is the most critical factor in FICO and VantageScore credit scores. A derogatory mark from late payments, collections accounts, charged-off accounts, and other non-payment issues can hurt your credit score.

If your credit history is generally good, your positive payment history, low credit utilization, and other factors may help support your credit rating so a derogatory mark doesn’t hurt as much as it would if you have multiple negative entries or a history of struggling with credit.

What To Do About Derogatory Marks To Improve Your Credit Score

What you should do to improve your credit after a derogatory mark depends on the negative entry. For example, if it’s a late payment, get your account current as soon as possible. An account in collections or a charge-off requires a payment — and you may be able to negotiate the removal of the negative mark from your credit report in the process. 

For more severe derogatory marks, such as repossession, foreclosure, or bankruptcy, it may be best to focus on improving other areas of your credit, such as making on-time payments or having a low credit utilization ratio, to reestablish yourself as a responsible borrower.

Even if you don’t get a derogatory mark removed from your credit report, it will hurt your credit less over time. That’s especially true if you improve your credit habits and establish a history of on-time payments and a low credit utilization ratio. Eventually, your good credit habits can start to outweigh your bad credit history.

If it’s been 7 years since the date of first delinquency on an account and it’s still on your credit report, you should file a dispute to remove it from your credit report.

How To See Derogatory Marks on Your Credit Report

You can see derogatory marks when you check your credit report. Every week, you can get a free credit report from the 3 major credit bureaus of Equifax, Experian, and TransUnion from AnnualCreditReport.com.

You can also contact the credit bureaus through their respective websites or by phone, but you may have to pay if you order a credit report directly from the credit bureaus:

• Experian: 888-397-3742
• Equifax: 888-548-7878
• TransUnion: 800-916-8800

Additionally, some websites such as Credit Karma, Credit Sesame, and Chase Credit Journey allow you to access your credit report and credit score for free.

Once you’ve obtained your credit report, you can review it to find derogatory marks such as late payments and collections accounts.

If you don’t want to check your credit report frequently, you can sign up for credit report monitoring. For example, Credit Karma offers free credit monitoring so you can get credit alerts when there’s a change to your credit report.

How Long Derogatory Marks Stay On Your Credit Report

Generally, derogatory marks stay on your credit report for up to 7 years from the date of first delinquency. Bankruptcies stay on your credit report for 7 to 10 years, depending on the type of bankruptcy.

Remember that the clock starts when your account first becomes delinquent, not when it goes to collections. For example, suppose you’re late making a credit card payment, and it becomes so late that it’s charged off and sent to collections. In that case, the account may stay on your credit report as a derogatory mark for up to 7 years from the date of the first late payment, not when it was sold to a debt collector.

Bankruptcies are a bit different. While the accounts that may have led to your bankruptcy will remain for up to 7 years from the initial delinquency, bankruptcy will be on your credit for up to 7 or 10 years from the date the bankruptcy was filed.

How long a bankruptcy stays on your credit depends on the type of bankruptcy you file. A Chapter 7 bankruptcy can stay on your credit for up to 10 years, while a Chapter 13 bankruptcy can stay up to 7 years.

While 7 or 10 years may sound like a long time, the effect of derogatory marks on your credit report tends to lessen over time. Generally, the longer a derogatory mark is on your credit report, the less effect it has on your credit score.

Some derogatory marks may fall off your credit report before 7 years, especially if it’s a collection account you’ve paid off or negotiated to remove the account.

Removing a Derogatory Mark From Your Credit Report

There are a few ways to remove derogatory marks from your credit report, including: 

• Review Your Credit Report: First, you should know what you’re dealing with. Request your credit report and look for any derogatory marks. Identify which marks may be in error and which ones you can reasonably resolve.
• File a Dispute: If the derogatory mark on your credit report is an error or contains inaccuracies such as the wrong date or amount, or it doesn’t belong to you, you can dispute it. You can file a dispute with each of the 3 credit bureaus Equifax, Experian, and TransUnion. Be ready with evidence that the derogatory mark is inaccurate, and request that it be removed from your credit report. You may need to follow up on your dispute.
• Get Help Removing Errors: You may need legal assistance if the derogatory mark stems from identity theft, fraud, or a scam. A nonprofit credit counselor or lawyer may be able to help you get the account removed from your credit report.
• Talk to the Creditor: You can negotiate with the creditor or debt collector. They may be willing to remove the mark if you pay off the account or agree to a payment plan. This is known as a “pay for delete” agreement.
• Write a Goodwill Letter: You can write the creditor or debt collector a goodwill letter to request that the negative entry be removed from your credit report.
• Give It Time: Finally, you can just wait. Eventually — usually up to 7 years — the derogatory mark will fall off your credit report. And depending on your state’s laws, you should eventually get past the statute of limitations for debt collection, which is how long a creditor can sue you to collect on a debt.

Derogatory Marks vs. Collections

Derogatory marks and collections are related but aren’t quite the same. While collections accounts are a type of derogatory mark, not all derogatory marks are collection accounts.

In addition to collection accounts, you could have late payments, charged-off accounts, bankruptcy, foreclosure, or other derogatory marks on your credit report. These derogatory marks typically stem from non-payment on accounts, but the account may or may not have gone to collections.

Collection accounts are a specific type of derogatory mark that indicates an account has been sent to a debt collection agency, usually for failing to pay a debt. The debt collection agency then attempts to collect payment on the debt.

Do Derogatory Marks Go Away Once Paid?

Derogatory marks may not disappear from your credit report once paid, but their impact on your credit score is typically reduced over time. 

When a derogatory mark is paid, it may be updated on your credit report to show that it has been satisfied or paid in full. However, it will not be removed from your credit report immediately. Most derogatory marks can remain on your credit report for up to 7 years, even after the accounts have been paid.

Paying off a derogatory mark can still be beneficial because it shows that you have taken responsibility for your debts and are working to improve your credit standing. In addition, as time goes on and the derogatory mark becomes older, its impact on your credit score will lessen.

With some debt collectors, you may be able to negotiate a “pay for delete” agreement. In this arrangement, the debt collector agrees to remove the collection account from your credit report in exchange for payment, usually in full or for a negotiated rate.

If you’ve paid off a collection account, check your credit report to verify the account has been updated to reflect you’ve paid it. 

Should You Pay Off Derogatory Accounts?

Generally, yes, you should pay off derogatory accounts if you can. Paying off a derogatory account may improve your credit score, and creditors like to see that you’ve paid your debts — even if you got behind in the past. With paid-off accounts, getting approved for new credit should be easier.

Paying off a derogatory account can also keep you out of legal trouble. Creditors or debt collectors may sue you to collect your debts. You could face wage garnishment, property liens, and other consequences if they get a judgment.

You’ll also save on interest and fees, which creditors and debt collectors often charge on outstanding payments. 

You may relieve stress by paying off derogatory accounts, too. Collection calls for the debt should stop, and you won’t have to worry about letters or potential lawsuits once you’ve satisfied the debt.

However, if you cannot pay off derogatory accounts, you may not want to stretch too hard to make that happen. If you’re struggling with debt and paying off derogatory accounts would strain your everyday budget, you might benefit from getting help from a nonprofit credit counselor or bankruptcy attorney instead.

Final Thoughts

Derogatory marks can stay on your credit report for up to 7 years — or 10 years for some bankruptcies — but you may be able to get them removed earlier. Still, the effect of derogatory marks on your credit will fade over time, especially if you take other steps to improve your credit.

The best way to deal with derogatory marks is to do what you can to avoid them. Set reminders to pay your bills on time, and talk to your creditors if you cannot make payments. Consider options such as 0% balance transfer cards or debt consolidation personal loans to help you manage debt, or talk to a nonprofit credit counselor about your options.

If you have made the tough decision to file for bankruptcy or are contemplating it as an option, you’ll probably want to know how bankruptcy can impact your credit and how long it will stay on your credit report.

The Different Types of Bankruptcy

There are 6 different types of bankruptcies, but only 2 really matter for most individuals. While each state from Florida to California has a slightly different way of handling bankruptcy, at a high level, this is how they are structured.

Chapter 7

This is the most common type of bankruptcy for both individuals and businesses. Chapter 7 is also referred to as “liquidation” bankruptcy because a trustee oversees the sale of your assets in order to pay off your debts. After everything of value that you own is sold (including real estate, vehicles, and more) and any remaining eligible unsecured debt (such as credit card debt), is wiped away.

You can file for Chapter 7 bankruptcy every 8 years.

Chapter 13

Chapter 13 bankruptcy is the “repayment” bankruptcy. In this type of bankruptcy, the court reorganizes your debt and sets up a monthly repayment process so that you can pay down your debt while keeping your assets. This process takes much longer than Chapter 7 bankruptcy due to the repayment schedule.

Importantly, this type of bankruptcy can stop your home from being foreclosed upon while you are making payments.

You can file for Chapter 13 bankruptcy every 2 years.

The Effects of Filing for Bankruptcy

Filing for personal bankruptcy will have a significant negative effect on your credit, and unfortunately, there’s no way around it. If you had good credit before filing for bankruptcy, your credit score will drop more than someone who had poor credit to start with, but it’s hard to say just how much your credit score will drop.

Having bankruptcy appear on your credit report will make it difficult to get approved for a credit card, mortgage, or personal loan. If you ARE approved, you will likely have higher interest rates and other unfavorable credit terms to contend with.

Even things like trying to rent an apartment, setting up a utility account, or getting the lowest rate on insurance premiums can be impacted by bankruptcy since your credit is often reviewed in these situations. Some jobs may look at your credit if you will be handling money in your role.

If you file for Chapter 7 bankruptcy, you may also lose your assets, such as your house, car, and other valuable possessions.

We have some advice on how to recover your credit after filing for bankruptcy at the bottom of this piece, so be sure to read on.

How a Bankruptcy Affects Your Credit Report

Where a Bankruptcy Appears on Your Credit Report

Credit bureaus regularly receive information from courts on such things as bankruptcy to make sure your credit report has up-to-date information.

A bankruptcy will appear on the “public records” section of your credit report. It may also be referenced in the “account information” section if creditors choose to note that the account is included in your bankruptcy filing.

How Long a Bankruptcy Remains on a Credit Report

How long a bankruptcy appears on your credit report depends on the type of bankruptcy you file:

• Chapter 7 bankruptcy stays on your credit report for 10 years
• Chapter 13 bankruptcy stays on your credit report for 7 years

If you had a debt that was reported as delinquent before you filed for bankruptcy, it will actually fall off your credit report 7 years after it was first reported. If not, it will fall off at the same time your bankruptcy does.

Can You Remove Bankruptcy From Your Credit Report Before 10 Years?

In short, unless there is a mistake on your credit report, bankruptcy cannot be removed from your credit report before 10 years (for Chapter 7) and 7 years (for Chapter 13).

Even after debt from your bankruptcy is discharged (meaning a creditor can no longer try to collect on it), it still won’t be removed from your credit report.

What Happens to Your Credit After a Bankruptcy Is Discharged

You might be wondering if you can create a letter to remove dismissed bankruptcies from your credit report since creditors can no longer collect on this debt.

Unfortunately, having debt discharged doesn’t mean that it will disappear from your credit report. While the status of your debt is changed, it will still remain on your credit report for the stated 7 to 10 years.

Any negative items (such as late payments and bankruptcy) will continue to negatively impact your credit until they are removed or fall off.

What Happens if Bankruptcy Is Still on Your Credit Report After 10 Years

If you still see a bankruptcy on your credit report after 7 years (for Chapter 13) or 10 years (for Chapter 7), this is considered an error as it should automatically fall off after the stated time has passed.

Whenever you see an error on your credit report, you can dispute this error directly with Equifax, Experian, and TransUnion. Legally, the credit reporting bureaus must remove incorrect information from your credit report within 30 days.

How To Rebuild Credit After Bankruptcy

Filing for bankruptcy doesn’t have to mean that you will never qualify for a mortgage or auto loan again. If you take steps to rebuild your credit, it’s possible to recover relatively quickly.

The good news is that the negative impacts of bankruptcy lessen over time, especially if you practice good financial habits after filing for bankruptcy. This includes paying your bills on time and keeping your credit utilization low. Being added as an authorized user on a credit card or getting a secured credit card can also help you rebuild your credit.

Also, be sure to check your credit reports as often as you can. You get multiple free credit reports per year from the credit reporting bureaus, so it’s usually best to space these out so that you can keep a frequent eye on the status of your accounts.

Final Thoughts

Filing for bankruptcy is often a last resort when you find yourself in a tough financial situation. Your credit score will be impacted as long as it remains on your credit report, which can be from 7 to 10 years depending on the type of bankruptcy.

The good news is that the impact on your credit lessens over time, especially if you take steps to make good financial decisions moving forward.

There’s a simple process to follow to freeze or unfreeze your credit — all it takes is logging in online or making a phone call to unfreeze your credit and open access to your credit reports either temporarily or permanently.

There’s no cost associated with unfreezing your credit reports, and if you make your requests online or by phone, the credit bureaus have to unfreeze your credit report within an hour, so you can count on speedy service.

Read on to learn the steps required to unfreeze your credit with each of the major credit bureaus — Equifax, Experian, and TransUnion — and find out when it’s a good idea to unfreeze your credit.

What Does It Mean To Unfreeze Your Credit?

You can unfreeze your credit by contacting the credit bureaus and requesting to lift the freeze temporarily or permanently. Lenders and creditors can access your credit report and use it to make decisions about lending you money, extending credit, or offering you other financial services once your credit is unfrozen.

It’s a good idea to unfreeze your credit when applying for a new credit product, such as a credit card or loan.

How Can You Unfreeze Your Credit?

You’ll need to contact each of the 3 major credit bureaus where your credit is frozen, including Equifax, Experian, and TransUnion, to unfreeze your credit.

Follow these steps to unfreeze your credit:

1. Contact the Credit Bureau: Visit the website of the credit bureau you need to unfreeze your credit with and look for their “freeze” or “security freeze” page. You may also be able to unfreeze your credit by phone or by mail. 
2. Verify Your Identity: You must provide your personal information, such as your name, address, date of birth, and Social Security number, to confirm your identity. You may also need to provide a PIN or password you created when you froze your credit.
3. Request an Unfreeze: Once your identity has been verified, you can request that your credit report be unfrozen. You may be given the option to unfreeze your credit temporarily or permanently. If you choose a temporary unfreeze, specify the length of time for which you want the freeze to be lifted.
4. Confirm the Unfreeze: After you have made the request, the credit bureau will send you confirmation via email or mail and your credit will be unfrozen. You can then apply for credit, loans, or any other services that require access to your credit report.

There are no fees associated with freezing and unfreezing your credit, though you may pay fees to lock or unlock your credit, which is a different process than freezing. 

How Long Does It Take To Unfreeze Credit?

You can unfreeze your credit report within an hour, depending on what method you use.

If you request to unfreeze your credit online or by phone, the credit bureaus must legally lift the freeze within an hour of receiving the request. But if you request by mail, the requirement extends to lifting the freeze within 3 business days of receiving the notice — so it’s 3 business days plus the time it takes to get the request through the mail.

As long as you make your credit unfreeze request on the phone or online, you can be confident that potential creditors can access your credit report. You could unfreeze your credit, submit an application, and freeze your credit again after approval, all on the same day.

Still, it’s a good idea to mention to the creditor that you recently unfroze your credit so they can let you know if it’s still frozen when they pull your credit report.

Is a Credit Freeze the Same as a Credit Lock?

Credit freezes and credit locks both restrict access to your credit reports but they are not the same. 

A free credit freeze limits access to your credit report, so creditors usually can’t see your credit information until you unfreeze it. 

A credit lock also limits access to your credit report but may require a fee. You can typically lock and unlock your credit immediately online or through a mobile app. A credit bureau’s credit lock service may come bundled with other services, such as alerts and identity theft insurance.

While both credit freezes and credit locks achieve the same goal of minimizing access to your credit report and lowering your risk of fraudulent accounts opened in your name, a credit freeze is free and is governed by federal law. With a credit lock, your credit report is restricted under a service agreement with the credit bureau, which doesn’t necessarily guarantee you’ll get error-free service.

Credit locks have an advantage with immediate unlocking and locking of your credit. Still, you can expect service within an hour if you request a credit freeze and unfreeze over the phone or online.

Unfreezing Your Equifax Credit Report

If you’ve placed a freeze on your Equifax credit report and need to unfreeze it, there are several ways to do so. You can unfreeze your Equifax credit report online, by phone, or by mail. The process is simple, but the time it takes to unfreeze your report may vary depending on your chosen method. 

How Long Does an Equifax Credit Freeze Last?

An Equifax credit freeze can last indefinitely. Once you place a credit freeze on your Equifax credit report, it will remain in place until you request it to be lifted.

If you want to temporarily lift the freeze to apply for credit or allow a background check, you can contact Equifax. You can also choose to permanently lift the freeze if you no longer need it.

How To Unfreeze an Equifax Credit Report

To unfreeze an Equifax credit report, you must contact Equifax. Follow these steps to unfreeze your Equifax credit report:

1. Go to the Equifax Security Freeze website.
2. Once you’re logged in, select Manage Credit Freeze from the menu.
3. Next, select Remove or Lift a Freeze from the options.
4. Equifax will ask you to provide some personal information to verify your identity. This may include your name, Social Security number, birth date, and address.
5. You can choose to lift the freeze temporarily, or you can choose to remove it permanently.
6. Once you’ve made your selections, review your request to ensure everything is correct. Then, click Submit to confirm your request.
7. Equifax will send you an email or letter once your freeze has been lifted. 

Equifax Credit Freeze Phone Number

You can call Equifax to place or lift a credit freeze or for any other credit-related inquiries at 888-378-4329. You’ll be prompted to enter your personal information to verify your identity before you can speak to a representative. The Equifax customer service phone line is available Monday through Friday from 9 a.m. to 9 p.m. EST and from 9 a.m. to 6 p.m. EST Saturday and Sunday.

Equifax Security Freeze vs. Credit Lock

An Equifax credit report lock and credit freeze are similar in restricting access to your credit report. However, there are some key differences.

A credit freeze is a free credit protection option that prevents anyone, including new lenders and creditors, from accessing your credit report without your permission. If you want to apply for credit or allow a background check, your credit freeze must be lifted temporarily or permanently.

A credit report lock lets you control who can access your credit report in real time. You can lock and unlock your credit report at any time through Equifax’s Lock & Alert mobile app (iOS, Android) or Lock & Alert website. If you need to apply for credit or authorize a background check, you can temporarily unlock your credit report and lock it again when you’re done. Equifax’s credit lock service offers alerts each time your Equifax credit report is locked and unlocked.

Another difference is that a credit freeze is governed by federal law. An Equifax credit report lock is a product of Equifax and is not subject to federal regulations. 

Both an Equifax credit freeze and credit lock are free. 

Unfreezing Your Experian Credit Report

You can unfreeze your Experian credit report online, by phone, or by mail. When you unfreeze your Experian credit report by phone or online, it takes less than an hour. If you make the request by mail, it could take up to 3 business days from receipt of the request.

How Long Does an Experian Credit Freeze Last?

An Experian credit freeze can last indefinitely until you request it to be lifted. If you want to unfreeze your credit temporarily to apply for credit or loans, you can request a temporary lift of the freeze that will remain in effect for a specific period. Your credit report will be frozen again automatically after the period elapses. 

You can also request a permanent credit unfreeze by contacting Experian.

How To Unfreeze an Experian Credit Report

Follow these steps to remove an Experian credit freeze:

1. Go to the Experian credit freeze website and sign in to your account. You can also call Experian’s customer service line at 888-397-3742.
2. Provide your name, address, date of birth, and Social Security number to verify your identity.
3. Indicate that you want to lift the credit freeze from your Experian credit report.
4. Indicate the length of time for which you want the credit freeze to be lifted if you want to lift the freeze temporarily. You can specify if you want to remove the freeze permanently.
5. Confirm your request to lift the credit freeze with Experian.

Once Experian receives your request, the credit bureau will lift the credit freeze from your credit report. This will allow creditors and lenders to access your credit report again when you apply for credit, loans, or other financial services.

Experian Credit Freeze Phone Number

The Experian credit freeze phone number is 888-397-3742. You can call this number to place a credit freeze on your Experian credit report, lift or remove a credit freeze, or get more information about Experian’s security freeze process.

Customer service representatives are available Monday to Friday from 7 a.m. to 7 p.m. CST. Be prepared to provide your personal information to verify your identity, including your name, address, date of birth, and Social Security number.

Experian Security Freeze vs. Credit Lock

An Experian security freeze and an Experian credit lock are both designed to protect your credit report from unauthorized access, but they work slightly differently.

A credit freeze restricts access to your credit report by blocking most creditors and lenders from accessing it. This means that if someone tries to apply for credit or loans in your name, the creditor or lender will be unable to access your credit report and will likely reject the application.

Like an Experian credit freeze, a credit lock allows you to control who can access your credit report. You can enable or disable your Experian credit lock instantly using Experian’s mobile app (iOS, Android) or the secure Experian CreditLock website. 

Experian’s credit lock service is part of a paid premium subscription service that includes monthly access to credit reports from all 3 bureaus, alerts for new credit activity, up to $1 million in identity theft insurance, and Experian phone assistance for credit and fraud resolution. 

A credit freeze and a credit lock are both useful tools for protecting your credit report from identity theft and fraud. A credit freeze is free and federally regulated, while an Experian credit lock is a paid service that instantly turns the lock on or off and comes with additional features.

Unfreezing Your TransUnion Credit Report

You can unfreeze your TransUnion credit report online, by phone, or by mail. Unfreezing your credit report allows you to grant access to your credit information to potential lenders, landlords, or other parties who need to check your credit history.

How Long Does a TransUnion Credit Freeze Last?

A TransUnion credit freeze can last until you lift or remove it, so a credit freeze with TransUnion can be in place indefinitely until you take action.

If you want to temporarily lift the freeze to apply for credit, you can request a temporary lift for a specific period.

If you want to remove the credit freeze permanently, you can do so at any time by contacting TransUnion by phone, mail, or online.

How To Unfreeze Your TransUnion Credit Report

To unfreeze your TransUnion credit report, you can follow these steps:

1. Go to the TransUnion Credit Freeze website and click Unfreeze (this may require you to log into your account).
2. Indicate the timeframe and purpose for the lift, such as applying for a new credit card, renting a new apartment, or applying for a new job.
3. Confirm your request to lift the credit freeze with TransUnion.

Once TransUnion receives your request, it will be processed, and your credit freeze will be lifted for the specified time and purpose. After the specified timeframe has passed, the credit freeze will automatically be reinstated unless you request to lift it again or request permanent removal of the freeze.

TransUnion Credit Freeze Phone Number

You can contact TransUnion’s customer service at 888-909-8872 to request a credit freeze or to lift or remove a credit freeze. Phone hours are Monday through Friday from 8 a.m. to 9 p.m. EST and Saturday and Sunday from 8 a.m. to 5 p.m. EST. Your identity will be verified before submitting your request, so be prepared to provide your personal information when you call.

TransUnion Security Freeze vs. Credit Lock

TransUnion offers both a credit lock and a credit freeze.

With a credit lock, you can lock and unlock your credit report as often as you want using its TransUnion: Credit Monitoring mobile app (iOS, Android) or through its TrueIdentity product, which offers free monitoring, alerts, and up to $25,000 in identity theft insurance.

With a credit freeze, you must contact the credit bureau online, by phone, or mail to request a freeze or unfreeze. 

Final Thoughts

It’s a good idea to protect your credit with a credit freeze, and it’s easy — and fast — to unfreeze your credit online or over the phone. You can temporarily unfreeze your credit when you need to apply for a credit card, a loan, or otherwise use your credit, then freeze it again once you’re done.

To keep up with the high rate of identity theft, the field of cybersecurity is rapidly growing. The U.S. Bureau of Labor Statistics projects the information security analyst occupation — those who monitor their organization’s networks for security breaches and investigate when one occurs — to increase substantially in the coming years.³ However, only time will tell if expanding the profession will have any impact on curbing, or at least slowing, identity theft.

The Pandemic Brought an Unprecedented Surge in Identity Theft

As more and more financial transactions, official registrations, and general interactions have moved online, identity theft reports have increased sharply. From 2001 to 2019, identity theft reports rose steadily from roughly 86,000 to over 650,000. But the onset of the COVID-19 pandemic brought an unprecedented surge in identity theft, likely caused by an increase in e-commerce transactions and a historic expansion to unemployment benefits aimed at mitigating the economic impact from the pandemic. The high number of people applying for government benefits during this time, combined with the rush to distribute these benefits quickly, created vulnerabilities that criminals were able to exploit. As a result, the number of identity theft reports increased over 113% from 2019 to 2020 and remain at elevated levels.

The 3-Year Change in Total Identity Theft Reports by Theft Type

While credit card fraud has long been the most common type of identity theft, in recent years, other types have been rising more quickly. New account bank fraud had the largest 3-year increase of all identity theft types, rising approximately 307% between 2019 and 2022. This type of fraud occurs when a scammer has been successfully registered by a financial institution after applying using false personal information for the sole purpose of committing fraud. With the advent of online banking and the ability to open an account without ever leaving one’s home, the opportunity for fraudsters to take advantage of new account fraud is greater than ever before.

Government benefits fraud had the second-largest increase since 2019 at over 250%. Much of this is attributable to the billions stolen from COVID-19 relief assistance programs starting in 2020. The Department of Labor estimated that approximately $46 billion was stolen by criminals via fraudulent pandemic-related unemployment insurance benefits.

U.S. States Ranked by the Number of Identity Theft Reports per Capita

While identity theft occurs throughout the U.S., it’s more prevalent in certain geographic regions. Southern states lead the country with the most identity theft reports per capita, with Georgia topping the list at 55.9 reports per 10,000 residents in 2022. Louisiana and Florida came in second and third with 53.8 and 51.1 reports per 10,000 residents, respectively. Major metropolitan areas in the South — such as Miami (87.3), Atlanta (75.2), and Houston (63.0) — also lead the country in reported identity theft.

Conversely, Midwestern states tend to have lower rates of identity theft, with the majority having less than 15 identity theft reports per 10,000 residents. Louisville, Kentucky (16.1); Grand Rapids, Michigan (15.6); and Minneapolis, Minnesota (15.2) all rank among the lowest large metropolitan areas for reported identity thefts. The exceptions in the region are Illinois, Ohio, and Indiana, which had 33.6, 26.3, and 18.3, respectively. South Dakota reported the lowest rate of identity theft, with just 7.5 reports per 10,000 residents last year.

For a breakdown of more than 350 metros and all 50 U.S. states, here is the report’s complete data table:

Methodology

To determine the cities with the highest rates of identity theft, researchers at Upgraded Points analyzed the latest data from the Federal Trade Commission’s Consumer Sentinel Network Data Book 2022 and the U.S. Census Bureau’s 2021 American Community Survey. The researchers ranked locations by the number of identity theft reports per 10,000 residents. In the event of a tie, the location with the larger total number of identity theft reports was ranked higher.

To improve relevance, only metropolitan areas with at least 100,000 people were included in the analysis. Additionally, metro areas were grouped into the following cohorts based on population size: 

• Small Metros: 100,000 to 349,999 people
• Midsize Metros: 350,000 to 999,999 people
• Large Metros: More than 1,000,000 people

Final Thoughts

Identity theft is a bigger threat now than ever: With more and more interactions taking place online, fraudsters have found a seemingly infinite number of ways to hack individuals’ personal data as well as breach entire companies’ security systems.

Reports of identity theft have increased dramatically in recent years, growing nearly 200% over the past decade. While initial growth was steady, increasing year after year, reports of identity theft significantly increased between 2019 and 2020, rising over 113%. Although the number of identity theft reports decreased from 2021 to 2022, identity theft remains well above pre-pandemic levels.

More recently, certain types of identity theft are occurring more frequently than others. New bank account fraud had the largest 3-year increase of all identity theft types, rising over 300% between 2019 and 2022. Government benefits fraud and securities accounts identity theft had the second and third largest increase, rising 250% and 190%, respectively.

While identity theft occurs throughout the U.S., certain regions have higher rates of fraud than others. Southern states tend to have higher rates of identity theft, and major metropolitan areas in the South — such as Miami (87.3), Atlanta (75.2), and Houston (63.0) — also lead the country in reported identity theft. Midwest states tend to have lower rates of identity theft with Louisville, Kentucky (16.1); Grand Rapids, Michigan (15.6); and Minneapolis, Minnesota (15.2) all ranking among the lowest large metropolitan areas for reported identity thefts.

References

1. Identity Theft Resource Center. (2022, April 13). Identity Theft Resource Center Report: Data Breaches Increase; Victim Rates Drop in Q1 2022. https://www.idtheftcenter.org/post/data-breach-increase-14-percent-q1-2022/. Retrieved May 3, 2023

2. The White House. (2023, March 2). FACT SHEET: President Biden’s Sweeping Pandemic Anti-Fraud Proposal: Going After Systemic Fraud, Taking on Identity Theft, Helping Victims. https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/02/fact-sheet-president-bidens-sweeping-pandemic-anti-fraud-proposal-going-after-systemic-fraud-taking-on-identity-theft-helping-victims/. Retrieved May 3, 2023

3. Bureau of Labor Statistics, U.S. Department of Labor. (2022, September 8). Occupational Outlook Handbook: Information Security Analysts. https://www.bls.gov/ooh/computer-and-information-technology/information-security-analysts.htm#tab-1. Retrieved May 3, 2023

It’s a good idea to pay off collection accounts, but the fact is that even paid collection accounts can stay on your credit report for up to 7 years from the date of the first delinquency. 

Although paid collection accounts dragging down your score can be a frustrating fact, you may be able to get these accounts removed from your credit report.

Here are your primary options for removing these accounts from your credit report:

1. Request validation of the debt.
2. Negotiate a pay-for-delete agreement.
3. Write a goodwill letter.
4. Dispute the collection with the credit bureaus.
5. Wait for it to fall off.

Let’s look at the impact of paid collections on your credit report and management options.

What Happens When a Collection Is Paid Off

A collection account will be marked as paid on your credit report when you pay it off. It will indicate whether you paid the account in full or settled for less than the full amount.

Even when your account is paid off, it stays on your credit report for up to 7 years from the date of the first delinquency, which is when you fell behind on the account. 

You shouldn’t need to notify the credit bureaus of paid-off accounts, as the creditors or collection agencies should do that. If your credit report isn’t updated, you can dispute the inaccuracy.

A paid collection account on your credit report can hurt your credit score, depending on the credit scoring model. That affects your ability to obtain credit products such as credit cards and loans at the best rates. On some of the most recent credit scoring models, paid collection accounts don’t hurt your credit score at all, though unpaid ones do.

But even if it’s a ding on your credit report, a paid collection is better for your credit than an unpaid collection account. Paying a collection shows you’ve taken responsibility for the debt and paid it off. 

The Benefits of Paying Off Collection Accounts

There are several benefits to paying off collection accounts:

1. Improved Credit Score: Paying off collection accounts can help improve your credit score. Even though the collection account will still appear on your credit report for up to 7 years, having a paid collection account is better than having an unpaid collection account.
2. Reduced Risk of Legal Action: If a collection account remains unpaid, the creditor may take legal action against you. Paying off the collection account can reduce the risk of being sued and facing legal consequences.
3. Fewer Collection Calls and Letters: When you have an unpaid collection account, you can expect to receive a surplus of calls and letters from debt collectors demanding payment. Once the account is paid off, the calls and letters should stop.
4. Easier Approval for Credit: If you have unpaid collection accounts, lenders may hesitate to extend you credit. Paying off collection accounts can help demonstrate to lenders that you are responsible for your debts, making it easier to get approved for credit in the future.
5. Better Financial Peace of Mind: Unpaid collection accounts can be a source of stress and anxiety. Paying them off can give you a sense of relief and knowing that you have taken steps to address your debts.

Does Paying Off Collections Improve Your Credit Score?

Paying off collections can improve your credit score. The extent to which it will improve your score depends on various factors, including the type of collection, how old it is, and how many other negative items are on your credit report.

In general, paying off a collection account will result in a positive change in your credit report, as it will be updated to show that the account has been paid in full. This will result in a more favorable credit report and may lead to an improvement in your credit score.

However, paying off a collection account does not guarantee an immediate or significant improvement in your credit score, as derogatory accounts such as collections aren’t the only factor influencing your credit score.

Your credit score is based on many factors, including payment history, credit utilization, length of credit history, and types of credit used. 

When you pay off a collection account, continue to make timely payments on your other accounts, maintain a low credit utilization ratio, and avoid negative credit behaviors to improve your credit score over time.

How Long Does a Paid Collection Stay On Your Credit Report?

A paid collection account will typically remain on your credit report for up to 7 years from the date of the original delinquency, which is the date you first fell behind on the account.

Even after you pay off the collection account, it will still be listed on your credit report for up to 7 years. However, having a paid collection account is generally viewed more favorably by lenders than having an unpaid collection account.

The impact of a paid collection account on your credit score will diminish over time, especially if you maintain a positive credit history by making timely payments on your other accounts and avoiding new negative credit events. 

Eventually, the paid collection will drop off your credit report altogether after the 7-year reporting period expires.

Removing a Paid Collection From Your Credit Report

If you have a paid collection account on your credit report, there are steps you can take to try and remove it from your credit report.

1. Request Validation of the Debt: You have the right to request validation of the debt from the collection agency. It must provide you with written proof that you owe the debt.
2. Negotiate a Pay-for-Delete Agreement: Before you pay off the collection account, negotiate with the collection agency to have them remove the account from your credit report in exchange for payment. Get any agreement in writing before making payments.
3. Write a Goodwill Letter: If you’ve already paid off the account and didn’t get a pay-for-delete agreement, you can still use a goodwill letter to request that the collection agency remove your resolved account from your credit report.
4. Dispute the Collection With the Credit Bureaus: You can dispute the collection account with the credit bureaus if you believe there are errors or inaccuracies. The credit bureaus will investigate and remove the account if it is invalid.
5. Wait for It To Fall Off: Collection accounts typically stay on your credit report for up to 7 years from the original delinquency date. If you have already paid the account, it will remain on your report for up to 7 years but will be marked as paid.

Can You Dispute a Paid Collection?

Yes, you can dispute a paid collection account if you believe it is inaccurate or has been reported in error.

To dispute a paid collection account, you should first request a copy of your credit report from the 3 major credit reporting agencies: Equifax, Experian, and TransUnion. Review your credit report carefully and look for any errors or inaccuracies, such as incorrect account balances, incorrect dates, or accounts that do not belong to you.

If you find an error or inaccuracy, follow these steps: 

• Write a dispute letter to the credit reporting agency reporting the error. In your letter, explain the nature of the error and provide any supporting documentation that proves your case. Include your full name, address, and account number(s) associated with the disputed information.
• Send your dispute letter by certified mail with a return receipt requested so you have a record of when the letter was received. You can also submit your dispute online through the credit reporting agency’s website.
• Once the credit reporting agency receives your dispute, it will investigate the disputed information with the creditor or collection agency that reported it. If the information is inaccurate, the credit reporting agency will correct or remove it from your credit report.
• Suppose the investigation results do not support your claim. In that case, the credit reporting agency will send you a letter detailing the results of the investigation and their reasons for not making any changes to your credit report. You may still be able to request that a statement of the dispute be added to your credit report to explain your side of the story.

You can’t dispute accurate information. You can still try to negotiate with the creditor or collection agency to see if it will remove the collection account from your credit report as a goodwill gesture. 

What To Do With a Paid-off Collection Still on Your Credit Report

If a paid-off collection is still on your credit report, you should first check the date of the last activity and the date of the original delinquency. The date of last activity is the date when the debt was most recently reported to the credit reporting agencies. In contrast, the date of the original delinquency is the date when you first fell behind on the account.

A paid-off collection account can remain on your credit report for up to 7 years from the date of the original delinquency. If the collection account has been on your credit report for more than 7 years, you can dispute it with the credit reporting agency to have it removed.

If the collection account has been on your credit report for less than 7 years and you have paid it off, it should be updated to show that the account has been paid in full. However, it may take some time for the credit reporting agencies to update your credit report.

If the account hasn’t been updated after 1 or 2 months, contact the creditor or collection agency to request reporting the account as paid in full to the credit reporting agencies. You can also request that the agency send you a letter confirming that the account has been paid in full.

How To Remove Collections From a Credit Report Without Paying

It is not typically possible to remove collections from your credit report without paying the debt unless there are errors or inaccuracies in the reported information.

However, there are a few things you can try:

1. Dispute the Collection Account: If errors or inaccuracies exist in the reported information, you can dispute the collection account with the credit reporting agency reporting the error.
2. Negotiate With the Creditor or Collection Agency: You may be able to negotiate with the creditor or collection agency to have the account removed from your credit report in exchange for payment in full or a settlement amount. However, this is not a guaranteed solution and may not work in every situation.
3. Wait for the Collection Account To Fall Off: Collection accounts typically remain on your credit report for up to 7 years from the original delinquency date. If the account is close to falling off your credit report, you may choose to wait it out rather than pay the debt.

Not paying a debt you legitimately owe can have serious consequences, such as legal action, wage garnishment, and damage to your credit score. It is always recommended to try to pay off your debts or work out a payment plan with the creditor or collection agency.

How To Negotiate Pay-for-Delete

Negotiating a pay-for-delete agreement with a collection agency can be a good way to minimize the impact of a collection account on your credit report. Here are some steps to follow:

1. Negotiate the Payment Amount: You can try to negotiate a lower payment amount, but be aware that the collection agency is not obligated to accept your offer. If you negotiate a lower payment amount, ensure that the agreement includes language that the account will be deleted from your credit report in exchange for the reduced payment.
2. Get the Agreement in Writing: Once you have negotiated the terms of the pay-for-delete agreement, make sure that the agreement is in writing and that you keep a copy for your records.
3. Make the Payment: Once you have the written agreement, make the payment according to the terms of the agreement.
4. Follow Up: After making the payment, follow up with the collection agency to ensure that it has deleted the account from your credit report. It’s a good idea to check your credit report periodically to ensure the account has been removed.

Remember, not all collection agencies will agree to a pay-for-delete agreement, and there is no guarantee that the agreement will be honored, even if you have it in writing. However, it’s always worth trying to negotiate, especially if the collection account is having a significant negative impact on your credit score.

Writing a Goodwill Deletion Letter for Paid Collection

A goodwill deletion letter requests a creditor or collection agency to remove a negative item from your credit report as a goodwill gesture. 

Here is an example of a goodwill deletion letter for a paid collection:

[Your Name]
[Your Address]
[City, State ZIP Code]

[Date]

[Collection Agency or Creditor’s Name]
[Collection Agency or Creditor’s Address]
[City, State ZIP Code]

Dear [Collection Agency or Creditor’s Name],

I am requesting a goodwill deletion of the collection account [Account Number] from my credit report. This account was paid in full on [Date], and I would appreciate your assistance in removing it from my credit report.

As you know, a paid collection can remain on a credit report for up to 7 years, even after it has been paid in full. I understand that this account was reported accurately. Still, I am requesting your help in removing it from my credit report as it is negatively impacting my credit score and financial well-being.

I have taken steps to improve my financial situation and am committed to maintaining responsible financial behavior moving forward. I hope you will consider my request and remove this account from my credit report.

Thank you for your time and consideration in this matter.

Sincerely,

[Your Name]

What To Do After You Pay Off a Collection Account

Congratulations on paying off your collection accounts! Here are some steps you can take next:

1. Verify That the Accounts Have Been Updated: Check your credit report to ensure that the collection accounts have been updated to reflect that the accounts are paid in full or settled. You can dispute the information with the credit reporting agencies if the accounts haven’t been updated.
2. Monitor Your Credit Report: Continue to monitor your credit report to ensure that the collection accounts have been updated and no new negative information has been added. You can get a free copy of your credit report once a year from each of the 3 major credit reporting agencies at annualcreditreport.com.
3. Build Your Credit: Building your credit is an ongoing process. You can start by making sure you are paying all of your bills on time and in full, keeping your credit utilization low (using less than 30% of your available credit), and avoiding opening too many new accounts simultaneously.
4. Consider a Secured Credit Card: If you are having trouble getting approved for traditional credit cards, you may want to consider secured credit cards. These cards require a security deposit but can be a good way to start building or rebuilding your credit.
5. Be Patient: It takes time to rebuild your credit after a collection account, but your credit score will improve with responsible financial behavior.

Paying off your collection accounts is a big step toward improving your financial health, but it’s only a part of the process. By making responsible financial decisions, you can build a strong credit history and achieve your financial goals.

Final Thoughts

While it can be disheartening to accept that collection accounts may not disappear from your credit report for up to 7 years, even if you pay the accounts in full, it’s often still worth paying off derogatory accounts. In doing so, you can lessen the effect of the collection account on your credit score, get off the hook for legal trouble, and may have options for negotiating a deletion of the account from your credit report.

The truth is that it happens all the time. You’re presented with your restaurant bill in a foreign country and the total is already calculated in U.S. dollars. You do the quick math, determine the total seems close, you sign, and you’re on your way. Unfortunately, you’ve just been the victim of dynamic currency conversion, and it can cost you.

But there is a simple solution to avoid this situation. Here’s all the information you need to know about dynamic currency conversion and how you can avoid it for good.

What Is Dynamic Currency Conversion?

When traveling abroad, dynamic currency conversion (DCC) uses your home currency to pay for a purchase in a foreign country instead of the local currency. However, you could also be in the U.S. and make an online foreign purchase on eBay, Etsy, or another foreign website, or use PayPal to pay for a foreign purchase, and experience DCC.

To help you understand DCC, let’s start with how a point-of-sale credit card transaction processes without it. You’re handed your restaurant bill while in Mexico and it’s calculated in Mexican pesos. You use your credit card to pay the bill, your credit card payment processor converts the pesos to U.S. dollars at its current exchange rate, and your card is charged in U.S. dollars.

With DCC, things work differently. The bill may be brought to you in U.S. dollars or the bill may have the option to check off whether you want to pay in U.S. dollars or Mexico pesos. You’re not sure of the conversion rate, but you are fine with the U.S. dollar amount listed., so you pay in U.S. dollars and you’re done.

Here’s the problem: when you selected to pay in U.S. dollars, you agreed to have the merchant exchange those dollars into local currency at their chosen (usually unfavorable) rate so they can be paid in local currency. There may even be additional fees added in. Then, once the merchant (or their payment processor) has exchanged the amount into Mexican pesos, your credit card payment processor has to then change the pesos back into U.S. dollars to bill you.

Confusing? Let’s look at an example.

An Example of Dynamic Currency Conversion

You’re checking out of your hotel in Mexico and when your bill is presented, it is calculated in both Mexican pesos and U.S. dollars. You are asked to select which currency you prefer to use.

• Bill in Mexican pesos: Mex$2,000
• Bill in U.S. dollars: $126

You’re rushed, you need to leave for the airport, and $126 appears correct, so you select U.S. dollars.

Let’s assume at today’s exchange rate, calculated by your credit card company, Mex$2,000 is the equivalent of about $106. The U.S. dollar selection is a dynamic currency conversion that would cost you $20 more than if you had selected the local currency — nearly 19% more! Your card will be billed $126.

The hotel, or its payment processor, used its own (unfavorable) exchange rate and fees were added. Imagine the additional cost of DCC when your hotel bill is thousands of dollars!

We know DCC can cost you more, but let’s continue and look closer at the process and how you can avoid it.

Hot Tip: When traveling abroad, always use a credit card that does not charge foreign transaction fees. The combination of being hit with dynamic currency conversion plus the addition of foreign transaction fees can add significant costs to your purchases. 

Pros and Cons of Dynamic Currency Conversion

While DCC may add costs to your transactions, there are some positive aspects of selecting DCC and paying with U.S. dollars:

• You’ll Know the Price You’re Paying — When you select DCC, you’ll know the price you’re paying for an item or service. You don’t need to calculate the exchange rate or guess. It can also be easier to budget your expenses when you know what you’ve spent in U.S. dollars.
• The Price Is Locked In — Unlike paying in local currency, the DCC price is locked in. You don’t have to wait to look at your credit card statement to know the exact amount of the purchase.

Unfortunately, the downsides far outweigh any positives of the practice:

• You’ll Pay More — DCC adds cost to your purchase in the form of unfavorable exchange rates and additional fees.
• Foreign Transaction Fees — Even in your own currency, you could still be hit with additional foreign transaction fees on top of the cost of DCC. Always use a card that does not charge these fees.

Bottom Line: With DCC, the price you pay will be obvious and it will be locked in. Unfortunately, these conveniences come at the price of paying more for your purchase. 

How To Avoid Dynamic Currency Conversion

Dynamic currency conversion can occur anywhere — at retail stores, restaurants, hotels, transportation providers, ATMs, sending money abroad, and more.

Here are some steps for avoiding this practice:

Be on the Lookout for Dynamic Currency Conversion

The first step to avoiding this practice is to know how to spot it.

It’s very difficult to dispute dynamic currency conversion once you’ve signed and agreed to be charged. For this reason, you’ll want to review every bill and always make sure the total is stated in local currency.

Watch for DCC at ATMs and with payment processing services as well. ATMs frequently ask if you want to be charged in U.S. dollars. Payment processors, such as PayPal, may apply their own conversion rates on foreign transactions that can be less favorable than your bank using their daily conversion rate.

Anytime you are making a foreign transaction always watch for DCC and select to execute the transaction in local currency to ensure you don’t pay more than you need to.

Ask for a Corrected Bill

If you’re presented with a bill that’s already in U.S. dollars, ask for it to be voided and request a new bill calculated in local currency. Do not sign anything until you’re certain the bill is in local currency. Circle the amount on the receipt so there is no question about what should be charged.

Don’t Pay in Cash With U.S. Dollars

You won’t avoid DCC by paying in cash with U.S. dollars, as the same unfavorable exchange rate and fees still apply. In our hotel bill example above, if you paid in cash with U.S. dollars, you would still be paying the inflated $126 versus the equivalent of $106 when paying in Mexican pesos.

Review Your Credit Card Statement

Hold on to your receipts and match them with your credit card statement. If you are charged incorrectly and the amount is significant, you can dispute the charge and use your receipt as proof of the correct transaction.

Know the Currency Conversion Rate of the Country You’re Visiting

Whether you download a currency conversion app to your phone (we recommend XE Currency), make notes, or just memorize the approximate conversion rate, it’s imperative to know this information in advance.

Hot Tip: If your bill is calculated in local currency, but there is a box that is checked that says convert to U.S. dollars, ask for another bill. A merchant may have checked the U.S. dollar box for you!

Final Thoughts

It can be tempting to pay a bill in a currency you’re familiar with, like U.S. dollars. Unfortunately, you’ll pay more with dynamic currency conversion.

The good news is that you do have a choice and DCC can be avoided. Review your bills carefully, always select to pay in local currency, and use a credit card that does not charge foreign transaction fees for even greater savings.

Savings Rates Climbed During the Pandemic

In the early weeks and months of the COVID-19 pandemic, experts feared that widespread shutdowns would devastate households economically. While March and April 2020 did bring brief spikes in unemployment, the economy overall fared better than expected early in the pandemic. Expansive government relief programs gave a boost to household finances, and because people spent less during lockdowns, the personal savings rate — calculated as the percentage of disposable income that people save — increased to record heights. Over the course of 2020 and 2021, low interest rates for borrowing and rising wages in a tight labor market continued to make it easier to save, keeping the rate elevated.

The rise and persistence of inflation more recently has reversed that trend. Year-over-year increases in the Consumer Price Index have exceeded 5% in every month since May 2021 and topped 8% in each of the last 6 months. With everything from housing to energy to groceries becoming more expensive, money that consumers had previously been setting aside is increasingly going toward essential spending.

Savings Rates Are Declining Now

These economic headwinds have sent the household personal savings rate back down to pre-COVID-19 levels. The savings rate peaked at 33.8% early in the pandemic but had fallen to just 5% as of July 2022 — less than half the rate of the previous July and the lowest level since the Great Recession. Today’s figures are more in line with recent history: despite steadily rising real disposable income over time — where disposable income is defined as total personal income less any personal taxes paid — personal savings rates have fallen from 10% to 15% in the mid-1970s to between around 4% and 8% in more recent decades.

Low savings rates can have a positive effect on economic activity because they signal that consumers are spending on goods and services. But in today’s environment, with high prices and rising interest rates, low savings could expose more households to financial difficulties. If the U.S. economy enters a recession and unemployment rates increase, households with depleted savings may struggle with essential spending.

U.S. States With the Most Disposable Income

Having more disposable income is important for positioning families to pay for necessary expenses and weather hardships when they arise. On this count, residents in certain parts of the country will be better off than others. Looking at the cost of living alone is not enough, as less expensive places to live — such as Mississippi, West Virginia, and Arkansas — are all ranked near the bottom for disposable income. Without taking cost of living into account, states in the South tend to have the lowest per capita incomes on both a pre- and post-tax basis. In contrast, most of the states where disposable incomes are highest are coastal locations, which tend to have higher concentrations of well-educated workers and well-paying industries. But these states also often have higher cost of living.

It’s important to consider all relevant factors to find the states whose residents have the most money to spend or save. In doing so, we see that Connecticut leads the way, followed by the Dakotas, Wyoming, and Massachusetts. On the other hand, residents of Mississippi, Hawaii, and Arizona average the least disposable income.

Methodology

The data used in this analysis is from the U.S. Bureau of Economic Analysis’ Personal Income and Regional Price Parities datasets. To determine the states whose residents have the most cash to spend, researchers at Upgraded Points calculated the per capita disposable income by state in 2021 and adjusted for cost-of-living differences. For the purpose of this analysis, disposable income is defined as total personal income less any personal taxes paid.

Final Thoughts

Households in the U.S. have experienced both financial highs and lows throughout the COVID-19 pandemic. Although the personal savings rate reached record heights in 2020 and 2021, savings are now declining due to inflation.

As disposable income decreases and savings rates decline, families may struggle to pay for essentials or unexpected expenses. Residents in certain parts of the U.S. will likely fare better than others, however.

Despite lower costs of living, states like Mississippi, West Virginia, and Arkansas all rank near the bottom for disposable income. How much residents pay in taxes is not enough to determine their disposable income, either, since states like California and Massachusetts still rank highly.

When considering all relevant factors — beyond cost-of-living differences or taxes alone — residents of Connecticut have the most money to spend or save, followed by residents of the Dakotas, Wyoming, and Massachusetts. Residents of Mississippi, Hawaii, and Arizona, meanwhile, average the least disposable income.

The Top 10 Best U.S. Cities for Boosting Your Credit Score

Coming in at the top spot for best cities to boost your credit score is Boston, with an overall score of 37.04 out of a total score of 50. A combination of a high mean credit score of 720, a high minimum wage at $14.25 per hour, a low unemployment rate of 3.7%, and a high number of financial advisors per capita at 121 boosts this city to the top of the rankings. According to Experian, the average credit score in the U.S. is 714,¹ so Boston comes in 6 points higher than the national average. 

New York boasts 3 of its cities in the top 10 rankings and New York City did not make the cut. Rochester is in the third spot with an overall score of 36.38 and a low unemployment rate of 2.3%. Albany, the capital city of New York, sits in the fourth spot with an overall score of 33.29. This is the only small city to make it into the top 10 rankings with a city size of just 99,224. A small city is defined as a city with less than 100,000 people.² Syracuse is the third city in New York that makes it into the top 10 with an overall score of 30.8. All 3 cities average a cost of living index of 70.29, which means it is 30% cheaper to live in one of these cities than the national average. 

The Worst U.S. Cities for Boosting Your Credit Score

One thing to note from the worst cities to boost your credit score is that half of the cities are located in Texas. There are multiple factors that contribute to these cities being in this ranking, but the biggest common denominators are that they have the lowest average credit score and the highest average credit card debt. Although these cities have a low cost of living, the average mean credit score in Texas is 674, a full 40 points lower than the national average. When it comes to credit scores, just a few points can make a difference. Teetering on that line between a fair credit score and a good credit score can greatly impact your ability to secure the loan amount you need. 

Other notable cities to mention in this list are New Orleans and Atlanta, both boasting low credit scores and high credit card debt. Read on to see the full list of cities and data for each of the ranking factors.

Where Does Your City Rank?

Interested to see your city’s stats? The table below provides a comprehensive list of all cities that we evaluated and the data for each ranking factor. 

Methodology

To conduct our analysis, we started with 60 of the largest cities in the U.S. We collected data on 8 different factors. Each factor was assigned a weight based on its importance in boosting credit score. From there, we converted the data into a score of 0 to 5, with 5 equating to the most favorable conditions. Those scores were multiplied by their factors’ weight and added together for a possible total score of 50. The factors are listed below with their respective weights and source data.

Ranking factors include:

Final Thoughts

If you are looking to boost your credit score, you might want to consider location as a possible factor. The ability to pay off debt is important when determining your credit score and external factors such as minimum wage, per capita personal income, unemployment rate, and cost of living index all contribute to that. 

Boston, San Jose, California, and Rochester, New York, are all top cities to boost your credit score, where minimum wages are higher, the unemployment rate is low, and the cost of living is low as well. If you are considering location though, you might want to think about avoiding Texas altogether as all of the cities we analyzed in that state made it into the bottom 10 positions on the list.

How you save and what you save every paycheck or every month depends on your personal financial situation. There is no one-size-fits-all savings plan, but we can all agree that saving what you can is important to set you up for what life might throw your way.

While inflation has slowed to 3.4% in 2024, down from the June 2022 peak of 9.1%,¹ it has still been a struggle for Americans to set aside savings every month. Monthly expenses such as food, gas, and rent have skyrocketed, leaving Americans spending more and seeing that impact at the end of the month.

Our article will walk you through the average savings account balance for Americans, savings by demographics, and much more.

5 Quick Statistics on Savings Accounts

1. 71% of Americans say they have $5,000 or less in their savings account.²
2. 41% of Americans say they have $500 or less in their savings account.²
3. 54% of American adults have 3 months of emergency savings.³
4. 47% of parents with children under the age of 18 have 3 months of emergency savings.³
5. 13% of all adults said they could not pay a $400 unexpected expense.⁴

What Are Savings?

According to Investopedia, savings refers to the money a person has left over after subtracting their consumer spending from their disposable income over a period. Savings, therefore, represent a net surplus of funds for an individual or household after all expenses and obligations have been paid.

The Average Savings Account Balance in the U.S.

While you might look at your bank account and think you don’t have a lot saved, it might make you feel better to know you’re not alone. According to survey data from The Ascent, the mean (average) savings balance among Americans is $25,898. However, the median (middle value: more representative than an average) is $1,200.²

When you break down the data from the survey, the most common response to “How much money is in your savings account?” was $1 to $500. And 71% of Americans have $5,000 or less in savings, with 41% saying they have $500 or less.²

Data from the Federal Reserve’s latest consumer finance survey offers a different view from the Ascent research. The Survey of Consumer Finances says the average balance in checking, savings, and other “transaction accounts” in the U.S. was $62,500 in 2022, representing a 29% increase from 2019 figures. The median balance was $8,000 – up from $5,300 in 2019.

Savings by Demographics

In the Federal Reserve’s latest “Report on Economic Well-Being of U.S. Households,” 54% of adults have 3 months of emergency savings.³ The 2024 report is based on 2023 data, the latest available – the 2023 figure is unchanged from the previous year’s report.

Based on the report, education-wise, 73% of adults with a bachelor’s degree or higher have 3 months of emergency savings, while just 41% of adults with a high school degree or GED have the same savings.

By race/ethnicity, 67% of Asian American adults have 3 months of emergency savings, compared to 42% of Black American adults.

Fewer parents living with their own children under the age of 18 (47%) have up to 3 months of emergency savings, compared to 56% of all other adults.

Unexpected Expenses

According to the Federal Reserve’s “Report on Economic Well-Being of U.S. Households,” in May 2024, when faced with a hypothetical unexpected expense of $400, 13% of all adults said they would be unable to pay the expense by any means.⁴

Another survey conducted in December 2023 by Bankrate found that 44% of Americans have enough savings to cover an unplanned expense of $1,000, meaning more than half would need to find other means to pay for an unexpected car repair or emergency room visit.⁵

When survey takers were asked how they would pay for a $1,000 unexpected expense, 21% said they would charge it to a credit card and pay it back over time.⁶

How Much Should I Have in Savings?

So, how much money should you have in savings? There’s no right or wrong answer here, as everyone has a different financial situation, but there are a few popular theories.

You have most likely heard that you should have enough money in savings to cover 3 to 6 months of basic expenses, but exactly how much that is depends on your personal lifestyle. 

A great way to find out how much you should save every month is to sit down and figure out all your monthly bills and expenses. You should look at how much money you bring in every month after taxes and figure out how much you can put into a savings account after all your bills are paid. 

4 Popular Types of Savings Accounts

Traditional

Traditional savings accounts can be opened at your bank or credit union with a low minimum deposit. This type of savings account allows you to earn interest on your money, but not as much as you would with other forms of savings accounts. 

High-Yield

High-yield savings accounts are a great way to earn interest on your money. You can find high-yield accounts at online banks and credit unions. 

Money Market

Money market savings accounts are a great option for people who want to earn a higher interest rate than a traditional savings account but also want to have an option to access their money. Essentially, a money market account acts as a regular savings account but with the benefits of a checking account. You can open a money market account in person or online at a bank or credit union.

Certificate of Deposit (CD)

If you do not need access to the money in your account, a CD account could be a good option for you. This type of account allows you to deposit money and agree to leave it in the account for a period of time. During that time, your money will earn a competitive rate. The terms on CD accounts typically range from a month to as long as 60 months. Longer terms usually result in a higher rate.

Final Thoughts

Whether you’re in the beginning stages of your savings journey or a seasoned saver, it’s always good to research how to increase your savings, look into different accounts, and monitor the market. Continue to save what you can every month, and remember, no financial situation is the same, but it’s always helpful to have a little extra money for a rainy day.

References

¹ ​U.S. Bureau of Labor Statistics (2024, May). 12-month percentage change, Consumer Price Index, selected categories. https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm.
² Caporal, J. (2023, August 18). Study: Median American’s Savings Account Balance Is $1,200. The Ascent. https://www.fool.com/the-ascent/research/average-savings-account-balance/.
³ The Federal Reserve (2024, May 21). Report on the Economic Well-Being of U.S. Households. https://www.federalreserve.gov/consumerscommunities/sheddataviz/emergency-savings-table.html.
⁴ The Federal Reserve (2024, May). Report on the Economic Well-Being of U.S. Households. https://www.federalreserve.gov/consumerscommunities/sheddataviz/unexpectedexpenses-table.html.
⁵  Bennett, R. (2024, February 29). The average amount in U.S. savings accounts – how does your cash stack up? Bankrate.
https://www.bankrate.com/banking/savings/savings-account-average-balance/.
_^6. Gillespie, L (2024, February 22). Bankrate’s 2024 annual emergency savings report. Bankrate. https://www.bankrate.com/banking/savings/emergency-savings-report/.

Obviously, the main goal for anyone with a credit card is to pay that balance off in full at the end of each month. But we all know that things happen, and it’s not always possible to do this each month. Credit card debt can slowly creep up and can easily leave you feeling overwhelmed.

This guide will offer tips to reduce or pay off your credit card debt in a few easy steps — and keep you encouraged and motivated in the process!

5 Steps for Getting Out of Credit Card Debt

Eliminating your credit card debt requires a thoughtful and deliberate approach — from creating a budget, determining your best payment strategy, and even contacting creditors to renegotiate rates.

The reason credit card debt is such a big problem is due to the high interest rates (known as APR) that cards often charge. Sometimes, it can feel like you’re making payments in vain, as you see the total balance hardly being affected and other fees being added on. If you’re only making the minimum payments, it can take years to pay off this debt.

1. Figure Out Your Current Financial State

Take stock of all of your current debts and obligations, including things like your mortgage or rent payment, monthly bills (like grocery, electricity, and internet), and minimum payments for all of your loans and credit cards.

Hot Tip: Including information like APRs for your cards and interest rates for your loans will be important later, so be sure to track this as well.

As far as your income goes, be sure to take into account your salary, profits from any other side businesses, and anything else that generates money (like selling clothing or receipt of dividends from any investments).

2. Reevaluate Your Spending and Find Ways To Save

Now that you know your current financial state, you can start to see where money can be saved — and where it can’t.

Mandatory Payments

Always make sure you’re meeting minimum payment requirements and mandatory obligations. This is especially important for things that involve secured debt (like your car or mortgage payments). Cars can be repossessed or you could even be forced out of your home if you miss too many payments.

You’ll also want to make sure to make minimum payments on any student loan debt you may have. This is because the government can garnish your wages, your tax refunds, and your Social Security benefits if you fall too far behind.

You also don’t want to cut necessary expenses for things like food, insurance, and electricity to repay credit card debt.

Where To Save

There are plenty of places where costs can add up, so it’s important to take a critical look at your spending. Maybe there’s an opportunity to cancel unnecessary costs like gym memberships, Netflix, or other subscription services. These can even be put on pause and restarted when you’re in a better financial position.

When you’re reviewing your expenses, you may see that you’re spending too much money eating out and can either find a cheaper alternative or cook more at home. Each situation is different, but it’s important to look over all of your expenses to see how you can make smarter choices.

Bottom Line: Each area where you save represents more money that can be allocated to paying down your credit card debt.

3. Create a Budget

Once you know your income and have prioritized your minimum monthly debt payments, it’s time to set up a monthly budget. This will help you track your spending and give you a timeline for eliminating your credit card debt.

A good place to start is to use free online tools like Mint, Personal Capital, or YNAB (You Need a Budget). After the initial setup, most of the hard work is done automatically for you — making it easy to ensure that you stay on track with your budget each month.

Bottom Line: Things like credit card transactions, utility payments, and rent/mortgage payments are tracked automatically, but if you make a lot of cash purchases, these may have to be tracked manually.

While we’re usually big advocates of putting your transaction on credit cards to take advantage of rewards or cash-back, this is the exception. If you’ve found that you can easily overspend on credit cards or that you’re not able to keep track of how much you’re spending, try only using cash while you’re working on cutting your debt.

Paying with cash (or a debit card) can ensure that you don’t rack up additional debt while you’re making attempts to pay it off. It’s also easier to see how much you’re spending versus just swiping your card and worrying about it later.

How To Make Extra Cash

Once you’ve cut your costs, you may still find that you’re coming up short when you develop your budget. In this case, finding creative ways to make a little extra cash can help make a dent in your credit card debt! Here are some ideas:

• Focus on a side business, such as selling homemade goods on Etsy or selling thrift store goods for a profit
• Ask for extra shifts or overtime hours at your current job
• Sign up with food delivery or grocery delivery services
• Sell goods on Facebook Marketplace, Poshmark, etc.
• Rent out your car through a service like Turo

Hot Tip: There are tons of ways to make a little extra cash — here are some more creative ideas.

4. Set a Pay-Down Strategy

There are 3 main strategies for debt reduction: the avalanche method, the snowball method, and the high-balance method.

We have an entire article about the benefits and financial impact of each debt reduction method, so we won’t go into a ton of detail here, but at a high level:

• The avalanche method involves paying off your balances with the highest interest rates first. The goal is to erase your debt as quickly and efficiently as possible while paying the minimum interest fees.
• The snowball method involves paying off the card with the smallest balance first to build momentum and positive repayment habits.
• The high-balance method involves paying off the card with the highest balance first to help lower your overall credit utilization and make you a more attractive borrower.

Bottom Line: All of these methods require making minimum payments on all remaining cards.

Balance Transfers

Another strategy to avoid paying interest on your credit card debt involves transferring high-interest debt to a single credit card with a balance transfer. Many of these cards allow you to pay an introductory interest rate of 0% on your balance for a set amount of time.

This isn’t a repayment strategy and will have to be used in conjunction with one of the methods listed above, but this can help you pay more money toward your principal amount and reduce how long it will take to pay off your debt by reducing interest fees. This is especially helpful when consolidating debt onto one card (which we’ll discuss next).

5. Seek Additional Assistance

When working to find additional solutions for paying off credit card debt, the Federal Trade Commission (FTC) suggests finding a credit counseling agency that offers in-person services. Many universities, military bases, credit unions, and housing authorities offer this.

These agencies can help develop a plan to tackle debt but may charge a fee for their advice. Here are some of the assistance options that a credit counseling agency might recommend:

Negotiation Strategies

Debt Consolidation

Debt Settlement

Debt settlement happens when a creditor agrees to accept less than the amount you owe. Unfortunately, this avenue isn’t open to most people. In this scenario, you would hire a debt settlement company to negotiate with your creditors on your behalf.

We recommend checking out the FTC website to educate yourself on potential risks, find tips for researching reputable debt settlement companies, and learn about the financial implications of choosing debt settlement.

Bankruptcy

In extreme cases, bankruptcy can help eliminate credit card debt since you’ll no longer be obligated to pay your creditors.

There are some huge drawbacks though:

1. You’ll be required to attend credit counseling before filing.
2. Filing can be expensive when you account for filing fees and a bankruptcy attorney.
3. Your bankruptcy will be a matter of public record (and remain on your credit report) for 7 years — leading to a drastic drop in your credit score

Bonus: Change Your Financial Habits Moving Forward

1. Stick to your budget: Review your spending at least annually and make adjustments as needed.
2. Check your credit score at least annually: Make sure all of those payments you’ve been making are accurately reflected on your credit report!
3. Establish an emergency fund: Having a safety net can reduce the need to rely on credit cards when you have an unexpected expense pop up.
4. Set savings goals: Are you trying to save for a new house? Start or contribute to a retirement fund? Make sure you’re setting aside money for these important goals.

Final Thoughts

We know that credit card debt can seem overwhelming, especially because everyone’s situation is unique. We hope we’ve given you some good tips to cut costs, while also developing a plan to pay off your credit card balances.

By breaking down the repayment process into steps and familiarizing yourself with some popular repayment strategies, it becomes easier to tackle. If you find yourself in a situation where the debt is overwhelming, there are some more drastic measures you can take to reduce your debt.

Hopefully, you can carry these changes you’ve made throughout your credit journey — even after your credit card debt has been repaid!

While purchasing investments via credit card isn’t especially common, you may be wondering whether it’s possible to do so in order to earn rewards on those transactions.

It is certainly possible to purchase crypto with a credit card, but it’s more difficult than you may think, and there can be significant pitfalls to be aware of.

Let’s take a look at the process of buying crypto with a credit card and some of the downsides you’ll need to consider before doing so.

Are You Able To Buy Crypto with a Credit Card?

A quick disclaimer before we go any further: if you’re considering using a credit card to purchase crypto (or any other investment) because you don’t currently have the disposable income in your checking or savings account, we highly advise against you doing so. In fact, we strongly advise against using a credit card for any purchase if you don’t have the ability to pay off the card in full each month.

Now, to answer our original question: can you buy crypto with a credit card?

Technically you can — but you’ll likely find that it’s not very easy to do so.

For starters, some crypto exchanges, like Coinbase, do not allow credit card payments for U.S. customers. Further, even if you do find an exchange that does allow credit card purchases, your credit issuer may decline the transaction.

How To Buy Crypto With a Credit Card

If you’re interested in purchasing crypto with a credit card, here’s the process you should follow.

• Step 1: Find out if your credit issuer will allow you to use your card to purchase crypto — without it being charged as a cash advance.
• Step 2: Locate an exchange that will allow you to use a credit card for purchases. Most of the major U.S. exchanges, like Coinbase and Gemini, do not allow purchases via credit card. However, smaller exchanges like Coinmama (based in Dublin) allow purchases from a Visa or Mastercard.
• Step 3: This is the easy part, assuming you’ve completed the first 2 steps. All you’ll need to do now is link your card to the exchange, select an amount that you would like to buy, and complete the transaction.
• Step 4: Pay off your balance in full once the statement posts. Again, you should not be purchasing crypto with a credit card if you do not have the funds to cover the purchase when your bill is due.

Pitfalls and Fees

In addition to the difficulty you’re likely to encounter when purchasing crypto with a credit card, there are also a few pitfalls and fees you’ll want to look out for.

Exchange Fees

One item you’ll want to keep an eye out for is the fee the exchange may charge to process your credit card transaction. These fees can often be upwards of 4% of the transaction, which can really add up if you’re making a large transaction.

Further, when you compare this to the fee you might be charged for a debit card or ACH transaction (these could be 0.5%, 0.35%, or even free depending on the exchange you’re using), making the purchase with your credit card starts to feel like a losing proposition.

Cash Advance Fees

Even if your credit card transaction goes through on an exchange, you’ll need to be wary about how that purchase is coded on the issuer’s end.

Credit issuers could treat a purchase of crypto as a cash-like transaction, and thus charge you a cash advance fee, which is usually $10 or 3% to 5%, whichever is greater.

This cash advance fee is in addition to the fee you may be charged for using a credit card, meaning you could end up owing upwards of 9% of the total transaction in fees — hardly worth it by any measure.

Not Earning Rewards

To make matters worse, if your issuer categorizes crypto purchases as cash-like transactions, then you’re unlikely to earn any rewards for these purchases.

That’s right, not only will you be subject to higher fees, but you also won’t earn rewards for that purchase to help offset the fee you’ll pay.

Getting Your Card Frozen

Finally, if you try to purchase crypto with a credit card, and your issuer thinks it is a fraudulent or unusual charge, it may freeze your card until it’s verified that you are indeed the person trying to make the purchase.

An Alternative Option: Crypto Rewards Cards

Instead of trying to purchase crypto with a credit card, you could earn a bit of crypto each time you make a purchase by way of a credit card that offers crypto rewards instead of cash-back rewards. Here are a few of our favorite options:

Gemini Credit Card

Those with the Gemini card can earn crypto rewards in 1 of the platforms’ 40+ supported assets in real-time as soon as they swipe their card. The card gives you 3% back on dining purchases (on up to $6,000 in spend), 2% crypto-back on grocery purchases, and 1% crypto-back on all other purchases.

The Gemini card does not charge an annual fee or any foreign transaction fees.

Coinbase Card

For those looking for a way to spend their current crypto holdings, the Coinbase card allows you to do just that. It immediately converts your crypto to dollars to complete transactions and allows you to earn up to 4% back in crypto when doing so.

That said, you should keep in mind that Coinbase charges you a 2.49% fee to convert your crypto into cash in order to immediately spend the balance. However, if you choose USDC as your payment method (a stablecoin pegged to the price of the U.S. dollar), you will not be charged the 2.49% fee and will still earn crypto rewards.

As with other cards, there is no annual fee to use the Coinbase card, and it can be used to complete purchases anywhere in the world that Visa is accepted.

Hot Tip: Read all about our favorite credit cards that earn crypto rewards in our complete guide!

Final Thoughts

Ultimately, while you can technically use a credit card to purchase crypto, it can be difficult to get the transaction to go through, and it rarely makes sense for most people given the fees that can be associated with doing so.

Given that, you’ll most likely be better off purchasing crypto using your debit card or via an ACH transfer. That said, those who are looking to earn additional crypto passively might want to consider adding a crypto-rewards card to their wallet in lieu of a traditional cash-back card.

If you’re just getting started on your credit card journey, read through our guide on the best credit cards for young adults and professionals.

The information regarding the Voyager Debit Mastercard was independently collected by Upgraded Points and not provided nor reviewed by the issuer.

In this article, we will dig into the different types of payment methods, as well as the growth of digital wallets. We will also assess if and how the way we pay for items impacts how much we spend.

Popular Payment Methods in the U.S.

According to the 2024 Diary of Consumer Payment Choice by the Federal Reserve Bank of Atlanta, U.S. consumers made most of their payments with debit cards, credit cards, and cash. Although cash still comes out as one of the top payment methods, the report also notes that more than half of payments (62%) were made with payment cards, such as debit, credit, and prepaid. 

The full figures showed: 

• Cash – 16% (of payments)
• Credit – 32%
• Debit – 30%
• Automated Clearing House (ACH) – 13%
• Check – 3%
• Mobile Payment Apps – Less than 1%
• Other – 6%

Of those choosing to stick with cash as a preferred payment option, there was a clear gradient in accordance with total household income. Those bringing in less than $25,000 made 32% of all purchases with cash, while those making more than $150,000 used it for just 10% of all payments. The full figures show:

• Less than $25,000 – 32% (of payments made with cash)
• $25,000 to $49,999 – 25%
• $50,000 to $74,999 – 15%
• $75,000 to $99,999 – 15%
• $100,000 to $149,999 – 11%
• Greater than $150,000 – 10%

Person-to-person (P2P) payments have continued to transition to a more digital landscape, with 2023 marking the seventh time in the last 8 years that a growth in online and remote purchases of this nature were made. 22% of all P2P payments in 2023 were made online, up from 19% in 2022. 

By contrast, credit cards are becoming more popular than ever. In total, credit cards accounted for $3.46 trillion of all U.S. spending in 2023. This represented a marginal rise on the previous year’s total of $3.37 trillion. In total, for the calendar year 2023, the total amount spent across different payment types was: 

• Credit – $3.466 trillion
• Debit – $2.753 trillion 
• Cash – $1.873 trillion 
• Prepaid Cards – $0.234 trillion
• Buy Now, Pay Later (BNPL) – $0.097 trillion

These figures are expected to rise in every area except 1 by the close of 2025, with cash expected to be the only spending method that decreases in value in that time: 

• Credit – $3.834 trillion
• Debit – $3,033 trillion
• Cash – $1.836 trillion
• Prepaid Cards – $0.252 trillion
• Buy Now, Pay Later (BNPL) – $0.125 trillion

The Growth of Digital Wallets

A digital wallet on your smartphone can be used to pay at stores that accept mobile or cashless payments. Digital wallets saw an increase in popularity during the pandemic because they offer a form of contactless payment and remove the need to physically touch a credit card reader.

The shift has been so drastic that more than half of consumers now prefer using their digital wallet over traditional payment methods. As many as 53% of people prefer paying with a digital wallet, compared to 34% who defer to the classic methods. 

Digital wallets are now the most commonly used payment method when online shopping, with 37% of all transactions made this way over the internet. Credit cards came in second with 32% and debit cards with 19%. This figure of 37% is expected to rise to 52% by 2027. 

The pandemic was a primary motivator for the increased adoption of digital wallets. There was a 17.2% increase in the use of digital wallets between 2019 and 2022, with a further 10.2% growth projected from then until 2026. 

This rise in the number of digital wallets in use has led to several big names emerging as providers of this service. PayPal, who was amongst the first to offer digital payment solutions, is most popular with U.S. adults. 71% of those 18 and older use this form of wallet. The most popular are: 

• Paypal – 71% (of all U.S. adults)
• Cash App – 44%
• Venmo – 39%
• Google Pay – 36%
• Apple Pay – 31%

This digital approach to payments is reflective of the gradual shift towards a cashless society. It’s estimated that by 2025, 51.6% of American consumers will no longer use cash as a means of payment. That would see a continued growth in the number of people stopping using cash – which has risen from 24% in 2015 to a projected 48% in 2024. 

Those aged 55 and above are the largest demographic to still use cash regularly. This age group makes 23% of their payments in cash, compared to just 12% of those aged 23 to 34. The total figures showed: 

• 18 to 24 – 13% (of payments were cash)
• 25 to 34 – 12%
• 35 to 44 – 13%
• 45 to 54 – 16%
• 55 to 64 – 23%
• 65+ – 23%

Preferred Payment Method for Bills

According to a 2023 Consumer Payments survey by Fiserv, credit cards are the preferred payment option for all age ranges for purchases ranging from unplanned expenses of over $2,500 to trips to the grocery store. The report specifically notes the ability to earn miles and points as a main reason for a credit card preference, in addition to being able to spread out the payments over time.

The report also notes that 70% of consumers use a mobile to conduct day-to-day banking transactions, and 52% like the idea of a financial “super-app” that can bring together all their financial accounts to learn about their spending and even offer them tailored advice. These additional benefits point to a preference for credit cards as compared to using cash or paying directly from a bank account.

Preferred Payment Method for Online Shopping

E-commerce websites are set to generate as much as $58.74 trillion globally in online sales by 2028. That number represents a compound annual growth (CAGR) of 14.6% between 2021 and 2028. With continued growth expected beyond that, it’s little wonder that more is being done by providers to make paying for items online easier than ever before.

As many as 99% of all consumers still use some form of card when making a payment. So, while digital wallets may have emerged as the most popular method of payment, debit and credit cards remain the most consistently used by all online shoppers. 

These 2 forms of payment led the way by some margin when compared to other options. The full figures showed:

• Debit and Credit Cards – 99% (of consumers)
• Digital Wallets – 81%
• Installment Plans – 37%
• Bank Transfers – 10%
• Invoices – 8%
• Cash on Delivery – 3%

The ease of online spending has given way to an age of social media consumerism. Reports found that nearly 50.7% of online shoppers paid for items through Facebook across 2023. The full breakdown of social platforms was as follows: 

• Facebook – 50.7% (of consumers) 
• Instagram – 47.4%
• YouTube – 33.9%
• TikTok – 23.9%
• Snapchat – 18.8%
• X (Formerly Twitter) – 18.5%

Making it possible to pay for items while browsing these channels has contributed greatly to the continued growth of the e-commerce industry. 

Does the Way We Pay Impact How Much We Spend?

This ease and contactless approach to making a payment have had a tangible impact on our spending. This appears to be at its most extreme when making payments via card. A recent survey from Forbes Advisor found that 58% of people spend more when paying with a card. 

By contrast, just 7% of respondents felt like they overpaid when using a digital wallet. This additional control over finances was mirrored by cash payments, where just 23% of those asked thought they spent too much when paying in this way. 

This was reflected by the types of payments which trigger impulse decisions in consumers. 52% of respondents said they were likely to be more impulsive when using cards, compared to just 24% of those who were paying via cash.

Despite the modest numbers for overspending with digital wallets, it was still found that a large amount of people lost track of spending when using them. This followed a pattern that saw each generation feel more confident about their spending the older they were:

• Gen Z – 41% (of respondents said they lose track of spending)
• Millennials – 24%
• Gen X – 15%
• Baby Boomers – 6%

This shift in spending management could be attributed to the frequency with which each generation uses digital wallets. On average, across all age brackets, 21% of respondents found it harder to keep track of their spending when using this kind of payment system.

Final Thoughts

As we continue to shift towards a more cashless society, our thinking about spending is changing. While credit and debit cards are still a big part of our spending, the emergence of digital wallets has slowly begun to replace them as the go-to means of spending money. This is especially true in the case of e-commerce shopping. 

Despite that, credit payments continue to be the preferred method for most U.S. consumers. The convenience of this payment method means that millions still turn to this traditional system when paying for expensive goods. But for how long?

But what if you were willing to settle for less, as long as it was cold hard cash? What if you wanted to maximize your cash-back as a business beyond Bank of America’s Preferred Rewards program?

That’s where Bank of America’s Preferred Rewards for Business comes into play! The program used to be known as Business Advantage Rewards, but thanks to the success of the Preferred Rewards program on the personal/consumer side, the bank revamped its business-focused program and gave it a new name.

In this guide, we’ll show you how to maximize your business’s cash-back potential by integrating Bank of America credit card products, lending, and banking all under 1 umbrella.

Let’s get to it!

Introduction

Bank of America’s Preferred Rewards for Business mirrors the consumer Preferred Rewards program in more ways than one.

There are 3 tiers of Preferred Rewards for Business:

• Platinum Honors
• Platinum
• Gold

Platinum Honors is the highest tier. Predictably, it boasts the strongest benefits, but also the highest qualification thresholds. Gold, on the other hand, is easier to qualify for but doesn’t have the most generous perks.

The qualification tiers are determined by your business deposits and Merrill Lynch business investment balances.

There are no additional fees to be a part of this program, and enrollment eligibility opens 3 or more business days after the end of the calendar month in which you satisfy the qualification criteria.

To become a member of Preferred Rewards for Business, you need to have:

• An active, eligible Bank of America business checking account
• A 3-month combined average daily balance of $20,000 or more in qualifying Bank of America business deposit accounts and/or Merrill business investment accounts

Benefits become effective within 30 days of enrollment or within 30 days of account opening for new accounts.

Once you qualify for a certain status, you’ll receive benefits for a year. If you no longer meet the requirements at the end of a year, you’ll have a 3-month grace period before you’re either moved to a lower tier or lose your benefits.

Membership Benefits

The Bank of America Preferred Rewards for Business features 3 elite-status tiers, each with a different set of benefits. Of course, the perks and benefits become stronger as you move to higher tiers, but the criteria for eligibility also get higher.

First, let’s take a look at the benefits you’ll enjoy as a Preferred Rewards for Business member, regardless of elite tier.

Select Banking Services

Bank of America offers its Preferred Rewards for Business members no additional fees on select banking services. This includes no monthly maintenance fees on up to 4 eligible business checking and 4 eligible business savings accounts.

You’ll also enjoy no additional fees on ATM/debit card replacement, cashier’s checks, check copies, check images, domestic inbound wire transfers, stop payments, and transfers through Balance Connect for overdraft protection.

Client Service

The Preferred Rewards Center has a dedicated specialist team to help deliver priority customer service to you. These professionals will help you access services and help with product needs and information.

Business Advantage Auto Loan Interest Rate Discount

Receive a discount on your interest rate when you purchase or refinance a car, van, truck, or another automobile for your business.

Business Advantage Financing Interest Rate Discount

One of the most important aspects of running a business is having access to financing.

When you need financing to buy inventory, materials, and supplies, to refinance debt, or to finance accounts receivables, you will get a discount on your interest rate on a variety of lending products, including Business Advantage lines of credit, term loans, and secured lending accounts.

This is particularly useful for purchases where credit cards are not accepted.

Commercial Real Estate Loan Interest Rate Discount

Receive a discount on your interest rate when you buy or refinance commercial real estate for your business.

Access to a Merrill Financial Solutions Advisor

You’re entitled to work 1-on-1 with a Merrill Financial Solutions Advisor who can offer you complimentary financial analysis when you need it.

Platinum Honors members will also get an annual relationship review with a Small Business Specialist who can help you focus on your specific business needs.

No ATM Transaction Fees

You’re entitled to no-fee transactions within the U.S. at Bank of America ATMs.

And, depending on which tier you qualify for, you may also get transaction fees waived at non-Bank of America ATMs in the U.S. This includes withdrawals, balance inquiries, and balance transfers.

Business Advantage Credit Card Bonus Rewards

The most exciting part of the Bank of America Preferred Rewards for Business program is that you’ll get bonus rewards with an eligible Business Advantage credit card!

When you redeem your rewards to a business checking account, you’ll get a bonus beyond your standard credit card rewards.

You need to have the Bank of America® Business Advantage Customized Cash Rewards credit card, Bank of America® Business Advantage Travel Rewards Card, or the recently launched Bank of America® Business Advantage Unlimited Cash Rewards credit card to qualify for these bonuses.

Business Advantage Rewards Savings Interest Rate Booster

This perk increases the savings interest rate you’ll get on Business Advantage Savings accounts.

Payroll Service Cash-back

As a business, you may need to run payroll. Bank of America helps simplify this and other HR tasks by offering cash-back on eligible payroll service fees.

Typically, eligible services include ADP or QuickBooks Online Payroll.

Practice Solutions Lending Interest Rate Discount

If you are a healthcare professional with your own practice (or wish to open your own practice), Bank of America offers an exclusive, customized financing perk, whether you’re a dentist, physician, optometrist, or veterinarian.

This is known as Practice Solutions — if you’re a Preferred Rewards for Business client looking to get a Practice Solutions loan (business line of credit or term loan), you can qualify for an interest-rate discount.

Statuses

Now that we’ve discussed the main benefits afforded to Preferred Rewards for Business members, let’s take a look at specific benefits by tier, starting with the highest: Platinum Honors.

Platinum Honors Tier

To qualify for the top-tier Platinum Honors status, you must have a 3-month average combined balance of $100,000 or more in eligible Bank of America deposit accounts and/or Merrill business investment accounts.

Once you qualify, you’ll get select banking services with no additional fee, including inbound wire transfers, cashier’s checks, and more.

Most notably, you’ll also get complimentary international inbound wire transfers, as well as 4 online outbound wire transfers per statement cycle.

You’ll receive a discount of 0.50% (or 50 basis points) on interest rates for business auto loans, a 0.50% discount on interest rates for commercial real estate loans, and a discount of 0.75% (or 75 basis points) for Business Advantage financing interest rates.

With Platinum Honors status, you’ll have access to a Merrill Financial Solutions Advisor when you need it, as well as an annual relationship review with a Small Business Specialist to focus on your business’ unique needs (unique to Platinum Honors status).

There are also no ATM transaction fees at non-Bank of America ATMs in the U.S. for an unlimited number of transactions while you hold Platinum Honors status.

Notably, having Platinum Honors status gets you a 75% bonus in credit card rewards, which means you can earn up to 5.25% cash-back on select purchases:

• Bank of America Business Advantage Customized Cash card — 5.25% cash-back in the category of your choice, 3.5% cash-back on dining, and 1.75% cash-back on all other purchases
• Bank of America Business Advantage Travel card — 5.25 points per dollar on purchases made at the Bank of America Travel Center, plus 2.62 points per dollar on all other purchases
• Bank of America Business Advantage Unlimited Cash card — 2.62% cash-back on all purchases

For those with Business Advantage savings accounts, you’ll get an interest-rate booster of 20%, which helps you earn more interest on your savings.

Finally, you’ll get $20 cash-back per month in payroll service fees, plus a Practice Solutions Lending interest rate discount of 0.35% (or 35 basis points).

Platinum Tier

To achieve Platinum status in the Preferred Rewards for Business program, you’ll need to have between $50,000 and $99,999 in combined balances across your business deposit accounts and investment accounts with Bank of America and/or Merrill Lynch.

Those who qualify will get fees waived for select banking services, including international inbound wire transfers. However, fees are not waived for outbound wire transfers like they are with Platinum Honors.

You’ll receive an interest-rate discount of 0.35% for Business Advantage auto loans and commercial real estate loans, as well as a 0.50% interest-rate discount for Business Advantage financing. Plus, you’ll be able to access a Merrill Financial Solutions Advisor on-demand.

Platinum status entitles you to up to 12 no-fee transactions at non-Bank of America ATMs in the U.S.

Receive a 50% credit card rewards bonus, which means you could get up to 4.5% cash-back:

• Bank of America Business Advantage Customized Cash card — 4.5% cash-back in the category of your choice, 3% cash-back on dining, and 1.5% cash-back on all other purchases
• Bank of America Business Advantage Travel card — 4.5 points per dollar on purchases made at the Bank of America Travel Center, plus 2.25 points per dollar on all other purchases
• Bank of America Business Advantage Unlimited Cash card — 2.25% cash-back on all purchases

Finally, enjoy an interest-rate booster of 10% on your Business Advantage Savings account balances, $15 per month in cash-back on eligible payroll service fees, and a 0.30% interest rate discount on Practice Solutions Lending.

Gold Tier

The final tier we’ll discuss is Gold, which requires combined balances of $20,000 to $49,999 in Bank of America business deposits or Merrill business investment accounts.

With Gold status, you’ll still get access to select banking services with no additional fee, and you’re entitled to priority client service, as well. However, only domestic inbound wire transfers are free (not international inbound or international outbound).

The interest rate discount on Business Advantage auto loans, commercial real estate loans, business financing, and Practice Solutions loans is 0.25%.

You’ll have access to your on-demand Merrill Financial Solutions Advisor, plus no ATM transaction fees as Bank of America ATMs in the U.S. However, you will pay a fee to use non-Bank of America ATMs.

The credit card rewards bonus is 25%, bringing your rewards rate to the following:

• Bank of America Business Advantage Customized Cash card — 3.75% cash-back in the category of your choice, 2.5% cash-back on dining, and 1.25% cash-back elsewhere
• Bank of America Business Advantage Travel card — 3.75 points per dollar on purchases made at the Bank of America Travel Center, plus 1.87 points per dollar on all other purchases
• Bank of America Business Advantage Unlimited Cash card — 1.87% cash-back on all purchases

Further, there’s a 5% interest-rate booster on Business Advantage Savings accounts and you’ll receive $10 monthly cash-back on eligible payroll service fees.

How To Optimize Your Earnings With Preferred Rewards for Business

As you can probably tell, the biggest perk you can get from Preferred Rewards for Business is the credit card rewards bonus.

Here’s the table for each status tier and eligible business credit card’s earnings structure for the Bank of America Business Advantage Customized Cash card:

Here’s the earnings table for the Bank of America Business Advantage Travel card:

The ability to earn 5.25% cash-back on a category of your choice or travel is impressive, especially for no annual fee credit cards!

And finally, the Bank of America Business Advantage Unlimited Cash card earns a flat cash-back rate that is amplified based on the status level:

Beyond these bonuses, though, check out this quick reference table of benefits for Preferred Rewards for Business members:

Final Thoughts

Bank of America’s Preferred Rewards for Business program is exemplary.

Being able to get more than 5% cash-back on a bonus category of your choice or travel is noteworthy, especially when you consider that these business credit cards have no annual fee.

Beyond that, though, Preferred Rewards for Business boasts a suite of lending discounts, including commercial real estate loans, business loans, auto loans, and so much more.

All you need to do to qualify is hit a minimum balance threshold for 3 months, and you’ll have that status for a year!

Overall, we’re a big fan of the Bank of America Preferred Rewards for Business program if you’re less interested in travel rewards and keen on receiving cash-back.

The information regarding the Bank of America® Business Advantage Customized Cash Rewards credit card and Bank of America® Business Advantage Travel Rewards Card was independently collected by Upgraded Points and not provided nor reviewed by the issuer.