Lucia Mutikani

Wed, June 4, 2025 at 7:25 AM CDT5 min read

By Lucia Mutikani

WASHINGTON (Reuters) -The U.S. services sector contracted for the first time in nearly a year in May while businesses paid higher prices for inputs, a reminder that the economy remains in danger of experiencing a period of very slow growth and high inflation.

The survey from the Institute for Supply Management (ISM) on Wednesday showed uncertainty was the dominant theme among businesses as they tried to navigate President Donald Trump’s constantly shifting trade policy.

The whiplash from the tariffs that Trump has announced, paused, and imposed has left most businesses in limbo and struggling to plan ahead, to the detriment of the economy. The Trump administration has given U.S. trading partners until Wednesday to make their “best offers” to avoid other punishing import levies from taking effect in early July.

“Until there is clarity on the trading environment, it appears that the business sector will remain wary of putting money to work,” said James Knightley, chief international economist at ING.

The ISM said its nonmanufacturing purchasing managers index (PMI) dropped to 49.9 last month, the first decline below the 50 mark and lowest reading since June 2024. It stood at 51.6 in April.

Economists polled by Reuters had forecast the services PMI would rise to 52.0 following some easing in the U.S.-China trade tensions. A PMI reading below 50 indicates contraction in the services sector, which accounts for more than two-thirds of the economy. The ISM associates a PMI reading above 48.6 over time with growth in the overall economy.

“May’s PMI level is not indicative of a severe contraction, but rather uncertainty,” said Steve Miller, chair of the ISM Services Business Survey Committee. “Respondents continued to report difficulty in forecasting and planning due to longer-term tariff uncertainty and frequently cited efforts to delay or minimize ordering until impacts become clearer.”

The ISM on Monday reported that manufacturing contracted for a third straight month in May, with suppliers taking the longest time in nearly three years to deliver inputs amid tariffs.

Retailers, airlines and auto manufacturers are among the businesses that have either withdrawn or refrained from giving financial guidance for 2025. While economists do not expect a recession this year, stagflation is on the radar of many.

Public administration, utilities, educational services, information as well as healthcare and social assistance were among the 10 services industries reporting growth. Eight industries, including retail trade, construction, transportation and warehousing, reported contraction.

Businesses in the construction industry said “tariff variability has thrown residential construction supply chains into chaos,” adding that “major heating, ventilation and air conditioning equipment manufacturers are passing on their cost increases due to higher refrigerant and steel commodity prices.”

They also noted that “planning is difficult for community projects that could be scheduled for the next 22 to 30 months.”

Trump on Tuesday doubled steel and aluminium duties to 50%. Businesses in the information sector said tariffs were a challenge “as it is not clear what duties apply,” adding “the best plan is still to delay decisions to purchase where possible.” Transportation and warehousing businesses said the import duties had “increased the cost of doing business.”

The White House’s unprecedented campaign to slash spending also impacted purchasing decisions by companies in the healthcare and social assistance industry. But tariffs are boosting demand for retailers as some customers pull purchases forward to avoid higher prices. Demand for data centers was driving activity for businesses in the utility industry.

Stocks on Wall Street were largely flat. The dollar eased against a basket of currencies. U.S. Treasury yields fell.

WEAK ORDERS

The ISM survey’s new orders measure dropped to 46.4, the lowest reading in nearly 2-1/2 years, from 52.3 in April, likely as the boost from front-running related to tariffs faded. Data on Tuesday showed the new light vehicle sales rate slumped in May by the most in about five years.

Services sector customers viewed their inventory as too high in relation to business requirements, which does not bode well for activity in the near term. Backlog orders were the lowest in nearly two years.

Suppliers’ delivery performance continued to worsen. This, together with lengthening delivery times at factories, points to strained supply chains that could drive inflation higher through shortages. Businesses are also seeking to pass on tariffs, which are a tax, to consumers.

That effort was corroborated by a report from the New York Federal Reserve showing the majority of businesses in its district said they had passed on at least some of the tariffs in the form of higher prices in May. Companies also flagged considerable confusion and uncertainty in navigating the duties.

The ISM survey’s supplier deliveries index for the services sector rose to 52.5 from 51.3 in April. A reading above 50 indicates slower deliveries. A lengthening in suppliers’ delivery times is normally associated with a strong economy. Delivery times are, however, likely getting longer because of supply-chain bottlenecks.

That situation was reinforced by a surge in the survey’s measure of prices paid for services inputs to 68.7, the highest level since November 2022, from 65.1 in April. Most economists anticipate the tariff hit to inflation and employment could become evident in the so-called hard economic data by this summer.

Services sector employment picked up. The survey’s measure of services employment rose to 50.7 from 49.0 in April. Some companies said “higher scrutiny is being placed on all jobs that need to be filled.” The index is generally consistent with a steadily cooling labor market.

Economists shrugged off the release on Wednesday of the ADP National Employment Report, which showed private payrolls increased by only 37,000 jobs in May, the smallest gain since March 2023, after a rise of 60,000 in April. They noted ADP had a poor record predicting the government’s closely watched employment report.

The government is expected to report on Friday that nonfarm payrolls increased by 130,000 jobs in May after advancing by 177,000 in April, a Reuters survey of economists showed. The unemployment rate is forecast to hold steady at 4.2%.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

John Csiszar

Wed, June 4, 2025 at 8:03 AM CDT4 min read

Famed “Shark Tank” investor Barbara Corcoran has some strong advice about investing that flies in the face of traditional thinking. Unlike most financial experts, Corcoran believes that diversification is not the best path to building wealth. Perhaps even more controversially, she’s also against the general concept of savings.

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Here are Corcoran’s explanations of her non-traditional views, along with a look at whether or not you should take her advice.

Diversification is one of the cornerstones of basic investment advice.

The theory is that by combining non-correlated assets — or those that don’t move up or down in price at the same time, like gold and stocks — you can reduce the volatility in your overall portfolio. Also, by having multiple assets, you avoid the risk that you can lose all your money by making one bad bet.

However, Corcoran sees things in an entirely different manner.

As she told CNBC Make It in 2023, “One piece of advice people hear all the time, and I just don’t believe it, is: ‘Diversify, don’t put all your eggs in one basket. I put all my money in the real estate basket, my brokerage firm and everything in there went to buying properties.”

Consider This: Money Influencer Delyanne Barros: Why Boring Could Be Best for Investing

Other famous investors support Corcoran’s ideas about diversification as well. Billionaires Warren Buffett and Charlie Munger, who were co-chairs of Berkshire Hathaway until Munger’s passing in 2023, famously referred to diversification as “diworsification” and “protection against ignorance.”

Like Corcoran, they believed that if you know what you’re doing, putting most or even all of your money into a single idea is the way to achieve outsized returns.

Corcoran’s “anti-saving” stance isn’t a recommendation to avoid basic building blocks like an emergency fund or contributions to a 401(k) plan. Rather, it’s just an expression of how she prefers to invest — in herself.

“I’m just not a believer in saving money,” the real estate guru told CNBC Make It. “I’ve never saved a dime my whole life. I spent every dollar I ever made and threw it back into the business.”

In other words, Corcoran’s approach towards “saving” is to reinvest her income into her growing business, which most successful companies do as well.

It shouldn’t be taken as an admonition against saving and investing your own way, especially if you don’t have your own business. The point Corcoran makes is that people should use their money to build and grow something rather than just let it sit idly.

The main risk with Corcoran’s approach is that you might swing and miss, perhaps in terrible fashion. If you put all your eggs into one basket and don’t fully understand what you’re doing, you might easily lose everything you have. That’s not investing, it’s speculating.

And while some speculations can work out, you’re just as likely to go bust as you are to get lucky and punch a winning ticket. Corcoran herself even admits that she almost went bankrupt “for the fifth time” during the 1990-91 recession, so it’s clear that even with an expert’s touch, non-diversification can be an aggressive strategy.

Taking Corcoran’s “non-saving” advice too literally could also cause problems if you think of it as a suggestion to simply blow all your money on shopping sprees.

While Corcoran fully endorses enjoying life and buying the things you want with money you have, she earned that privilege by first reinvesting every dime she had into her growing business. Her process for growing wealth is not to save by being frugal but to invest so you can earn the money to have anything you want.

An important thing to note is that Corcoran believes in her anti-diversification, anti-saving stance because it ended up working out for her in spectacular fashion.

She sold her real estate business for $66 million in 2001 and is now a world-renowned expert in the real estate space and a star investor on “Shark Tank.” But this doesn’t necessarily mean her strategy would work for everyone.

For example, if you run a solid business, know what you are doing and funnel all your time, energy and money into it, you certainly could succeed in the same way. But if you have poor business sense — or if your idea of not diversifying is putting all your money into an obscure cryptocurrency — you could just as likely go bust.

The key is to understand exactly what you’re doing, as Corcoran clearly does. If you have her level of expertise, dedication and business know-how, then focusing on one solid investment — like yourself — could indeed be the right path to building wealth.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Wait, What? Why Barbara Corcoran Is Against Diversifying and Saving Money

Holly D. Johnson

Wed, June 4, 2025 at 2:01 PM CDT5 min read

• Under normal circumstances, a bank cannot take money from your checking account to pay off your credit card debt.

• There are exceptions to this rule, including if a bank gets a court judgment against you.

• If you are at risk of falling behind on card payments, negotiate with the issuer and look into other financial options so your credit score doesn’t take a hit.

If you can’t pay your credit card bill, a range of unfortunate circumstances can come into play. Not only can late or missed credit card payments cause considerable damage to your credit score, but you will likely see late fees tacked onto your account. Your credit card company can also charge you a higher penalty interest rate until you get your account back in good standing.

That said, banks lack the authority to force you to pay your credit card bill, even if you have funds in a connected checking account to cover it.

Credit card companies cannot take money out of your checking account without your permission, even if both accounts are from the same bank. If you have a Chase credit card and checking account and you are late on your credit card payment, for example, Chase cannot seize the funds in your checking account to cover it.

This is good news for consumers who want to maintain control over their funds. However, banks may get the authority to seize funds from a bank account based on certain legal proceedings. We’ll go over how that works in more detail below.

The Fair Credit Billing Act (FCBA), which protects consumers from unfair credit card billing practices, dictates the rules banks must follow when it comes to the seizure of funds from a bank account.

The FCBA states the law clearly in its text:

The law recognizes that using an offset provision to go after your credit card debt would give the bank some leverage against you.

However, there are some exceptions to this rule. For example, you may have authorized your bank to pay off your credit card debt using the money in your checking account through an automatic bill payment arrangement. In that case, your bill is paid on your behalf unless you stop the automatic payment before it goes through.

There are other circumstances that would allow a bank to take money from your bank account to offset credit card debt. For one, the bank could go to court and get a judgment against you. If the judgment doesn’t rule out the offset approach, and there are no state or other laws that prohibit this action, the bank could take your money for the credit card debt.

Keep in mind: The location of a card issuer’s headquarters determines what state laws it must follow. So, just because your state might have laws to prevent this approach, doesn’t mean your issuer has to follow them.

The Consumer Financial Protection Bureau’s official interpretation of the FCBA law regarding offset in this case says the following:

Beyond that, a card issuer cannot routinely include terms in its credit card agreement that give it a security interest in a credit card consumer’s bank accounts. For the security interest to apply, you should have agreed to it as a condition for the credit card account or to receive more favorable terms for the account. The issuer should make a separate disclosure of the security interest provision (apart from the regular terms and conditions of the card agreement), and you should have signed off on it.

And in case the card issuer closes your account, and you continue to add on credit card debt after the closing, it could take your money to pay for any charges you made after the closing (but not toward the amount outstanding before the closure).

If you have credit card debt with a bank but you have money deposited with another institution, the same rules still apply. Your credit card issuer cannot legally seize funds from any bank account you have unless an exception (like a court order or judgment) applies.

It’s never a good idea to fall behind on your credit card payments, even when funds are tight. You could be charged a late payment fee by your card issuer, who can also increase your card’s interest rate. If you are more than 30 days late, your issuer could report the lapse to credit bureaus, and your credit score could take a hit.

At a certain stage of delinquency (typically six months), your issuer could write off your debt or sell it off. If your debt is charged off in this fashion, it will tarnish your credit score for up to seven years.

But unfortunately, paying your credit card bills on time isn’t always an option for those experiencing financial hardship. If you’re unable to make your card payments, you should start by doing the following:

1. Call your card issuer to see if you can negotiate. Ask customer service about their financial hardship programs. You may be able to work out a deal with lower monthly payments, a lower interest rate or both, but you’ll never know unless you try.

2. Consider transferring your debt. See if you can transfer the debt to a balance transfer credit card with a promotional 0 percent APR offer. That would buy you some time to sort out your financial situation while avoiding interest payments. A personal loan may also offer a lower interest rate.

3. Work with a certified credit counselor or another financial professional. A credit counselor from a nonprofit organization can help you look at your debt holistically and come up with a plan to manage it.

If you have a banking relationship with your card issuer and have fallen behind on your card payments, the bank typically cannot seize the money you have on deposit to pay off your credit card debt without a court judgment.

Even though this protection against offset is a benefit, you should aim to sort out the situation with the card issuer if you’re on the verge of falling behind on payments. There could be consequences to your credit score if you fail to act.

Rebecca Betterton

Wed, June 4, 2025 at 11:54 AM CDT12 min read

• The best time to refinance is when your credit score or overall financial situation have improved.

• Generally, you should aim to either lower your interest rate or your monthly payment — or both.

• Avoid refinancing when auto loan rates are high or you won’t be able to save money by switching lenders.

It makes sense to consider refinancing your auto loan if you can lower your interest rate and monthly payment. The refinancing process involves swapping your current loan for a new loan with different — and preferably better — terms.

There are other times when it makes sense to refinance your auto loan, even if rates haven’t dropped dramatically or have remained steady, like we’ve seen over the first few months of 2025. The best time to refinance depends on the market, your finances, the state of your loan and the car itself.

However, refinancing is not always a wise financial move. If interest rates are high, or if you’re close to paying off your loan, then it may make more sense to stick with your current auto loan. Knowing the ins and outs of when to refinance and when to wait will keep you in the driver’s seat to make the best car refinancing decision.

There are multiple benefits to refinancing and quite a few situations where refinancing makes the most sense. In general, the best time to refinance your car is when you can reduce your monthly payment or interest rate.

Refinancing is a good move when rates are low. The Federal Reserve cut rates three times in 2024 following 11 consecutive increases since 2022. It has indicated two potential rate cuts for 2025, likely later in the year. Although Fed rate cuts don’t directly impact auto loan rates, auto lenders tend to fall gradually in tandem with the cuts.

Auto loan refinancing rates tend to match used vehicle rates, which currently average 11.87 percent according to Experian data. However, Bankrate’s data shows that the auto loan rates for a 48-month loan haven’t changed significantly in months. With inflation finally moderating, it makes sense to keep an eye out for refinancing opportunities.

Assuming a remaining loan balance of $10,000 and a term of four years, this is how refinancing from a 15 percent APR to a 7 percent APR can affect your overall costs:

Your total savings would be about $39 a month — but you would reduce the total interest you pay by $1,865.

Regardless of the direction of the Fed funds rate, improving your credit score may be enough to get a lower rate. The difference between a bad credit rate and a good credit rate may be more than 10 percent. That could mean major monthly payment and total interest savings.

One way to boost your score quickly is to consolidate your credit card debt. If you’re like nearly 2 in 5 cardholders (37 percent), you may have recently maxed out a credit card or come close since the Federal Reserve began raising interest rates in 2022, according to data from Bankrate’s Credit Utilization Survey.

Paying off credit card debt has two benefits that could get you a lower rate. First, it reduces your credit utilization ratio, which accounts for 30 percent of your FICO credit score. Second, it reduces your debt-to-income ratio (DTI), which could result in a better rate.

Here are the average auto loan interest rates for each credit score, according to Experian’s first-quarter 2025 data:

Dealer financing takes many forms. Often, it is either captive financing, which is offered through a sister company to the auto manufacturer or a third-party financing company.

In the first quarter of 2025, captive financing companies and buy here, pay here dealerships accounted for nearly 39 percent of all auto financing, according to data from Experian.

Because dealers tend to offer loans at a markup to make a profit, you may have a much higher rate than you would if you’d shopped at a bank or credit union. Refinancing with a different lender could help you secure a lower, more competitive rate.

If your income has dropped or your expenses have increased since you took out your auto loan, it may be time to explore refinancing. You may be able to get a more affordable car payment by extending your loan term — even without a lower interest rate. Many lenders offer terms as long as 84 months, which could save you money in your monthly budget.

One warning: You’ll typically pay more total interest if you extend your term. Refinancing to a longer term can be a good short-term solution, but consider making principal-only payments to reduce your overall cost.

Lenders view positive equity as a big plus when refinancing. The bigger the difference between what you owe and your car’s worth, the more the lender stands to make if you default on your loan. Since the lender takes less risk, you may get a lower interest rate.

You can estimate your car’s value on websites like Edmunds or Kelley Blue Book. Once you have an estimate, divide the number by your outstanding balance to determine if you have positive equity.

For example, if your car’s value is $20,000 and your remaining balance is $15,000, your loan-to-value ratio is 75 percent. That means you have 25 percent equity in your car.

Bankrate insight

You can refinance your car loan multiple times, but it may be difficult if you have a low balance or don’t have much time left on your loan.

Refinancing a car loan isn’t always the right choice, especially if it won’t improve your financial situation — or may even worsen it. In this case, refinancing and paying off your car loan early may not be the best decision.

If you are nearing the end of your loan term, refinancing may not save you money. Instead, you should stick with it unless you desperately need to extend your loan term to reduce your monthly payment.

In addition, most lenders have a minimum loan term of 24 or 36 months. If you have less than that remaining on your car loan, you may have to extend your term. While a longer loan term will mean a lower monthly payment, you will also pay more interest.

Your remaining loan balance also matters. Lenders set a minimum balance for refinancing, typically between $3,000 to $7,500. If you owe less than the lender’s minimum balance, it is unlikely that you will qualify. And while cash-out refinancing does exist, it can be hard to find a lender that offers it.

Because cars depreciate over time, the longer you have an auto loan, the more likely you owe more on the car than it is worth. This is also called being “underwater” or upside down on a car loan — and it will make it hard to refinance. Lenders know they won’t be able to recoup the loan’s full amount if you default while upside-down, so they generally won’t extend any new credit secured by the car.

This is the opposite of having positive equity in your car. So while you may be able to refinance, you should determine if it will actually save you money. If it won’t — or you just break even — refinancing may not be your best option.

Bankrate insight

Don’t refinance a vehicle you can’t afford. Reassess your budget to see if you can make any cuts, or consider trading in the car for a cheaper vehicle with a lower payment.

If you took out your auto loan when rates were low, it may be difficult to find a better rate. In fact, you may pay more if you refinance in a market where interest rates are on the rise. The recent leveling off of inflation has the potential for lower auto loan rates in the future, although some experts suggest the Trump administration’s tariffs could increase inflation.

However, if you’re struggling to make payments because of the short repayment term you chose, a car refinance may still make sense. If you have to choose between missing a payment and extending your loan term at a higher rate, choosing the longer-term refinance could save your credit score and prevent a future car repossession.

Lenders determine eligibility differently. Before you start, check the auto loan refinancing requirements for you, your vehicle and your current loan. Most lenders will require:

• A regular source of income, a low debt-to-income ratio and good credit.

• Proof of residence, such as a lease agreement, mortgage statement or utility bill.

• Your car’s make, model, year, vehicle identification number (VIN) and mileage to evaluate your car’s worth.

• Your loan’s current balance, monthly payment and payoff amount to determine if you meet its minimum loan requirements.

Most lenders will not consider refinancing unless your car is less than 10 years old. Your mileage should also not exceed 100,000 or 150,000 miles, depending on the lender.

Bankrate tip

You can find specific refinancing requirements on lenders’ websites or Bankrate’s auto loan lender reviews.

Before refinancing, consider whether fees will impact your overall savings. If your auto loan has a prepayment penalty, paying off your loan early can cost you. You will need to weigh the amount you save in interest over the cost of the prepayment penalty to determine if refinancing will actually save money.

Some lenders may also charge a substantial origination fee when you refinance. Like a prepayment penalty, it can eat into the potential savings and make refinancing more of a hassle than just sticking with your current lender.

Watch out for other fees charged by both your old and new lender. Transaction fees, administrative fees or processing costs may reduce the benefit of refinancing. You may be able to negotiate these fees, but there are also some states that will charge you state registration and title transfer fees for re-registering your car after refinancing.

Current auto loan refinance rates are high, but if you purchased a car before the Fed’s rate cuts, then you might find a more favorable rate now. Tariffs are another factor that could affect refinancing. If tariffs increase prices enough, inflation could lead the Fed to raise rates, indirectly raising refinance rates.  On the other hand, tariffs might lead to a shortage of vehicles in the market, increasing the value of used cars. As the value of used cars rises, lenders might offer more favorable refinance rates.

Your best bet is to keep track of auto loan refinance rates on a regular basis and take extra steps to boost your credit, like keeping your credit card balances low or paying them off, so you’re ready when rates drop. Your financial situation should determine when you’re ready to refinance — ideally, it should be after you have improved your credit and while average rates are on the decline.

Most lenders require that you have paid on your current auto loan for at least six months before they approve you for refinancing. This solid payment history shows potential lenders that you are a low lending risk.

Similarly, most lenders require that you have at least six months left on your loan. Six months gives a lender enough time to make money from refinancing your loan. It also prevents you from over-borrowing. Lenders rarely offer terms of less than two years, and opting to refinance when you only have a few months left on your current loan will lead to paying more than necessary in interest.

If you want to lower your car payment without refinancing, you still have options.

• Request a car loan modification. If you’re behind on payment, ask your lender about a car loan modification. You may be able to extend your term or reduce your rate when facing short-term financial problems.

• Swap to a less expensive vehicle. You may want to consider a less expensive vehicle to relieve some of the financial burden. This can be either trading in your car for a less expensive model or selling your car privately and buying a less expensive vehicle.

• Consider a lease. Switching over to a car lease could also help you save on monthly payments, but it may cost more over the long term. This is because leasing still requires a down payment, as well as interest and fees. On top of the usual costs, you won’t own the vehicle at the end of the lease period. You can certainly choose to buy it — but that will come with additional costs.

• Pay your loan off with a personal loan. If your car is too old for refinancing, consider a personal loan. Since these loans are often unsecured, they don’t require any vetting by the lender, and many lenders are able to approve loans within a day of applying.

The primary reason to consider refinancing is to lower your rate or monthly payment. Try to apply the savings to your balance for an even faster pay off.

Get the refinancing process started by checking your credit score and prequalifying with at least three lenders to see what interest rates you qualify for without hurting your credit score. Crunch the numbers to be sure refinancing is aligned with your overall financial goals.

Denny Ceizyk

Wed, June 4, 2025 at 11:41 AM CDT9 min read

• Preapproval will help you get the best rate available and give you leverage to negotiate at the dealership.

• Consider the overall cost of an auto loan in addition to the monthly payment — and don’t clue the dealership salesperson in on your budget too early.

• Shop around with many different lenders to get an idea of your estimated interest rates and take any steps to improve your credit score before going to the dealership.

With new and used car prices continuing to rise, it’s more important than ever to get the best deal on a car loan that meets your short- and long-term financial goals. A little extra planning could help you strike a better deal on the out-the-door price of a new car. Taking more time to compare auto loan rates along with a few other budget-savvy steps could save you money so you don’t erase the savings negotiated on the purchase price.

Before you start car shopping, ask yourself a few questions about your finances — and answer them honestly.

• How much can I really afford? Take a look at your spending habits to see if there are any avoidable expenses eating up your paycheck. You may need to cut back or eliminate some depending on how much your new car payment is.

• How much of a down payment can I make? A down payment will help you negotiate a lower price and reduce the amount you need to finance. Use an auto loan calculator to see how a large down payment impacts your total cost.

• Can I cover maintenance and emergencies? Oil changes, tire rotations, new brakes or a late-night breakdown are necessary costs that come with owning a car. Make sure your budget can handle them without using a credit card or taking out an emergency loan.

• How much will my insurance be? If you know the make and model of the car you plan to get, find out how much the insurance will be. Auto insurance premiums have been on the rise in the past few years, and if you haven’t bought a car recently, the premium sticker shock may surprise you.

• What is my credit score? Auto loan lenders are more likely to approve your application and extend low interest rates if you have excellent credit. If you have bad credit, you may have a more difficult time finding approval, but you may still be able to access bad credit auto loans.

Dealership financing can be an easy and convenient way to get a car loan, but dealers often mark their rates up by a few percentage points. Before heading onto the high-pressure sales floor, get a few auto loan quotes from banks or credit unions. This can help you haggle with the dealership’s finance department.

If your credit score is fair or bad — or if you’re buying an older, high-mileage used car — try online lenders or a marketplace lender like Bankrate. You can get several quotes from multiple lenders to see if the payments are affordable.

Keep in mind that prequalification is different from auto loan preapproval. Ideally, you should apply for preapproval with lenders. This will allow you to negotiate with the dealership more effectively as a cash buyer. Just be prepared for the dealership to withhold price discounts or extra perks if you don’t use their in-house lender.

Don’t make the mistake of strolling onto a new car dealership lot unless you know you can handle the higher monthly payment. With vehicles continuing to become more expensive, it’s crucial to determine whether you want a new or used car so you can set a realistic budget.

The price difference between a new and used car could drive your decision between the two. Data from April shows that new cars had an average cost of $48,699, according to Kelley Blue Book. Used car listings for the same period were more than $23,000 lower, averaging $25,547.

This leads to a big difference in the average monthly car payment between new and used. You could save more than $200 per month by buying used — the average used car monthly payment is $521 compared to $745 for new cars. If you want the benefits of a new car without the debt and depreciation that comes with it, consider a certified pre-owned (CPO) car instead.

Although the monthly payment on your car loan is important — and you should know in advance how much car you can afford each month — it shouldn’t be the basis of your price negotiation.

Once you tell a dealer how much you can afford monthly, you will likely get some sales spin about all the creative ways to get you to that payment. That may include choosing a longer term that increases the odds you could end up upside down on your loan.

To avoid this, negotiate the vehicle’s purchase price and any dealer fees instead of focusing on the monthly payment. Counter back any questions about payment with questions about lowering the price.

Your creditworthiness determines your interest rate, and a high credit score can help you qualify for a better auto loan interest rate than someone with a low score. Knocking off just one percentage point of interest from a $45,000 car loan over 60 months could save hundreds of dollars in interest paid over the life of the loan.

Knowing your credit score ahead of time will put you in the driver’s seat in terms of negotiation. With it, you will know what rate you can expect — and if the dealer is trying to overcharge you or lie about what you qualify for. If it needs some work, you can pay off credit card debt, avoid opening new accounts and pay everything on time.

The average auto loan interest rate for a new car was 6.73 percent in the first quarter of 2025, according to data from Experian. For a used car, the average jumped to 11.87 percent — though both new and used cars are more expensive for a borrower with bad credit.

Auto loan terms typically range from 24 to 84 months. Longer terms may offer lower payments, but the longer you spend repaying your loan, the more interest you’ll pay. Some lenders may also charge a higher interest rate if you choose an extended repayment period because of the greater risk you’ll become upside-down on the loan.

To decide how long you should spend paying back your auto loan, consider your priorities. For example, if you are the type of driver interested in getting behind the wheel of a new vehicle every few months, being trapped in a long-term loan might not be right for you. On the other hand, if you have a limited budget, a longer term might be the only way you can afford your car.

Bankrate tip

A short loan term will cost you less in interest overall but will have high monthly payments, while a long loan term will have lower monthly payments but higher interest costs over time.

Experts recommend you make a down payment of at least 20 percent on a new or used car loan. The benefit of a down payment is that is shows the lender you’re financially prepared for the purchase. It may even motivate the sales rep to negotiate for a lower price or discounted add-ons.

The opposite is also true. Offering no down payment, or a low down payment, may tell the dealer your finances aren’t in good shape. The dealer may choose to charge you a higher rate on your loan, and it could increase the chance of ending up upside down on your car loan with a vehicle that is worth less than what you owe.

Dealerships profit from vehicle add-ons — especially aftermarket products sold through the finance and insurance office like extended warranties and gap insurance. Check if the add-on, warranty or product is available outside the dealership for less.

Buying from a third party is often cheaper for aftermarket products, especially if you wind up wrapping them into your financing. This will mean spending more over the long haul since you will be charged interest. If there is an add-on you truly want, pay for it out-of-pocket. Question every fee you don’t understand to avoid unnecessary additions to your purchase price.

Being upside down on a car loan is when you owe more on your car than it is worth. Lenders may allow you to roll over that negative equity into a new loan, but it’s not a smart financial move. If you choose to do so, you will pay interest on both your current and previous car.

Instead of rolling negative equity into your new loan, try paying off your old auto loan before taking out the new one. You can also pay off your negative equity upfront to the dealer to avoid paying excess interest.

The pressure to make a decision can lead inexperienced car buyers to make hasty decisions that result in buying an affordable car. Read all the fine print in your car loan paperwork, look at each line of your car’s price estimate and check the insurance coverage so you know how you’re protected — and how much it will cost.

You may also want to look into the Consumer Reports maintenance and repair costs for the vehicle so you have an idea of what the average owner is spending. Similarly, Kelley Blue Book and Edmunds have similar five-year cost-to-own estimates. If you don’t understand something in your loan paperwork or the purchase agreement, don’t sign. If you’re feeling pressured, you have every right to walk away.

The key to avoiding car loan mistakes is planning ahead of time and knowing what you want before you shop. This means negotiating the monthly payment, knowing your credit score, choosing the right term length, being aware of add-on costs and avoiding rolling over negative equity. Keep potential mistakes in mind while you negotiate, and with luck, you will reduce the odds of buying a car you can’t afford or compromising on other financial goals.

Erik J. Martin

Wed, June 4, 2025 at 4:16 PM CDT11 min read

• A balance transfer credit card can help you pay off your debt faster and save money on interest, but you’ll usually pay a balance transfer fee for the privilege.

• Balance transfer credit cards offer advantages, including consolidating multiple payments, lowering total interest paid and paying off debt faster.

• It’s important to carefully assess your financial situation and make a plan before pursuing a balance transfer credit card — or you could end up taking on even more debt.

When your monthly credit card payments are barely scratching the surface of your overall balance, it can make your debt feel overwhelming. The good news is that you might not have to keep battling with a steep credit card bill and a balance that won’t budge. Instead, you could benefit from a balance transfer credit card if your credit is still in good shape.

The low or zero percent introductory annual percentage rate (APR) could help you pay off your credit card balance faster, save you money on interest and even improve your credit score. But despite all the benefits of a balance transfer, it still may not be the right move for you once you consider the downsides, like the balance transfer fee. We’ve interviewed some experts to talk about the pros and cons of a balance transfer, so you can decide whether a balance transfer is the right move for you.

If you are eligible, you can stand to gain a lot from a balance transfer. Here’s a rundown of the biggest advantages:

The most important reason to pursue a balance transfer credit card is to take advantage of a low or 0 percent introductory APR offer. By transferring your debt to this new card, you start saving on interest immediately. Every payment you make goes directly toward reducing the amount you owe, which makes the balance transfer credit card a valuable tool for becoming debt-free. When more of your monthly payment goes towards the principal, you’ll pay off your debt faster and pay less interest overall.

“Credit card interest is very high at present, with rates from 18 percent to as high as 27 percent. Banks are allowed to charge high interest because credit card charges are unsecured loans. A balance transfer allows consumers to temporarily have a lower or no interest charge while they pay down debt.”

Learn more: Credit card payoff calculator

Depending on the credit limit you’re granted, your new credit card may allow you to transfer multiple credit card debt balances onto one card. In turn, this streamlines your finances by allowing you to consolidate multiple payments. If you’ve been struggling to manage several due dates and payment amounts, this is extremely helpful.

“If you are dealing with multiple credit card debts, transferring all balances onto one card simplifies your financial management. You’ll now deal with just one monthly payment, making it easier to track and less likely for you to miss due dates,” Sudhir Khatwani, founder of The Money Mongers, says.

The best balance transfer credit card you choose could offer more than a 0 percent intro balance transfer APR. It may also offer better overall benefits — possibly including cash back, rewards, discounts and more.

“New generations of cardholders are used to … moving from one service to another, like streaming, cable and cell phone providers. They may also feel they are not getting the full benefits or services from an existing issuer. Changing cards and transferring balances can often yield better rewards — for example, an airline card that rewards airfare miles,” Martini adds.

Dennis Shirshikov, former head of growth for Awning.com and a finance professor at the City University of New York, notes that “a side benefit of transferring a balance to the right card is improving your credit score by reducing your credit utilization ratio.”

Your credit utilization ratio measures the amount of credit you are using versus the amount of credit that is available to you. It is typically expressed as a percentage and is calculated by dividing the total amount you owe in revolving credit accounts by the total credit limits of those accounts.

When your credit utilization is high, which means you are using a large portion of your available credit, it can negatively impact your credit score. Opening a balance transfer credit card will lower your credit utilization ratio because you’ll have more available credit and will be paying down your balance without adding interest to it.

On the other hand, balance transfer credit cards have their downsides. If you find that the disadvantages outweigh the pros, then you may want to consider balance transfer alternatives. Here are several caveats to watch out for:

To be eligible for the best balance transfer credit card offers, you usually need to have good or excellent credit. While there are options for balance transfer cards if you have bad credit, they are typically lacking compared to the best cards out there. If your score is in a lower range, you may not qualify for a card with a 0 percent intro APR offer, and if you do, it might not have the best terms.

Instead, a debt management plan might offer some relief. These plans are offered by credit counseling agencies and provide benefits like lower interest rates and a single monthly payment, which helps you pay off your debt faster without requiring a minimum credit score.

Depending on the terms of the card you’re considering and its current promotion, you may have to pay a balance transfer fee. This fee is usually 3 percent to 5 percent of the total transfer amount and may be subject to minimum fees. For example, if you transfer a $1,000 balance to a balance transfer card with a 5 percent transfer fee, the total amount you will need to pay down is $1,050.

Negotiating or avoiding balance transfer fees can be challenging, but there are credit cards available that don’t charge balance transfer fees. In addition to a handful of balance transfer cards offered by major issuers, some credit unions also offer cards with no balance transfer fees.

Keep in mind: A balance transfer fee (3 to 5% of the amount transferred) is due upfront. Factor this into your debt payoff plan — it could mean the difference between saving money or breaking even.

The truth is, with a balance transfer card, you’re simply moving money around without necessarily improving your debt problem. In fact, if you don’t practice good financial spending and repayment habits, you could make the problem worse.

“Know that a credit transfer is not free money to extend paying off your open balance. It’s only a[n] … opportunity to save money and pay off a balance,” cautions Martini.

Having a new card may entice you to charge even more, especially if your new balance transfer card also offers a 0 percent intro APR on purchases.

“Without discipline and a plan, a balance transfer can tempt you to accrue more debt, exacerbating your financial situation,” warns Andrew Latham, a certified financial planner.

Take control of your spending by creating a realistic budget that tracks your income and expenses responsibly. Avoid impulse purchases and try to pay more than the minimum amount due on your credit cards each month.

It is important to remember that 0 percent intro APR offers typically expire 12 to 21 months after opening the card. That provides a limited window of time in which to benefit, but it can also provide a false sense of security.

“It’s important to read the fine print, as it varies per [offer],” says Martini. “Before initiating any balance transfer, understand how long the new issuer is offering you the 0 percent or low interest rate. For the transfer to work in your favor, you must pay off the balance before the end of the introductory rate.”

And once the introductory offer ends, the remaining balance could be subject to a higher interest rate than you had before. To ensure you pay off the balance before the intro period ends, make a plan using Bankrate’s credit card balance transfer calculator to determine the monthly payment amount that will help you reach your goal.

Money tip: Divide your transferred balance by the number of months in the 0% APR period — that’s your minimum monthly payment to avoid interest. Better yet, pay 10 to 15% extra to build a buffer and stay ahead.

Each time you sign up for a new credit card, your credit score may drop by up to 10 points — possibly for several months. That’s because applying for a new card usually triggers a hard inquiry, which can temporarily lower your credit score. Other factors like using more of your recently freed up available credit or closing your paid off credit card could also lower your credit score, in addition to lowering the age of your overall credit account.

If you’re worried about your score dropping, keep in mind that it’s temporary. You could also avoid the extra hit to your credit score by creating a payment plan with your credit card company. This looks like automating payments or making smaller, more frequent payments that are easier to manage.

If you’re planning to apply for a mortgage, auto loan, home equity loan or personal loan in the near future, be cautious about getting a balance transfer credit card now. As mentioned above, applying for such a card might temporarily decrease your credit score by adding a hard inquiry to your credit profile. This could make it harder to get approved for the loan you want or secure a low interest rate. In this case, it may be helpful to stick with your current credit card but make larger or extra payments regularly to reduce your debt faster.

Alternatively, you might consider using a portion of your personal or home equity loan to consolidate and pay off your higher-interest credit card debt.

“Personal loans are available, often easy to get and usually have a much lower interest rate than any credit card,” suggests Martini.

Getting a balance transfer isn’t a one-size-fits-all solution for dealing with credit card debt. A balance transfer could be a bad idea in the wrong situation.

But if you’re experiencing these circumstances, a balance transfer card might be a good idea:

• You’ve resolved the issues that contributed to your credit card debt.

• You thoroughly understand your budget and know exactly how much you can contribute to paying off your debt each month.

• You’re not applying for a major loan like a mortgage or car loan anytime soon.

• You still have a healthy credit score.

• You don’t foresee any financial disruptions for the next 12 to 21 months.

• Your credit card debt doesn’t feel hopeless, it’s just challenging to deal with.

If that’s not you, you may want to reconsider a balance transfer credit card, even if the 0 percent introductory offer seems like an opportunity you can’t pass up. Instead, you may want to evaluate your finances and address the root of your credit card debt or try other options for tackling your debt.

While balance transfer cards can be powerful financial tools, they also aren’t right for everyone. You may want to skip them if:

• You know you can’t make your payments on time. This will end up hurting your credit score even more.

• You don’t need a long intro APR period. If you know you can pay off your balances within, say, a few months, save the ding to your credit report and balance transfer fees. Instead, focus all your efforts on getting to the finish line.

• You know you can’t manage it. If the temptation to overspend on your new card is too much, do yourself a favor and reconsider.

• You’re about to buy a car or house. Lenders don’t like to see people seeking a lot of credit all at once — it’s considered a red flag. Instead, keep your credit in the best shape possible and ask your lender if a new card would help or hurt your application.

While a 0 percent APR offer can help you make great strides toward paying off credit card debt, it can also come with some downsides, like temporarily lowering your credit score. Before pursuing a balance transfer credit card, carefully assess your financial situation — including your ability to repay and qualify for the new card. Check out Bankrate’s Cardmatch™ tool to match with balance transfer cards that fit your credit profile and financial goals.

Nicole Dieker

Wed, June 4, 2025 at 2:25 PM CDT7 min read

Most of us know how to use our credit card to make purchases, but not everybody knows how to get cash from a credit card at an ATM. When you use your credit card to request a cash advance, you can withdraw money from your credit card and use it to pay rent, pay back friends and family, cover bills and more.

Can you use a credit card at an ATM to get a cash advance? Absolutely. Should you? Not unless you need to. Cash advances come with additional fees and high interest rates, so they should only be used as a last resort. Here’s what you need to know about how cash advances work, how to get cash from your credit card at an ATM and which cash advance alternatives you should consider before taking money out of your credit card.

A cash advance is a transaction that allows you to withdraw money from a credit card. Instead of using your credit card to purchase goods or services, you essentially use your credit card to purchase cash. The money you withdraw during a cash advance becomes part of your credit card balance.

Getting cash from a credit card is one way to ensure you have money when you need it, but requesting a cash advance at an ATM can cost you. Expect to pay a cash advance fee at the ATM, and expect to pay a higher interest rate on any cash you withdraw.

In most cases, cash advance interest rates are between 20-25 percent APR, and there isn’t any grace period during which you can pay off your balance without getting charged interest. That cash advance APR will kick in immediately.

To minimize the cost of a cash advance, pay off your credit card balance in full as quickly as possible. The longer you keep a cash advance on your credit card without paying it off, the more you run the risk of racking up high-interest credit card debt.

If you need to take money out of a credit card at an ATM, here’s how to request a cash advance:

• Insert your credit card into an ATM

• Enter your credit card PIN

• Select the “cash withdrawal” or “cash advance” option

• Select the “credit” option, if necessary (you may be asked to choose between checking, debit or credit)

• Enter the amount of cash you’d like to withdraw

• Acknowledge that you accept any fees associated with the transaction

• Complete the transaction and collect your cash

Using a credit card at an ATM is a lot like using a debit card — just follow the instructions to withdraw cash, acknowledge that you accept the fees and charges and collect your money.

There may be an instance where you need to take out a cash advance due to an emergency, but despite whatever reason has brought you to an ATM with your credit card, develop a plan to pay off cash advances as quickly as possible. However, with all of this in mind, there are three major drawbacks to a cash advance. Let’s take a look at a few.

First, your bank will charge you a cash advance fee every time you use a credit card at the ATM. Since ATM fees are already higher than ever, paying an additional cash advance fee on your ATM transaction is an extra expense that you should try to avoid whenever possible. The exact fee you will be charged varies by issuer.

Cardholders can find this information in their card’s terms and conditions. Be sure to read those carefully before accepting your fate with a cash advance withdrawal.

Cash advance interest rates can be much higher than the interest rate your credit card issuer charges for purchases — and since cash advances don’t come with grace periods, that interest starts accruing right away. Interest charges on a cash advance can seriously add to your debt, especially if you carry a balance on your credit card from month to month.

The third drawback of a cash advance has to do with your credit score. Taking out a cash advance will lower your available credit, so be prepared for your credit score to go down. In other words, if the balance is not paid off and interest begins to accrue immediately, your credit utilization rate will go up and your credit score will go down. You can also expect lenders to view you as more of a credit risk, since people generally only request cash advances when they don’t have enough money in their checking account to cover an expense that requires cash.

If you need cash but don’t want to pay the extra expenses associated with a cash advance, you have a few options. If you have a debit card, you can withdraw money from an ATM without having to pay a cash advance fee, as long as you use an ATM in your bank’s network. You can also visit a bank branch and cash a check in person.

If you need to use your credit card to make a cash payment because you don’t have enough money in your checking account to cover the cost, see if there are other ways to transfer the money. Peer-to-peer payment apps like Venmo or Square Cash (often called the Cash App) allow you to send money to friends and family. This means that if you were hoping to get cash to pay back a friend or relative, you might be able to Venmo or Cash App them instead.

Be aware that Venmo and Square Cash both charge a 3 percent fee for credit card transactions. Also, some credit card issuers code peer-to-peer payments as cash advances. So, it’s still best to use a debit card or a linked checking account with Venmo and Cash App whenever possible.

Lastly, you might want to consider a personal loan. If you need cash quickly but don’t want to deal with the high cost of a cash advance, a personal loan can get you the money you need at a much more reasonable interest rate. As of June 2025, the average personal loan interest rate is under 13 percent. When you take out a personal loan, you’ll receive a lump sum of money that you can use to pay rent, pay off medical bills or cover other types of expenses that require cash.

Don’t confuse a cash advance with a “cash back credit card.” The latter is a rewards card that offers you cash back in the form of rewards you can redeem into an eligible account or for statement credit. However, some Wells Fargo cards allow cardholders to redeem their cash back as a withdrawal at a Wells Fargo ATM. In that case, you aren’t taking a cash advance. Instead, you’re redeeming your cash-back rewards. There won’t be a cash advance fee or interest rate to consider.

Remember, a cash advance should always be viewed as a last resort. It is important to exhaust all of your other options before you decide to get cash from a credit card at an ATM, such as using a debit card, a payment app or a personal loan. You could even borrow cash from a friend if the opportunity presents itself. Interest rates for cash advances tend to run higher than for regular purchases, so keep in mind the financial consequences if you are not able to pay off your account balance quickly.