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It’s not possible to consolidate debt with zero credit score impact: any application for new credit usually affects your credit score. However, debt consolidation with a personal loan can improve your score over time. 

<p>When people worry about debt consolidation hurting their credit, they’re usually thinking about how a loan application affects their credit score. What may negatively affect a credit score is a missed payment, a closed account that shortens your credit history, or new spending on the cards you just paid off. Here’s how the credit score is affected at every stage of debt consolidation. </p><h2><b>The five factors in your FICO score, and how debt consolidation touches each</b> </h2><p><a href="https://www.myfico.com/credit-education/what-is-a-fico-score">FICO scores are built from five weighted categories</a>: payment history (35%), amounts owed including credit utilization (30%), length of credit history (15%), credit mix (10%), and new credit including recent inquiries (10%). </p><p>Consolidation can affect all five of these factors. Most of the effects are positive over time.  </p><h3><b>Stage 1: Shopping for rates </b> </h3><p>When looking for a debt consolidation loan, the first step is usually to check your rate. With many lenders, such as Happen Bank, this triggers a soft inquiry—a preliminary credit check that doesn’t appear on your credit report and has no effect on your score. Comparing rates and other loan terms helps you come to a decision. </p><p>The key distinction is between pre-qualification (soft pull, no score impact) and a formal application (hard pull, small temporary impact). Check which type of inquiry a lender uses before you proceed. </p><h3><b>Stage 2: Submitting a formal personal loan application </b> </h3><p>A formal loan application triggers a hard inquiry, which appears on your credit report and is visible to other lenders. <a href="https://www.myfico.com/credit-education/credit-reports/does-checking-credit-score-lower-it">For most people, one additional credit inquiry will take less than five points off their FICO Scores</a>. The effect is temporary: <a href="https://www.myfico.com/credit-education/credit-reports/does-checking-credit-score-lower-it">hard inquiries stay on your report for up to two years, but only affect FICO scores for a year</a>. </p><p><b>The rate-shopping window.</b> <a href="https://www.myfico.com/credit-education/credit-reports/does-checking-credit-score-lower-it">FICO can group multiple hard inquiries made within a short time frame—usually 14 to 45 days—into one inquiry</a>. This does however depend on a few factors, such as the FICO model used to calculate your score, which depends on the lender. This means you can potentially apply to more than one lender within that window and have it count as a single inquiry on your score. Apply sequentially over several months, and each one counts separately. </p><p><b>Note:</b> With Happen Bank, a hard enquiry is triggered only when the loan is funded. </p><h3><b>Stage 3: Credit utilization drops</b> </h3><p>This is one way through which debt consolidation with a personal loan may positively affect a credit score. When a personal loan pays off your credit card balances, your revolving utilization ratio drops: potentially from a high percentage to zero. A debt consolidation loan could <a href="https://www.experian.com/blogs/ask-experian/can-personal-loan-hurt-credit-score/#:~:text=A%20debt%20consolidation%20loan%20could,effect%20on%20your%20credit%20score.">reduce your credit utilization</a>, which is an important credit scoring factor: your utilization will decrease to 0% on the cards whose debt you consolidate, which can have a positive effect on your credit score. </p><p>Updated balances may be reflected after creditors report them to credit bureaus. </p><h3><b>Stage 4: Keeping paid-off accounts open</b> </h3><p>Closing a paid-off credit card account removes available credit from your profile, which can push your credit utilization ratio up even with a zero balance on that card. It may also <a href="https://www.experian.com/blogs/ask-experian/what-to-know-before-closing-your-old-credit-cards/#:~:text=and%20lower%20your%20average%20account%20age%2E">reduce your average account age</a> if the closed card is one of your older accounts. Both factors can affect your credit score. </p><p>Some card issuers close accounts they consider dormant if no activity is recorded over an extended period, which can produce the same credit score effects as voluntary closure. </p><h3><b>Stage 5: Payment history builds over the loan term</b> </h3><p><a href="https://www.experian.com/blogs/ask-experian/can-personal-loan-hurt-credit-score/">Payment history is the largest component of your FICO score at 35%</a>. Each on-time payment on your consolidation loan adds to that record. Over a multi-year loan term, consistent on-time payments build a payment history that can strengthen your score. </p><h3><b>Stage 6: Credit mix improves slightly</b> </h3><p>If your credit history has been primarily revolving credit—credit cards only—a personal loan adds an installment account to your profile. If you previously had only credit cards and a personal loan is the first installment loan in your name, this can <a href="https://www.experian.com/blogs/ask-experian/can-personal-loan-hurt-credit-score/#:~:text=It%20can%20also%20add%20to%20your%20credit%20mix%2C%20especially%20if%20you%20previously%20had%20only%20credit%20cards%20and%20a%20personal%20loan%20is%20the%20first%20installment%20loan%20in%20your%20name.">add to your credit mix</a>, which is a factor in your score. Credit mix accounts for 10% of your FICO score. </p><h2><b>The effect of running up new balances</b> </h2><p>The consolidation loan clears your cards. The credit score improvement from lower credit utilization follows. But if you begin accumulating new balances on the cleared cards, the utilization benefit can erode.  </p><h2><b>Debt consolidation options and their credit score implications</b> </h2><p>A personal loan is the most common consolidation vehicle, but not the only one. A balance transfer card moves balances to a new card with a low or 0% introductory APR—useful for smaller balances you can clear within the promotional window, though the transfer fee adds to the cost. Home equity loans and HELOCs allow borrowing against equity in your home—lower rates, but your home secures the debt. Each option triggers its own credit score effects. </p><p>Check your rate in seconds with no impact to your credit score with <a href="https://www.happen.com/personal-loan/debt-consolidation">Happen Bank</a>.<sup>1,2</sup> </p><h2><b>Frequently asked questions</b> </h2><h2><b>Does debt consolidation hurt your credit?</b> </h2><p>Yes, but in the short term. A formal application triggers may affect your credit score. However, over time, the credit utilization drop from paying off card balances and consistent on-time payments typically produce a net positive effect.  </p><h2><b>Can I consolidate debt without any credit score impact?</b> </h2><p>Not entirely—any formal application for new credit can affect your credit score. However, the long-term effects of consolidating debt can be positive. </p><h2><b>How long does it take for debt consolidation to improve my credit score?</b> </h2><p>There is no fixed timeline to see credit score improvement. The effect of reduced credit utilization from paying off card balances usually shows up first. Payment history benefits build steadily over the life of the loan.  </p><p></p><p><b>Disclosures</b> </p><ol><li><p>Checking a rate through us generates a soft inquiry on a person’s credit report, which does not impact that person’s credit score. A hard credit inquiry, which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. </p></li><li><p>Between April 2026 and June 2026, 76% of Happen Personal Loan offers were generated in under a minute from the beginning of the application process. </p></li></ol><p></p>

Most personal loan application delays come down to a few things. Missing or mismatched documents, failed income verification, unanswered follow-up requests, and submitting multiple full applications to different lenders are some of them. Knowing what to look for can help you identify and address potential delays. 

<p>Most people who experience a loan delay don&#39;t see it coming. The process feels straightforward—fill in the details, upload the documents, wait for approval. In most cases, it indeed is. But small gaps in an application can pause things at any stage, and the fixes are simpler than most people expect. Here&#39;s what actually causes delays and how to get ahead of each one before you apply. </p><h2><b>1. Missing or incomplete documents</b> </h2><p>Lenders typically need to verify your identity and income before they can approve a loan. If a required document isn’t included in your application—or needs to be requested separately—the process pauses until it arrives. </p><p><b>What to do:</b> Gather everything before you start. This typically includes a government-issued photo ID, your Social Security number, two to three recent pay stubs or bank statements, and your bank account numbers. Self-employed applicants should also have one to two years of federal tax returns ready. Having these prepared before you apply means there’s nothing to chase down mid-process. </p><h2><b>2. Information that doesn’t match your documents</b> </h2><p>Lenders may verify every piece of information in your application against supporting documentation. A small discrepancy—a nickname instead of a legal name, or stated income that doesn’t match your pay stubs—triggers a review step that takes time. </p><p><b>What to do:</b> Enter your information exactly as it appears on your supporting documents. Your legal name, your current address, your employer’s full legal name, and your precise income figure. If you’ve recently moved or changed jobs, make sure your documents reflect the current situation rather than an older one. </p><h2><b>3. Slow responses to follow-up requests</b> </h2><p>Even a well-prepared application occasionally generates a follow-up request—an additional bank statement, an employment verification letter, or a document that was unclear when uploaded. The application doesn’t move until this is furnished. </p><p>This is where a slow or delayed response can turn hours into days. </p><p><b>What to do:</b> Check your email throughout the day after submitting your application. If you receive follow-up queries, try to respond to them as soon as possible.  </p><h2><b>4. Applying with multiple lenders simultaneously via full applications</b> </h2><p>If you’re comparing lenders, submitting multiple full applications at once may result in multiple hard credit inquiries, depending on the lender. Each one may have a small effect on your credit score. </p><p><b>What to do: </b>Check your rates first before submitting a full application. With Happen Bank, checking your rate uses a soft inquiry—no impact to your credit score—and can return your rate in seconds.<sup>1</sup> A hard credit inquiry only appears on your credit report if and when a loan is issued to you.<sup>2</sup> </p><h2><b>5. Denials based on loan amounts</b> </h2><p>The amount requested can affect whether an application is approved. Lenders evaluate the requested amount against the borrower&#39;s income, credit profile, debt-to-income ratio, and any other factor they deem pertinent. How lenders handle this, and what options may be available if an application isn&#39;t approved, varies by institution.  </p><p><b>What to do:</b> Checking your estimated rate before application typically helps, as it provides a view of the loan terms that one can expect.  </p><p>Check your rate in seconds with <a href="https://www.happen.com/personal-loan/">Happen Bank</a>.<sup>1</sup> </p><h2><b>Frequently asked questions</b> </h2><h3><b>Why is my loan application taking so long?</b> </h3><p>Common reasons may include a missing document, a discrepancy between your application and your supporting records, or a follow-up request that’s waiting on a response. Check your email for any communication from your lender. If you do not receive a response, contacting the lender to confirm receipt is a reasonable next step. </p><h3><b>How long does personal loan approval take?</b> </h3><p>This depends on the lender as well as your specific application. With some lenders, approval can happen the same day. If your application requires additional documentation or verification, the timeline extends accordingly. Between April 2026 and June 2026, 66% of Happen Personal Loans that were approved for funding on a given business day were disbursed within 24 hours.<sup>3</sup> </p><h3><b>Does having multiple loans pending at the same time hurt my credit score?</b> </h3><p>Multiple full personal loan applications in a short window can each generate a hard credit inquiry, which may have a small negative effect on your score. Some lenders allow consumers to check rates using a soft enquiry, which generally does not affect their credit score. </p><p></p><h2><b>Related terms</b> </h2><p><a href="https://www.happen.com/glossary/a/annual-percentage-rate-apr">Annual Percentage Rate (APR)</a> </p><p><a href="https://www.happen.com/glossary/h/hard-credit-inquiry">Hard Credit Inquiry</a> </p><p></p><h2><b>Disclosures</b> </h2><ol><li><p>Between April 2026 and June 2026, 76% of Happen Personal Loan offers were generated in under a minute from the beginning of the application process. </p></li><li><p>Checking a rate through us generates a soft inquiry on a person’s credit report, which does not impact that person’s credit score. A hard credit inquiry, which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. </p></li><li><p>Between April 2026 to June 2026, 66% of Happen Personal Loans that were approved for funding (which is after your loan application is approved) on a given business day were disbursed within 24 hours. Actual availability of funds may vary and is dependent on multiple factors, including, but not limited to your receiving bank’s processing times and policies. A business day is defined as Monday through Friday and excludes the weekend and bank holidays. </p></li></ol><p></p>

Lenders usually evaluate your credit score, debt-to-income ratio, income stability, and application accuracy when making an approval decision. Each one is within your control to varying degrees. Improving on these can be beneficial before you apply for a personal loan. 

<p>Getting approved for a personal loan depends on more than just your credit score. Lenders look at your full financial picture—income, existing debt, application accuracy, and the amount you&#39;re requesting. Understanding these factors can help consumers better understand what lenders may consider when evaluating an application. Here&#39;s how to prepare. </p><h2><b>1. Know where your credit score stands</b> </h2><p>Your credit score is not the only factor determining approval, but it is an important one. Before you apply, check your score so you know <a href="https://www.myfico.com/credit-education/credit-scores">what range of APRs</a> to expect and what your approval odds are.  </p><p>Checking your own credit score doesn’t affect it adversely. You can access your full credit report for free at <a href="https://www.annualcreditreport.com/">AnnualCreditReport.com</a>. This offers you an opportunity to review your report for errors, such as incorrect balances, accounts that aren’t yours, or outdated information. Correcting inaccurate information may affect your credit score, depending on the circumstances. </p><p>If your <a href="https://www.happen.com/resource-center/personal-finance/5-financial-habits-to-improve-your-credit-score">score needs work</a>, the <a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">two moves</a> that help most in the near term are paying down revolving balances (balances on credit cards, line of credit, etc.) and making every upcoming payment on time.   </p><h2><b>2. Lower your debt-to-income ratio</b> </h2><p>Your debt-to-income (DTI) ratio measures how much of your gross monthly income goes toward existing debt payments. A DTI below <a href="https://www.experian.com/blogs/ask-experian/credit-education/debt-to-income-ratio/">35%</a> typically signals comfortable debt management. A high DTI (above 50%) signals that adding a new payment may stretch your budget. </p><p>You can aim to lower your DTI before submitting an application in a couple of different ways:  </p><p><b>Pay down existing balances.</b> Reducing a credit card balance lowers the minimum payment lenders count against your income. Even a small reduction makes your ratio more favorable. </p><p><b>Higher verifiable income.</b> Because DTI is calculated against gross income, a higher income level relative to existing debt obligations produces a lower ratio. Changes in income, such as a raise, an additional income source, or documented freelance work, affect how DTI is calculated, provided the income can be verified by the lender. </p><h2><b>3. Present a clear picture of your employment </b> </h2><p>Lenders typically review income and employment information as part of a personal loan application. Gaps in employment or recent job changes don&#39;t automatically disqualify you, but they can make income harder to verify, and how lenders weigh this varies. </p><p>If you&#39;ve recently changed jobs, some lenders may ask for documentation from your new role before approving. If you&#39;re self-employed, lenders often request tax returns to document income; the number of years required depends on the lender. </p><h2><b>4. Get your application right the first time</b> </h2><p>Application errors can lead to additional reviews or delays. A name mismatch between your application and your ID, income figures that don’t match your pay stubs, or a bank account number entered incorrectly can all trigger additional review or a declined application. </p><p>Before you submit: </p><ul><li><p>Match your name, address, and employer exactly to your supporting documents </p></li><li><p>Provide accurate income information consistent with the lender’s application instructions </p></li><li><p>Double-check your bank account and routing numbers </p></li></ul><h2><b>5. Consider a co-borrower</b> </h2><p>If your credit or income profile isn&#39;t strong enough on its own, some lenders allow you to apply with a co-borrower. Co-borrower availability, requirements, and any potential impact on approval or rates vary by lender, so check directly with the lender before applying.  </p><h2><b>Check your rate before you commit</b> </h2><p>Checking your rate may help you understand the terms that may be available to you before submitting a full application. With Happen Bank, this takes seconds.<sup> 1</sup>  </p><p><a href="https://happen.com/personal-loan">Check your rate with Happen Bank with no impact to your credit score.</a><sup>2</sup> </p><h2><b>Frequently asked questions</b> </h2><h3><b>How can I qualify for a personal loan with a low credit score?</b> </h3><p>A lower credit score may make approval harder but not impossible. It depends on your specific score, the loan amount, the DTI ratio, and how strong your income documentation is. Adding a creditworthy co-borrower is also an option.  </p><h3><b>How much does my credit score affect my loan approval chances?</b> </h3><p>Your credit score has a major impact on loan approval chances, but it’s not the only factor. Income, DTI, loan amount, and application accuracy all contribute to approval odds. A borrower with a lower score, a stable income, and low DTI may have better odds than one with a higher-score borrower with an unstable income. It’s your overall credit profile that matters. </p><h3><b>How does applying with a co-borrower work?</b> </h3><p>You and your co-borrower apply together—both names go on the application and the loan. The lender evaluates both of your credit scores, incomes, and DTI ratios together to make the approval decision and set the loan terms. A stronger combined profile can unlock approval or a lower APR that neither of you might qualify for individually. </p><p></p><h2><b>Related terms</b> </h2><p><a href="https://www.happen.com/glossary/a/annual-percentage-rate-apr">Annual Percentage Rate (APR)</a> </p><p><a href="https://www.happen.com/glossary/c/credit-score">Credit Score</a> </p><p><a href="https://www.happen.com/glossary/h/hard-credit-inquiry">Hard Credit Inquiry</a> </p><p></p><h2><b>Disclosures</b> </h2><ol><li><p>Between April 2026 and June 2026, 76% of Happen Personal Loan offers were generated in under a minute from the beginning of the application process. </p></li><li><p>Checking a rate through us generates a soft inquiry on a person’s credit report, which does not impact that person’s credit score. A hard credit inquiry, which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. </p></li></ol><p></p>

A fixed-rate personal loan locks in your APR and monthly payment for the full term. A variable-rate personal loan ties your rate to a market index, which can move up or down over time. Fixed rates typically protect you from rate increases. Variable rates carry the risk of rising costs.  

<p>When you consider taking out a personal loan, there are two ways in which your rate can be structured. The choice affects not just your monthly payment, but the total cost of borrowing over the full term, particularly if your loan runs several years. Here’s how both structures work and what to consider before choosing. </p><h2><b>What is a fixed-rate personal loan?</b> </h2><p>A fixed-rate personal loan has an APR that stays the same for every month of the repayment term. Your monthly payment doesn’t change. The total cost of the loan is predictable from day one. </p><p>This predictability is a key advantage of fixed-rate personal loans. You can usually plan your budget around a payment that doesn’t move, and you’re insulated from market-driven rate increases for the full life of the loan. </p><h2><b>What is a variable-rate personal loan?</b> </h2><p>A variable-rate personal loan has an APR tied to a benchmark index, typically the prime rate or <a href="https://www.achieve.com/learn/personal-loans/personal-loan-rates">SOFR</a> (the Secured Overnight Financing Rate). As the index moves, your rate and monthly payment move with it. </p><p>Variable rates can start at a lower APR than fixed-rate personal loans. But the rate can rise over time if market conditions shift, which makes the total cost of the loan harder to predict and budget for. </p><p>Most variable-rate personal loans <a href="https://www.investopedia.com/terms/r/reset-rate.asp#:~:text=Variable%20interest%20rate%20loans%20can%20be%20reset%20on%20various%20schedules%2C%20which%20may%20include%20monthly%2C%20quarterly%2C%20or%20annual%20reset%20dates.">can reset</a> on a defined frequency, which may be on a monthly, quarterly, or annual basis: your lender’s terms specify the frequency and any cap on how much the rate can move in a given period. </p><h3><b>How they compare</b> </h3><table><tr><td><p><b>Attribute</b> </p></td><td><p><b>Fixed rate</b> </p></td><td><p><b>Variable rate</b> </p></td></tr><tr><td><p>Monthly payment </p></td><td><p>Same every month </p></td><td><p>Can change as the rate adjusts </p></td></tr><tr><td><p>Total cost predictability </p></td><td><p>Certain from day one </p></td><td><p>Depends on how rates move </p></td></tr><tr><td><p>Protection from rate increases </p></td><td><p>Full: your rate never rises </p></td><td><p>None: rate rises with the index </p></td></tr><tr><td><p>Benefit if rates fall </p></td><td><p>None: rate stays fixed </p></td><td><p>Yes: your cost can decrease </p></td></tr><tr><td><p>Considerations </p></td><td><p>Longer terms, budget certainty </p></td><td><p>Shorter terms, falling-rate environments </p></td></tr></table><h3><b>When a fixed rate can be advantageous</b> </h3><p><b>Your loan term is longer.</b> Over 36, 48, or 60 months, there’s time for market rates to move. A fixed rate removes that variable entirely: you know the exact cost of the loan from month one. </p><p><b>You’re working to a specific budget.</b> A payment that doesn’t change is usually easier to plan around. If your monthly budget is tight, a variable payment that can increase is a genuine risk. </p><p><b>You expect rates to rise or stay flat.</b> Locking in a fixed rate protects you if the benchmark index (defined before) increases over your repayment period: your cost stays exactly where you agreed. </p><p><b>When a variable rate can be viable</b> </p><p><b>Your loan term is short.</b> A shorter loan term reduces the window within which rates can change. </p><p><b>You plan to pay off early.</b> If you intend to pay the loan off ahead of schedule, the window for rate increases is narrower. </p><p><b>You expect rates to fall.</b> If the benchmark index declines over your repayment period, your variable rate and monthly payment can decrease. </p><h3><b>Summing up</b> </h3><p>Fixed-rate personal loans keep your APR and payment the same for the full term: they start slightly higher but protect you from rate increases. Variable-rate personal loans start lower but can rise with market conditions, making total cost harder to predict. The predictability of a fixed rate can be a desirable advantage.  </p><p>Happen Bank’s personal loans carry a fixed rate for the full term: your APR and monthly payment stay the same from start to finish. APRs range from 6.53% to 35.99%, with loan amounts from $1,000 to $75,000 and terms from 24 to 84 months.<sup>1</sup>  </p><p>Checking your <a href="https://happen.com/personal-loan">rate</a> takes seconds and uses a soft inquiry — no impact to your credit score.<sup>2,3</sup>  </p><h2><b>Frequently asked questions</b> </h2><h3><b>Are personal loans fixed or variable rate?</b> </h3><p>Personal loans can be either, though fixed-rate loans are more common. A fixed rate keeps your APR and monthly payment the same for the full term. A variable rate ties your APR to a market index and can change over time. </p><h3><b>What is the difference between a fixed and variable rate personal loan?</b> </h3><p>A fixed rate is locked in at origination and never changes. A variable rate is tied to a benchmark index and adjusts periodically—up or down—based on market conditions.  </p><h3><b>Which is safer: a fixed or variable rate personal loan?</b> </h3><p>A fixed rate can be the safer choice over a multi-year term. The payment never changes, and you’re protected from market-driven rate increases. Variable rates can fall, but the risk of rising rates makes fixed the more reliable option for longer loans. </p><p></p><p><b>Disclosures</b> </p><ol><li><p>For Personal Loans, APR ranges from 5.96% APR to 35.99% APR and origination/processing fee ranges from 0.00% to 8.00% of the loan amount. APRs and origination/processing fees are determined at the time of application. The lowest APR may be available to borrowers with excellent credit, subject to additional factors including, but not limited to, loan amount, loan term, and sufficient investor commitment. Advertised rates and fees are valid as of 06/22/2026, are subject to change without notice, and may not be available for all Personal Loan products and/or through all application channels or platforms. A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $27,198 for a term of 36 months, with an interest rate of 14.49% and a 6.00% origination fee of $1,632 for an APR of 18.91%. In this example, the borrower will receive $25,566 and will make 36 monthly payments of $936. Loan amounts range from $1,000 to $75,000 and loan term lengths range from 24 months to 84 months. Some amounts, rates, and term lengths may be unavailable in certain states. There is no prepayment penalty. </p></li><li><p>Between April 2026 and June 2026, 76% of Happen Personal Loan offers were generated in under a minute from the beginning of the application process. </p></li><li><p>Checking a rate through us generates a soft inquiry on a person’s credit report, which does not impact that person’s credit score. A hard credit inquiry, which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. </p></li></ol><p></p>

Your debt-to-income (DTI) ratio is your total monthly debt payments divided by your gross monthly income, expressed as a percentage. It is one of many factors used to determine your creditworthiness.  

<p>Your DTI ratio changes when your debts change, when your income changes, or both. There are concrete steps you can take before you apply that can move it in the right direction. In this article, we cover what the metric is, what the generally accepted thresholds look like, and how to lower it. </p><h2><b>What DTI measures, and what it doesn’t</b> </h2><p>Your debt-to-income ratio is a snapshot of how much of your gross monthly income is already committed to debt repayment. A high DTI may signal that adding a new monthly payment may stretch your budget. A low DTI can signal that you have room to take on new debt. However, the specific threshold varies with the lender. Do note that your DTI doesn’t directly impact your FICO Score because your income <a href="https://www.myfico.com/credit-education/blog/why-is-DTI-important">is not considered</a> when calculating your score. Your credit score and DTI are separate inputs to a lender’s decision.</p><h3><b>Front-end vs. back-end DTI</b> </h3><p>For personal loans, only one type of DTI typically matters. But understanding both is useful for context. </p><p><b>Front-end DTI</b> measures only housing costs—your mortgage or rent payment, property taxes, homeowners’ insurance—as a percentage of gross income. Mortgage lenders typically like to see a front-end DTI of <a href="https://www.myfico.com/credit-education/blog/why-is-DTI-important">28%</a> or less. </p><p><b>Back-end DTI</b> is the measure <a href="https://www.experian.com/blogs/ask-experian/how-to-calculate-your-debt-to-income-ratio/#:~:text=Most%20lenders%20use%20back%2Dend%20DTI%20only%2C%20but%20mortgage%20lenders%20typically%20use%20both">typically used</a> for personal loans. It includes all of your monthly debt obligations: credit card minimums, car loan payments, student loans, existing personal loans, and housing costs. A back-end DTI of <a href="https://www.experian.com/blogs/ask-experian/credit-education/debt-to-income-ratio/">35%</a> or less generally indicates that you’re managing your debt payments comfortably and have enough cash flow left over for other expenses and financial goals. Please note that none of these thresholds are set in stone. They vary depending on the lender. </p><h2><b>How to calculate your DTI</b> </h2><p>Add up your fixed monthly debt obligations—<a href="https://www.experian.com/blogs/ask-experian/credit-education/debt-to-income-ratio/">using minimum payments for revolving credit such as credit cards</a>: </p><ul><li><p>Credit card minimum payments </p></li><li><p>Car loan monthly payment </p></li><li><p>Student loan monthly payment </p></li><li><p>Any existing personal loan payments </p></li><li><p>Rent or mortgage payment </p></li></ul><p>Divide that total by your gross monthly income (before taxes and deductions). Multiply by 100. <b>Example:</b> Monthly debt payments of $1,800 ÷ gross monthly income of $5,500 = 0.327 × 100 = <b>32.7% DTI</b></p><h2><b>What DTI thresholds mean for personal loan approval</b> </h2><p><i>There’s no universal DTI cutoff across all personal loan lenders</i>. Thresholds vary by institution, loan type, and how your credit score and income interact with your ratio. However, here are some generic thresholds: </p><p><b>Below 36%:</b> Generally associated with more competitive rate offers </p><p><a href="https://www.myfico.com/credit-education/blog/why-is-DTI-important"><b>36%–43%:</b></a> Within the range where many lenders may still approve a loan  </p><p><b>43%–50%: </b>Approaches or exceeds thresholds used for qualified mortgages; personal loan lenders vary in how they evaluate this range  </p><p><b>Above 50%:</b> Options narrow significantly across most loan types. </p><h3><b>Factors that may lower your DTI </b> </h3><p><b>Paying down revolving balances. </b>Reducing a credit card balance can lower the minimum payment counted against your income. Eliminating a balance entirely can remove its minimum payment from the monthly total used in DTI calculations. </p><p><b>Paying off smaller installment debts. </b>For borrowers in the final months of a car loan or personal loan, completing that payoff can remove a monthly obligation from the DTI calculation. </p><p><b>Not opening new credit before applying. </b>Each new credit account adds a minimum payment to the calculation, which can increase DTI on paper regardless of whether the payment is manageable. </p><p><b>Higher verifiable income. </b>Because DTI is calculated against gross income, a raise, a second income source, or documented freelance income shifts the ratio.  </p><h2><b>DTI vs. credit utilization: an important distinction</b> </h2><p>These metrics are related but measure different things and affect you differently. </p><p>Credit utilization is what you owe on revolving accounts relative to your available credit limit. It is a factor in your FICO score and appears on your credit report. </p><p>DTI, by contrast, has <a href="https://www.experian.com/blogs/ask-experian/credit-education/debt-to-income-ratio/">no impact on your credit score</a>, particularly because your income isn’t a factor in credit-scoring models.  </p><p>Check your rate in seconds with <a href="https://happen.com/personal-loan">Happen Bank</a>, with no impact to your credit score.<sup>1,2</sup> </p><h2><b>Frequently asked questions</b> </h2><h3><b>What is a good debt-to-income ratio for a personal loan?</b> </h3><p>The thresholds differ with each lender. A DTI of below 36% is generally considered good. A DTI of above 50% may require improvement, but the actual consequence depends on the lender and other factors that determine your creditworthiness. </p><h3><b>Does DTI affect my credit score?</b> </h3><p>No. Your DTI doesn’t directly impact your FICO Score because your income is not considered when calculating your score.  </p><h3><b>What counts toward my DTI?</b> </h3><p>Minimum payments on credit cards and lines of credit, monthly payments on installment loans, and housing costs all count towards DTI. Utilities, groceries, insurance, and other non-debt living expenses usually don’t count. </p><p></p><h2><b>Disclosures</b> </h2><ol><li><p>Checking a rate through us generates a soft inquiry on a person’s credit report, which does not impact that person’s credit score. A hard credit inquiry, which may affect that person’s credit score, only appears on the person’s credit report if and when a loan is issued to the person. </p></li><li><p>Between April 2026 and June 2026, 76% of Happen Personal Loan offers were generated in under a minute from the beginning of the application process. </p></li></ol><p></p>

The best debt consolidation loan is the one that costs you the least after accounting for fees, pays off your creditors efficiently, and gets funds to you when you need them. Both personal loans and balance transfer options can reduce the interest you pay on credit card debt. But they work differently. A balance transfer card typically offers a low introductory APR that reverts to a standard rate, while a personal loan offers a fixed APR for the full term. If you can pay off the balance fast enough, a balance transfer card may cost less. The right choice depends on how much you owe, how quickly you can pay it down, and whether you want certainty. 

<p>If you’re carrying credit card debt and looking for a lower-cost way out, two options tend to come up: a balance transfer card and a personal loan. Both can reduce what you pay in interest. In this article, we’ll look closely at how they work. </p><h2><b>How a balance transfer credit card works</b> </h2><p>A balance transfer moves debt from one credit card to another card that offers a 0% or low introductory APR for a set period, which can extend over <a href="https://www.nerdwallet.com/credit-cards/learn/what-is-a-balance-transfer#:~:text=0%25%20periods%20of%2018%20months%20or%20more%2E"><u>18 months</u></a> in some cases. If you pay your balance off before the promotion ends, you may avoid interest altogether on the transferred amount (if the APR is 0%). </p><p>Two costs matter here: </p><ul><li><p><b>Balance transfer fee.</b> Most cards charge a fee to move a balance, <a href="https://www.experian.com/blogs/ask-experian/what-is-a-balance-transfer-fee/">typically ranging from 3% to 5%</a> of the amount transferred. That fee gets added to the balance upfront. </p></li><li><p><b>The APR after the promotional period ends.</b> Once the promo period ends, any unpaid balance starts collecting interest at the card&#39;s standard APR. As of the second quarter of 2026, the average credit card APR for cardholders who were charged interest was <a href="https://www.federalreserve.gov/releases/g19/current/">20.94%.</a> </p></li></ul><p>A balance transfer doesn’t eliminate interest if the transferred balance is not repaid within the promotional period.  </p><h2><b>How a personal loan for credit card debt consolidation works</b> </h2><p>A personal loan is more straightforward. You borrow a lump sum, then repay it in fixed monthly payments over a set period. For a fixed-rate personal loan, the APR stays the same for the full loan term. There is no promotional APR that expires, and no anxiety over what happens when time runs out. There is no balance transfer fee either. However, other charges may apply, so it is recommended that all loan terms are carefully reviewed before making a decision.  This works well if you want to know exactly what you owe each month and exactly when the loan ends. There’s no pressure to beat a deadline. With Happen Bank, you can also potentially get a discount on the standard APR by opting for Direct Pay.<sup>1</sup> This allows your qualifying creditors to be paid directly, which is often more convenient. </p><h2><b>Personal loan vs. balance transfer—Comparison</b> </h2><p>Here’s a quick overview of what we have discussed so far: </p><table><tr><td><p> </p></td><td><p><b>Balance transfer card</b> </p></td><td><p><b>Personal loan</b> </p></td></tr><tr><td><p><b>Rate structure</b> </p></td><td><p>0% introductory APR, then standard variable APR </p></td><td><p>Fixed APR for the full loan term; APR discount with Happen Bank’s Direct Pay<sup>1</sup> </p></td></tr><tr><td><p><b>Balance transfer fees</b> </p></td><td><p>Typically, 3%–5% of transferred amount </p></td><td><p>None </p></td></tr><tr><td><p><b>Credit impact</b> </p></td><td><p>May add revolving credit*; utilization may increase </p></td><td><p>May add installment credit; can lower revolving utilization </p></td></tr><tr><td><p><b>Worth considering for</b> </p></td><td><p>Smaller balances you can confidently pay off within the promo window </p></td><td><p>Larger balances, longer payoff timelines, or when you want rate certainty </p></td></tr></table><p>*A type of credit that allows the borrower to make charges and payments against a set borrowing limit, paying interest only on outstanding balances. </p><h2><b>Which option makes more sense for your situation</b> </h2><p>A balance transfer can be the cheaper move if your balance is manageable and you’re confident you can pay it off before the promo ends.  A personal loan is typically beneficial if your payoff timeline is longer or your balance is too large to pay down within the promotional window. A fixed payment and a defined end date can remove the usual uncertainty. For many borrowers, that predictability can be worth more than the chance at 0%. </p><h2><b>What to expect from a Happen Bank personal loan for credit card debt consolidation</b> </h2><p>Here are a few key advantages of consolidating credit card debt with a personal loan from Happen Bank: </p><ol><li><p>Happen Bank’s Direct Pay option sends loan funds directly to your qualifying creditors. You may receive an APR discount of 0.75% to 8% off the standard APR for using Direct Pay.<sup>1</sup> </p></li><li><p>Consolidating debt with Happen Bank’s personal loans can produce an improvement in your FICO score. In fact, borrowers who used Direct Pay to refinance 51% or more of qualifying revolving debt within the first three months saw an average FICO score improvement of 35 points.<sup>2</sup> </p></li><li><p>Happen Bank charges no prepayment fees. If you pay down your loan ahead of schedule, you pocket the savings. </p></li></ol><p>NerdWallet named Happen Bank its <a href="https://www.nerdwallet.com/personal-loans/best/debt-consolidation-loans">best personal loan for debt consolidation</a> in 2026. </p><p><a href="https://www.happen.com/personal-loan/debt-consolidation">Check your rate</a> in seconds.<sup>3</sup></p><h2><b>Frequently asked questions</b> </h2><h3><b>Is a personal loan or balance transfer better for paying off credit card debt?</b> </h3><p>There is no clear standout winner. The answer depends on your balance and timeline. A balance transfer card can cost less for a smaller balance you can confidently pay off before the promotional period ends, once the transfer fee is factored in. A personal loan with a fixed APR is typically more predictable for larger balances or longer payoff timelines. </p><h3><b>Does a balance transfer or a personal loan affect my credit score more?</b> </h3><p>Both options affect your credit profile, but in different ways. A balance transfer card adds a revolving account and may increase your overall credit utilization. A personal loan adds an installment account. An installment loan can reduce revolving credit utilization, which accounts for <a href="https://www.myfico.com/credit-education/credit-scores/amount-of-debt">approximately 30% of your FICO score</a>.  </p><h3><b>What happens if I don’t pay off my balance transfer before the introductory period ends?</b> </h3><p>You have to pay interest as per the standard APR on the remaining balance. If there’s a meaningful risk you won’t fully repay the balance within the promo window, ascertain the post-promotion APR, applicable fees, and other loan terms. Compare these terms with those of a fixed-rate personal loan before taking a decision. </p><p></p><h2><b>Related terms</b> </h2><p><a href="https://www.happen.com/glossary/a/annual-percentage-rate-apr">Annual Percentage Rate (APR)</a> </p><p><a href="https://www.happen.com/glossary/r/revolving-credit">Revolving Credit</a> </p><p></p><h2><b>Disclosures</b> </h2><ol><li><p>The APR discounted rate is a discount that some customers may receive for taking out a loan to pay down existing qualifying debt paid directly by Happen Bank; such rate is discounted from the rate given for taking a full cash loan. Not all applicants will qualify for the discount. Any actual discount rate will be determined at the time of application. The best APR discounts may be available to borrowers with excellent credit. Advertised discounted rates are subject to change without notice. </p></li><li><p>Between January 2025 and March 2025, borrowers who used Happen Bank&#39;s Direct Pay to refinance 51% or more of qualifying debt within the first three months saw an average FICO score increase of 35 points. Reducing debt and maintaining low credit balances may contribute to an improvement in credit score, but results are not guaranteed by Happen Bank. Individual results vary based on multiple factors including but not limited to payment history and credit utilization.  </p></li><li><p>Between April 2026 and June 2026, 76% of Happen Personal Loan offers were generated in under a minute from the beginning of the application process. </p></li></ol><p></p>

The best debt consolidation loan is the one that costs you the least after accounting for fees, pays off your creditors efficiently, and gets funds to you when you need them. 

<p>If you’re carrying several high-APR balances and looking at consolidation loans, you’re already asking the right question. What you need next is a framework for evaluating what’s actually in front of you.  </p><h2><b>What is debt consolidation?</b> </h2><p>Debt consolidation combines multiple debts into a single loan with one monthly payment, one APR, and a fixed end date. You replace multiple debts with one loan that, if the rate is lower than your current average, costs you less in total interest. and pays off on a defined timeline. </p><p>Most debt consolidation loans are personal loans. They’re unsecured, have a fixed APR, and don’t require collateral. You borrow a set amount and pay it off in monthly installments.  </p><h2><b>What types of debt qualify?</b>  </h2><p>Usually, credit cards, store cards, medical bills, and personal loans can be eligible under most consolidation loans. Mortgages, car loans, and student loans are generally excluded. If you’re not sure whether a specific balance qualifies, confirm with the lender before you apply. </p><h2><b>How debt consolidation loans work</b> </h2><p>If approved, you usually receive the loan funds in your bank account. You then use that money to pay off the debts you’re consolidating, leaving you with only the new loan. </p><p>Some banks may offer direct payment to qualifying creditors. The funds can go straight to your outstanding accounts without any effort on your part. It also removes the hassle of keeping track of payment cycles for multiple debts. Happen Bank, for instance, offers the Direct Pay option. You may also receive an additional APR discount.<sup>1</sup>  </p><h2><b>What to look for when comparing banks for consolidation loans</b> </h2><p><b>APR, not interest rate.</b> These aren’t the same number. The interest rate is based on the cost of the borrowed principal amount. APR includes the interest rate plus any other costs, such as an origination fee. Always compare APR to APR.  </p><p><b>Whether funds go directly to creditors.</b> This can be worth prioritizing, both for the potential APR discount and for the convenience it provides. </p><p><b>Funding speed.</b> Getting money quickly matters when the reason you&#39;re borrowing has a deadline—a bill due, an unexpected expense, a time-sensitive repair. If timing is important, confirm the timeline before you apply. Happen Bank offers same-day funding to eligible borrowers.<sup>2</sup>  </p><h2><b>How to apply for a debt consolidation loan</b> </h2><p><b>1. List every debt you’re consolidating.</b> Pull your latest statements. For each account, note the creditor, current balance, APR, and minimum monthly payment.  </p><p><b>2. Check your credit score.</b> You don’t need to know your exact future APR, but your credit score sets expectations. Borrowers with stronger scores typically see lower rates.  </p><p><b>3. Apply for prequalification.</b> If possible, check your rate with prequalification. Pre-qualifying with two or three lenders lets you compare loan terms. </p><p><b>4. Choose your lender and your term.</b> Once you have actual offers, compare them on total cost: not just monthly payment amounts. A longer term lowers what you pay each month but may raise what you pay overall. Pick the shortest term your budget can comfortably handle. </p><p><b>5. Submit your full application.</b> A full application usually requires income and identity documentation. Once approved and funded, you can pay off each balance or choose Direct Pay. </p><h2><b>How Happen Bank compares</b> </h2><p>Happen Bank was named the best overall debt consolidation loan for 2026 by Nerdwallet. Additionally, it is rated 4.7-star on <a href="https://www.trustpilot.com/review/happen.com">Trustpilot</a> across more than 14,000 reviews (as of 07.31.2026). Here are a few key features: </p><p><b>APR:</b> Happen Bank’s personal loans run from 6.53% to 35.99% APR, with terms from 24 to 84 months and no prepayment penalty.<sup>2</sup> </p><p><b>Direct creditor payment:</b> With Direct Pay, you can have your qualifying creditors paid directly. You may be eligible for an additional APR discount of 0.75% to 8% for using it.<sup>1</sup> </p><p><b>Funding speed:</b> Once approved, funds can be disbursed in as little as 24 hours, or the same day if approved before 12:30 PM ET on a business day.<sup>3 </sup> </p><p><a href="https://www.happen.com/personal-loan/debt-consolidation">Check you rate in seconds</a> with Happen Bank.<sup>4</sup> </p><h2><b>Frequently asked questions</b> </h2><h3><b>What types of debt can be consolidated?</b> </h3><p>Most consolidation loans cover unsecured debt: credit cards, store cards, medical bills, and personal loans. Mortgages, auto loans, and student loans are generally excluded. If you’re unsure whether a specific balance qualifies, confirm with the lender before you apply. </p><h3><b>How long does it take to pay off a debt consolidation loan?</b> </h3><p>Most personal loan terms run from two to seven years. The right term depends on your balance, the offered APR, and what your monthly budget can support. You can typically pay the loan off early without penalty—doing so saves you the remaining interest. Happen Bank charges no prepayment penalty. </p><h3><b>Does checking my rate affect my credit score?</b> </h3><p>No. Checking your rate with Happen Bank uses a soft credit pull, which doesn’t impact your credit score. Your credit score is only affected if a loan is issued to you.<sup>5</sup> </p><p></p><h2><b>Related terms</b> </h2><p><a href="https://www.happen.com/glossary/a/annual-percentage-rate-apr">Annual Percentage Rate (APR)</a> </p><p><a href="https://www.happen.com/glossary/h/hard-credit-inquiry">Hard Credit Inquiry</a> </p><p><b></b></p><h2><b>Disclosures</b> </h2><ol><li><p>The APR discounted rate is a discount that some customers may receive for taking out a loan to pay down existing qualifying debt paid directly by Happen Bank; such rate is discounted from the rate given for taking a full cash loan. Not all applicants will qualify for the discount. Any actual discount rate will be determined at the time of application. The best APR discounts may be available to borrowers with excellent credit. Advertised discounted rates are subject to change without notice. </p></li><li><p>For Personal Loans, APR ranges from 6.53% APR to 35.99% APR and origination/processing fee ranges from 0.00% to 8.00% of the loan amount. APRs and origination/processing fees are determined at the time of application. The lowest APR may be available to borrowers with excellent credit, subject to additional factors including, but not limited to, loan amount, loan term, and sufficient investor commitment. Advertised rates and fees are valid as of 06/22/2026, are subject to change without notice, and may not be available for all Personal Loan products and/or through all application channels or platforms. A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $27,198 for a term of 36 months, with an interest rate of 14.49% and a 6.00% origination fee of $1,632 for an APR of 18.91%. In this example, the borrower will receive $25,566 and will make 36 monthly payments of $936. Loan amounts range from $1,000 to $75,000 and loan term lengths range from 24 months to 84 months. Some amounts, rates, and term lengths may be unavailable in certain states. </p></li><li><p>Between January 2026 and March 2026, 64% of Happen Personal Loans that were approved for funding on a given business day were disbursed within 24 hours. Actual availability of funds may vary and is dependent on multiple factors, including, but not limited to, your receiving bank’s processing times and policies. A business day is defined as Monday through Friday and excludes weekends and bank holidays. </p></li><li><p>Between April 2026 and June 2026, 76% of Happen Personal Loan offers were generated in under a minute from the beginning of the application process. </p></li><li><p>Checking a rate through us generates a soft inquiry on a person&#39;s credit report, which does not impact that person&#39;s credit score. A hard credit inquiry, which may affect that person&#39;s credit score, only appears on the person&#39;s credit report if and when a loan is issued to the person. </p></li></ol><p></p>

Personal Finance

Most people apply for personal loans through an app or website now: no branch visit or phone call required. But not all apps are built the same. The best ones are fast to show you real terms, easy to navigate from application to payout, and useful beyond the loan itself. Here's what to look for before you download anything.

<p>When taking a personal loan, you&#39;re likely thinking about your APR, loan amount, and the time it takes to get your money. The app is just the interface. But a good app makes the overall process better. A poor one adds friction to every step, from checking your Annual Percentage Rate (APR) to uploading documents, to finally getting your money. Here are a few traits of the best personal loan apps in 2026.  </p><h2><b>What makes a personal loan app worth using</b> </h2><p><b>Ratings and user reviews.</b> App Store and Google Play ratings reflect what borrowers have experienced. A consistently high rating across a substantial number of reviews is one of the most reliable signals of a well-built app and responsive service. Trustpilot reviews are another useful sign, particularly for how the lender handles issues after the loan is funded. </p><p><b>Interface and ease of use.</b> A good app handles the full journey in one place: checking your terms, uploading documents, reviewing and signing your agreement, and tracking your payout. It should not route you to another channel to complete a step. </p><p><b>Application status tracking.</b> Once you submit an application, you should be able to see exactly where your application is in real time—received, under review, approved, funded—without calling anyone. Clear status updates let you respond immediately if anything is needed, which is often the difference between a same-day decision and a next-day one. </p><p><b>APR upfront, not just the interest rate.</b> A key figure that you should be able to see on a good app is the annual percentage rate (APR)—not just the interest rate. APR includes the interest rate and any upfront fees, annualized into one figure. It lets you compare what a loan actually costs across lenders. An app that leads with the interest rate and buries the APR is making the comparison harder than it needs to be. </p><p><b>Getting loan terms quickly. </b>The best apps return your potential APR, term, and monthly payment in seconds before you commit to anything. Seeing these numbers upfront gives you what you need to compare options and make a confident decision. </p><p><b>Clarity on funding speed.</b> A good app is specific: it tells you the cutoff time for same-day disbursement, whether weekends count, and what to expect if your approval comes in after the cutoff. Vague claims about speed are less useful than a clear timeline you can plan around. </p><p><b>Tools beyond the loan.</b> The best apps extend their usefulness beyond the application. Credit monitoring, debt management tools, and the ability to manage your loan—change a payment due date, make extra payments, track your balance—turn the app into a long-term financial tool. </p><h2><b>What “fast funding” actually means</b> </h2><p>Getting money quickly matters when the reason you’re borrowing has a deadline: a bill coming due, an urgent repair, an unexpected gap. But “fast funding” means different things depending on the lender, the time of day you’re approved, and your own bank’s processing time. </p><p>Here’s what to check before you assume an app will be fast. </p><p><b>Same-day cutoff times.</b> Most lenders that offer same-day funding require approval before a specific time. </p><p><b>Business day definitions.</b> Weekends and bank holidays typically don&#39;t count toward the funding timeline. </p><p><b>Your bank’s processing time.</b> Even after a lender releases funds, your bank may need an additional business day to make them available. That delay isn’t dependent on the lender. </p><p><b>Your application’s completeness.</b> A complete, accurate application can help avoid delays. Missing documents or information mismatches can trigger follow-up requests that can potentially extend the process.  </p><h2><b>The Happen Bank app</b> </h2><p>The Happen Bank app is rated 4.8 on the <a href="https://itunes.apple.com/us/app/ft-mobile/id532638447?mt=8">App Store</a> across more than 8,000 reviews and holds a 4.7-star rating on <a href="https://www.trustpilot.com/review/happen.com">Trustpilot</a> across more than 14,000 reviews (as of 19<sup>th</sup> August, 2026). Additionally, NerdWallet named Happen Bank its <a href="https://www.nerdwallet.com/personal-loans/best/debt-consolidation-loans">best personal loan for debt consolidation</a> in 2026. </p><p>Beyond the loan itself, the app includes DebtIQ—a tool that can help track your balances and monitor your credit.  </p><p><a href="https://apps.apple.com/us/app/happen-bank/id532638447">Download the Happen Bank</a> app to check your rate in seconds.<sup>1</sup></p><h2><b>Frequently asked questions</b> </h2><h3><b>What should I look for in a personal loan app?</b> </h3><p>Start with ratings—App Store, Google Play, and Trustpilot reviews reflect user experiences. Then look for an app that shows you your APR upfront, gives you real-time application status updates, and is specific about what &quot;fast funding&quot; actually means in practice. Tools beyond the loan, credit monitoring, debt tracking, and payment management, are a sign the app will be useful beyond the application. </p><h3><b>How fast can I get a personal loan through an app?</b> </h3><p>Once approved, the timeline depends on the lender, your bank&#39;s own processing time, and how complete your application is.  </p><h3><b>What should I look for to verify a personal loan app is legitimate?</b> </h3><p><a href="https://consumer.ftc.gov/articles/what-know-about-advance-fee-loans">Lenders must register in every state where they do business</a>: you can verify this with your state&#39;s attorney general or banking regulator. Legitimate lenders also <a href="https://www.experian.com/blogs/ask-experian/can-i-trust-online-personal-loan-lenders/">typically list</a> their state licenses on their website, often linked at the bottom of the page. App Store ratings and Trustpilot reviews from a substantial number of users are also useful signals of how the lender actually performs in practice. Avoid any lender that asks for an upfront fee before issuing a loan: this is a <a href="https://www.experian.com/blogs/ask-experian/signs-of-a-personal-loan-scam/">common sign of an advance-fee scam</a>, where the fee is collected and the loan never materializes. </p><p></p><h2><b>Related terms</b> </h2><p><a href="https://www.happen.com/glossary/a/annual-percentage-rate-apr">Annual Percentage Rate (APR)</a> </p><p><a href="https://www.happen.com/glossary/h/hard-credit-inquiry">Hard Credit Inquiry</a> </p><p></p><h2><b>Disclosures</b> </h2><ol><li><p>Between April 2026 and June 2026, 76% of Happen Bank Personal Loan offers were generated in under a minute from the beginning of the application process. </p></li></ol><p></p>

Personal Loan

Both a high-yield savings account (HYSA) and a certificate of deposit (CD) outperform a traditional savings account. 

<h2><b>Quick Answer</b></h2><p>Both a high-yield savings account (HYSA) and a certificate of deposit (CD) outperform a traditional savings account. For most savers, the biggest difference is access to your money. A HYSA lets you move money freely at a variable APY; a CD locks your funds for a fixed term in exchange for a guaranteed rate. If there&#39;s any chance you&#39;ll need the money within the term, the HYSA wins. CDs often offer only a modest APY advantage over HYSAs, though the gap varies with market conditions. If you have a defined timeline and genuine certainty about access, a CD offers rate certainty that a HYSA can&#39;t match.</p><h2><b>Key Takeaways</b></h2><ul><li><p>A HYSA earns a variable rate with no lock-in; a CD earns a fixed rate for a defined term with an early withdrawal penalty. Both outperform a traditional savings account.</p></li><li><p>An emergency fund should always be in a HYSA or equivalent liquid account – never a CD.</p></li><li><p>Early withdrawal penalties on CDs – typically 3–6 months of interest – can erase the rate advantage over a HYSA if you need the money before maturity.</p></li><li><p>The CD&#39;s rate premium over a HYSA is typically less than 0.5% in most rate environments; the liquidity trade-off is often not worth it unless you have genuine timeline certainty.</p></li><li><p>Splitting savings between a HYSA (for liquidity) and a CD or CD ladder (for rate certainty on longer-horizon funds) is a practical strategy for savers with both goals.</p></li></ul><p>Both products beat a traditional savings account. In many rate environments, their APYs are close enough that the rate difference isn&#39;t the deciding factor – the liquidity trade-off is. A HYSA earns a variable rate you can access anytime. A CD locks in a fixed rate for a set term, with a penalty if you withdraw early. Neither is universally better. Choosing the right account starts with understanding how soon you&#39;ll need your money. One is better for your situation, and the decision usually comes down to three questions.</p><h2><b>How a HYSA and a CD actually work</b></h2><p><b>High-yield savings account (HYSA):</b> A savings account that pays a significantly higher APY than a traditional savings account, with no fixed term. Funds can be deposited or withdrawn at any time. The APY is variable – it moves with prevailing interest rates, typically tracking the Federal Reserve&#39;s benchmark rate. For example, Happen Bank&#39;s LevelUp Savings account earns 4.00% APY when $250 or more is deposited per month, with no minimum balance requirement and no monthly fees.<sup>1</sup></p><p><b>Certificate of deposit (CD):</b> A savings product that pays a fixed APY for a defined term – commonly 3, 6, 12, or 24 months. The rate is locked in at opening and doesn&#39;t change, regardless of what happens to interest rates during the term. The trade-off: withdrawing funds before the term ends typically forfeits 3–6 months of interest, depending on the institution and term length. That&#39;s the <a href="https://www.lendingclub.com/resource-center/personal-savings/cd-early-withdrawal-penalty-what-you-need-to-know">early withdrawal penalty</a> – and it&#39;s worth understanding before you commit.</p><p>Here&#39;s the comparison at a glance:</p><table><tr><td><p></p></td><td><p><b>HYSA</b></p></td><td><p><b>CD</b></p></td></tr><tr><td><p><b>APY type</b></p></td><td><p>Variable</p></td><td><p>Fixed</p></td></tr><tr><td><p><b>Term</b></p></td><td><p>None</p></td><td><p>Defined (6 months–5 years)</p></td></tr><tr><td><p><b>Access</b></p></td><td><p>Anytime</p></td><td><p>Locked until maturity without penalty; early withdrawal available, but subject to penalty</p></td></tr><tr><td><p><b>Early withdrawal penalty</b></p></td><td><p>None</p></td><td><p>Typically 3–6 months of interest</p></td></tr><tr><td><p><b>Rate certainty</b></p></td><td><p>No</p></td><td><p>Yes</p></td></tr><tr><td><p><b>Best for</b></p></td><td><p>Flexible savings; emergency fund</p></td><td><p>Defined-timeline savings; rate-lock value</p></td></tr></table><h2><b>Three questions that determine which is right for you</b></h2><p><b>1. How soon will you need the money? </b></p><p>This is the most important question, and it has a clean answer. If there&#39;s any realistic chance you&#39;ll need the funds within the CD term – for an emergency, a planned purchase, a change in circumstances – a HYSA is the correct choice. Early withdrawal from a CD typically costs 3–6 months of interest, which in most rate environments erases the rate advantage over a HYSA entirely.</p><p>If the timeline is genuinely defined – you know you won&#39;t need the money for 12–24 months – a CD&#39;s rate lock is worth considering, particularly if you believe rates are headed lower.</p><p><b>2. How will interest rates affect you?</b></p><p>A HYSA&#39;s variable APY moves with the Fed funds rate. When rates rise, your HYSA earns more. When they fall, it earns less. A CD locks in today&#39;s rate for the full term, regardless of what happens next. This is the genuinely speculative element of the comparison. Future interest rate movements are uncertain. A practical rule of thumb is that if you expect rates to fall during your savings window, a CD offers certainty that a HYSA can&#39;t. If you&#39;re uncertain or you expect rates to hold or rise, the HYSA&#39;s flexibility wins without meaningful cost.</p><p><b>3. How easily do you need to access your funds?</b></p><p>It is generally recommended to keep emergency savings in a liquid account such as a HYSA rather than a CD. A house down payment you&#39;re saving toward a defined closing date 18 months out is a legitimate CD candidate. The rule is simple: if there&#39;s a meaningful chance you&#39;ll need the money before the term ends, the CD&#39;s rate premium isn&#39;t worth the liquidity cost.</p><h2><b>HYSA vs CD – how the numbers compare</b></h2><p>Here are two scenarios using the same starting balance:</p><p><b>Scenario A: $10,000 for 12 months , funds not needed until maturity</b></p><p>HYSA at 4.00% APY: ~$400 earned (variable; this example assumes that the rate holds and the balance remains untouched)<sup>3</sup></p><p>12-month CD at 4.50% APY: ~$450 earned (fixed; no access without penalty)</p><p>Difference: $50 in the CD&#39;s favor</p><p>The CD wins by $50 – but only if the rate stays below 4.50% for the HYSA and the full balance remains untouched until maturity. Either condition changing closes that gap.<sup>3</sup></p><p><b>Scenario B: $10,000 for 12 months, access needed at month 8</b></p><p>HYSA at 4.00% APY: ~$267 earned (8 months, proportional, no penalty, assuming the rate holds and the balance is untouched)<sup>3</sup></p><p>12-month CD at 4.50% APY, early withdrawal at month 8: ~$338 earned, minus 3-month early withdrawal penalty (~$113) = ~$225 net</p><p>Difference: $42 in the HYSA&#39;s favor – despite the lower headline rate. This example illustrates why liquidity can outweigh a slightly higher advertised APY. <sup>3</sup></p><p>The takeaway is that the CD&#39;s rate advantage is real but narrow, and penalties erase it quickly the moment circumstances change. For most savers, a HYSA is the lower-risk default; a CD is the better call only with genuine timeline certainty.</p><p>If you expect to need access to your funds within the year, or you&#39;re not comfortable locking money away for that long, Happen Bank CDs are also available from 6 months. A shorter term means a lower rate lock-in period and less exposure to early withdrawal penalties if circumstances change. </p><h2><b>Which should you open?</b></h2><p><b>Open a HYSA if:</b> you&#39;re building or maintaining an emergency fund, your savings timeline is uncertain or shorter than the shortest CD term you&#39;re comfortable committing to, you plan to make regular deposits or withdrawals, or you simply want the flexibility to access your money without a penalty. </p><p><b>Open a CD if:</b> you have a lump sum you genuinely won&#39;t need until a defined future date, you want the certainty of a locked rate in a potentially falling-rate environment, and you&#39;re comfortable with your funds being inaccessible for the term. CD terms at Happen Bank start at 6 months: you don&#39;t need a long horizon to benefit from rate certainty. </p><p><b>Consider both if:</b> you have enough saved to separate your money by purpose. Keep 3–6 months of living expenses in a HYSA for liquidity. Place surplus savings with a defined timeline – even as short as 6 months – in a CD or a CD ladder (multiple CDs at staggered maturities) that returns portions of your money at regular intervals while keeping some funds in a locked, higher-rate instrument. </p><h2><b>Ready to put your savings to work?</b></h2><p>The best savings account is the one that matches your actual timeline and access needs – not the one with the highest headline rate. If flexibility matters, a high-yield savings account earns a competitive return without any commitment. If you have a defined timeline and want rate certainty, a CD delivers that.</p><p>If you&#39;re looking for flexibility alongside a competitive yield, Happen Bank&#39;s <a href="https://happen.com/personal-banking/savings/high-yield-savings">LevelUp Savings</a> is one option to compare against current CD offerings. LevelUp Savings earns 4.00% APY when $250 or more is deposited per month – no minimum balance, no monthly fees, and no lock-in period. Funds are accessible anytime.<sup>1</sup></p><p>If you have a defined timeline and want rate certainty, Happen Bank&#39;s <a href="https://www.lendingclub.com/personal-banking/savings/certificate-of-deposit">certificates of deposit</a> offer terms from 6 months to 5 years with a $500 minimum opening deposit. <sup>2</sup></p><h2><b>Frequently Asked Questions</b></h2><h3><b>Is a CD better than a high-yield savings account?</b></h3><p>It depends on when you need the money. A CD earns a fixed rate and can offer rate certainty in a falling-rate environment, but accessing funds early typically forfeits 3–6 months of interest, which erases the rate advantage in most scenarios. For savers with a genuinely defined, long-horizon timeline, a CD can come out ahead. For most savers – particularly those building an emergency fund or with uncertain timelines – a HYSA&#39;s flexibility wins without meaningful cost.</p><h3><b>What happens if I withdraw from a CD early?</b></h3><p>Early withdrawal typically forfeits a portion of the interest you&#39;ve earned – usually 3–6 months&#39; worth, depending on the CD term and the institution. On a 12-month CD, a 3-month penalty at withdrawal month 8 means you keep only 5 months of interest rather than 8.</p><h3><b>Can I have both a HYSA and a CD?</b></h3><p>Yes, and for many savers with enough saved to separate by purpose, having both makes sense. Keep your emergency fund and near-term savings in a HYSA where they&#39;re accessible anytime. Place surplus savings with a genuine long-term horizon – a house down payment two years out, for example – in a CD or a CD ladder for rate certainty. The two products serve different functions and work well together.</p><h3><b>Does Happen Bank offer CDs?</b></h3><p>Yes. Happen Bank offers <a href="https://www.lendingclub.com/personal-banking/savings/certificate-of-deposit">certificates of deposit</a> with a minimum opening deposit of $500. Both deposit products are FDIC-insured up to $250,000 per depositor per ownership category. <sup>2, 4</sup></p>

What does it take to achieve financial independence early in life? The end goal for many FIRE followers is early retirement—but it’s not the only goal.

<p>What does it take to achieve financial independence early in life? The end goal for many FIRE followers is early retirement—but it’s not the only goal. If you’d like to spend less, save more, and build creative, new options for yourself by becoming more financially independent, the FIRE movement and its philosophy may be what you’re looking for. </p><h2><b>What is the FIRE movement</b>​<b> &amp; how does it work</b>​? </h2><p>The Financial Independence Retire Early (FIRE) movement is a financial planning philosophy and lifestyle that encourages followers to drastically cut expenses and spend less, save aggressively, minimize or eliminate all debt, and invest wisely to achieve financial independence—and possibly retire well before your late 60s or early 70s. </br></br>Inspired by the 1992 book <i>Your Money or Your Life</i><i><b> </b></i>by Vicki Robin and Joe Dominguez, the FIRE movement invites and challenges you to consider accumulating wealth by being satisfied with less. While going full FIRE may not be something everyone will want or be able to strive for, FIRE tools can help you set some ambitious financial goals and provide a mindset for achieving them.</p><h3>How does it work?</h3><p>The FIRE movement encourages saving money and adjusting your lifestyle dramatically to reach financial independence as quickly as possible. It starts with your FIRE number, the amount of money you need to retire or to attain your vision of financial independence. Two formulas can help you calculate your FIRE number:</p><h3>The rule of 25</h3><p>The FIRE rule of 25 says you’ll need to save roughly 25 times your annual expenses to have enough of a nest egg to draw out expenses indefinitely without running out of money. If you need $60,000 per year to live, your FIRE number is $60,000 x 25 = $1.5 million.</p><h3>The 4% rule</h3><p>The FIRE 4% rule refers to the amount experts say you can withdraw from your retirement savings each year without running out of money over a 30-year retirement. There’s some debate about whether the 4% rule is the right rule of thumb for an early retirement that might go well beyond 30 years. The rule is also based on historical market data, which might not be matched in the decades to come. Some experts suggest using 3.3% as a guideline instead. Still, for estimating purposes, 4% gives you a quick calculation of what your savings might yield in retirement income. Say you already have $750,000 in retirement savings. Based on the 4% rule, you can withdraw $30,000 per year, adjusting each year for inflation, without worrying too much about depleting your savings.</p><h2>Key elements of the FIRE lifestyle</h2><p>How do you get to $1.5 million in retirement savings quickly? FIRE followers design their lifestyles around their financial goals aligned around a few key pillars:</p><h3>Be frugal. </h3><p>Many forgo expensive homes, cars, and other worldly goods in favor of saving 30% to 70% of their incomes. Getting there may require extreme measures. For example, FIRE followers may choose to live with family to save on rent, explore van life or tiny homes, or work remotely from a location with a lower cost of living.</p><h3>Work hard. </h3><p>To maximize income, FIRE followers may hold down multiple jobs or freelance in their spare time. </p><h3>Avoid debt.<b> </b></h3><p>Carrying high-interest credit card debt or lingering student loan debt cuts into your ability to save. FIRE followers aim to pay down existing debt as quickly as possible and avoid taking on future debt.</p><h3>Save aggressively.</h3><p> In addition to putting aside a high percentage of their incomes, this group maximizes their tax advantages and returns by using a combination of savings accounts, traditional and Roth retirement accounts, and investments.</p><h2>Does ​the FIRE philosophy work for everyone?</h2><p>Some FIRE tactics, like saving as much as possible or cutting back on spending, work for just about anyone. However, the goal of saving 25 times your annual expenses by the time you’re 35 or 40 and retiring early on 3% to 4% of your savings may not be the right approach for everyone—especially people with lower incomes or people who live and work in major metropolitan areas where the cost of living is high. If your income barely covers your basic expenses, this plan may not be doable for you. </p><p>The FIRE lifestyle isn’t always sustainable. Missing out on vacations, swapping weekend time with the family for a second job, and denying yourself simple luxuries like owning a car ultimately may feel limiting to some. Setting ambitious FIRE goals may be more realistic if your income is high and your responsibilities are few. Throw a couple of kids and a mortgage into the mix, however, and early retirement can start to feel a lot more challenging.</p><p>Still, retiring at age 35 isn’t the only goal. Financial independence might mean saving enough money early in your career to give yourself better options in midlife. For example, you may want to take a sabbatical, start a new midlife career, downshift to part-time work or consulting, or simply worry less about meeting your day-to-day living expenses. For some, retiring early might mean exiting the workforce comfortably at 60, having paved the way with good financial habits over your adult lifetime.</p><p>FIRE can’t account for all of life’s unpredictability, especially if you’re young and the path forward is long. If the markets don’t perform as well in the next 25-30 years as they have in the past, you may have to save more, withdraw less, or continue working to make up the difference. You may have surprise medical expenses that consume a large chunk of your savings. (You may also inherit money or invent a million-dollar product.) FIRE can’t remove uncertainty, but it can help you to be resilient: Learning to budget, developing a savings habit, avoiding debt, getting serious about investing—these skills can help you navigate the changes life throws at you, pre-and post-retirement.</p><p>The FIRE movement isn’t everyone’s cup of tea, but many in the movement feel empowered by taking control of their finances and working toward their goals. FIRE followers encourage each other to stick to their plans and continually improve their financial standing, which is useful counterprogramming in a consumerist culture.</p><h2><b>Is there a right way to achieve financial independence and retire early</b>?</h2><p>Achieving financial independence and retiring early means different things to different people. When thinking about your financial goals, FIRE encourages you to consider different versions of financial independence and early retirement. These may become your ultimate goals or may provide milestones to measure your success along the way. Here are a few ways some choose to interpret the FIRE movement:</p><h3>Barista FIRE </h3><p>Barista FIRE means saving enough money to exit the rat race and work in a less demanding job. Barista FIRE requires less money than traditional FIRE by lowering the amount you would need to withdraw from your savings. For instance, if you needed $4,000 to cover your monthly expenses and could earn $1,500 working part-time, your Barista FIRE number would be 25 x $30,000* = $750,000. This is much less than the $1.2 million if you had to plan to withdraw a full $4,000 per month with the traditional FIRE. </p><p>Attaining Barista FIRE can be an important psychological marker. Even if you don’t choose to work part-time when you reach Barista FIRE, it may be reassuring to know that you have the financial freedom to do so.</p><p>*$4,000 - $1,500 = $2,500 x 12 months = $30,000</p><h3>Lean FIRE<b> </b></h3><p>Lean FIRE is the least amount of savings you would need to retire without working. Lean FIRE envisions a scaled-down version of retirement where you live minimally on $40,000 a year or less. If you were able to whittle your expenses down to $3,000 per month, your Lean FIRE number would be $900,000. Here, years of living frugally and avoiding debt may act as a training ground for a low-expense retirement—if it doesn’t burn you out. </br></br>In any case, reaching Lean FIRE means you’ve crossed an important line: Retirement is now possible for you. </p><h3>Fat FIRE<b> </b></h3><p>Fat FIRE is for those who want to live on $100,000 a year (or more) in retirement. Fat FIRE followers plan to travel and enjoy life, and don’t want to worry about paying for medical expenses or elder care down the road. It provides for a less stressful retirement by giving you a bit more wiggle room in your budget. With Fat FIRE, reaching an annual income of $100,000 in retirement would of course require $2.5 million in retirement savings. </p><h2><b>How do social security benefits play into FIRE?</b> </h2><p>In any of these scenarios, the impact on whether and how much you will receive in Social Security benefits should be considered. </p><p>Essentially, early retirement will very likely decrease your Social Security benefit because you’ll be missing out on your prime earning years. The reason for this is because Social Security benefits are accrued over your working life and calculated by taking your highest 35 earning years and averaging them out to a monthly earning. If you’re not earning (or earning much less) during your prime earning years, it can have a significant impact on the Social Security benefits you’ll receive in retirement.</br></br>Depending on how much you do receive in Social Security benefits, it can help reduce the amount of money you’ll need in retirement (and the target expense figure you use to calculate your FIRE number). But depending on how early you hope to retire, you’ll also need to account for extra withdrawals during the years before your Social Security benefits begin. Your FIRE number is useful for estimating a savings goal and giving you a target to aim for. </br></br>Before you embark on FIRE, and well before you’re ready to retire, you’ll want to double-check your math to make sure your living expenses will be covered for the duration.</p><h2><b>7 strategies to reach financial independence, retire early (FIRE) status</b> </h2><p>The FIRE movement provides several strategies to help you quantify your goals and break them down into actionable steps. Your FIRE number and the goals that go with it are entirely up to you. Whether you go all-in or use FIRE strategies to attain smaller financial goals, these seven FIRE-inspired strategies may help:</p><h3>1. Embrace a vision. </h3><p>When your entire financial focus is on paying monthly bills, it’s hard to work toward big-picture goals like being financially independent and retiring early. Having a vision for your future can help guide you and deserves your attention. It’s important to lift your head from the grindstone long enough to make room for lifelong goals while also managing the day to day.</p><h3>2. Get out of debt, stay out of debt. </h3><p>High-interest debt can drag down your finances and keep you from reaching your financial goals. Manage your revolving debt carefully. Where you can, pay down high-interest credit card balances or consider <a href="https://www.happen.com/personal-loan/debt-consolidation">using a debt consolidation loan</a> to lower your interest costs and help eliminate your consumer debt. <a href="https://www.happen.com/auto-refinancing">Refinancing a high-interest car loan</a> or student loan debt may save you money or speed up the repayment process. </p><h3>3. Maximize your income. </h3><p>If your income doesn’t leave much room for savings, look for ways to reduce expenses and earn more on the side. In the short term, you might find a side gig or source of passive income to supplement your paycheck, or proactively move up the pay scale at your current job. Longer term, consider a career that will earn more income or think about starting your own business if your current job doesn’t offer the growth potential you’ll need.</p><h3>4. Prioritize savings.<b> </b></h3><p>FIRE movement followers save 30% to 70% of their income to meet their financial goals. If saving this much feels unrealistic right now, how about a consistent 10% to 15%? FIRE followers also take savings seriously, seeking out <a href="https://www.happen.com/personal-savings/high-yield-savings">high-yield savings accounts</a> and <a href="https://www.happen.com/personal-savings/cd">using CD ladders</a> to earn the most interest to grow their hard-earned dollars.</p><h3>5.  Invest wisely. </h3><p>As you build wealth, investments play a critical role in getting to your FIRE number. Investing can also help you maintain your savings throughout your retirement years. Finding a good financial advisor can help, but don’t overlook the value of learning about investing yourself. The better you understand the fundamentals of investing, the more effective you can be at managing your money, whether you work with an investment pro or not.</p><h3>6. Live below your means.</h3><p> Our consumer culture encourages us to spend, spend, spend—on our homes, cars, kids, technology, fashion, dining out, travel, pets, fitness, on and on. But meeting your financial goals means channeling your money away from spending and toward debt reduction and savings. The difference is mathematical, but it’s also philosophical: Create a lifestyle that serves your financial goals.</p><h3><b>7. Get an early start. </b></h3><p>Embracing the FIRE movement early in your working career means getting a head start on long-term savings. The earlier your start puts more time on your side. Whether the goal is early retirement, financial independence, or simply putting yourself on a solid financial footing, now is the best time to start.</p><h2>The bottom line</h2><p>The FIRE movement brings the sometimes-distant goals of financial independence and retirement into focus. By putting numbers to big-picture financial objectives, FIRE makes long-term savings more concrete and measurable. And while there’s no way to make saving 25 times your annual expenses easy—or remove the risk of an entirely obligation-free retirement over multiple decades—FIRE offers real steps to get you there. </p><p>At the same time, FIRE provides a framework for thinking about money. By making conscious choices about saving and spending, by challenging yourself to consider how much money is enough (to live on or to retire on), you can use your money to do more than pay your bills or buy things. Even if you don’t become a dedicated FIRE follower, at the very least the philosophy of aiming for financial independence to retire early can help you be more intentional with what you do with your money. That alone is a step in the right direction.</p>

What happens when you take money out of a CD before the maturity date? Here's everything you need to know, including how CD early withdrawal penalties are calculated, how to avoid these fees, and when incurring them might be a good idea.

<p>If you need to withdraw your funds early (before the maturity date), it generally means paying a <a href="https://www.happen.com/personal-savings/cd">certificate of deposit (CD)</a> early withdrawal penalty fee to the bank or credit union. This is often based on the term and amount of interest earned, but can also be a set amount determined by your financial institution. </p><p>It’s important to understand what happens when you take money out of a CD before the maturity date, including how CD early withdrawal penalties are calculated, and how to avoid these charges. We also cover a few reasons why you might want to consider making an early withdrawal on a CD despite the penalty you would incur.  </p><h2>What is a CD early withdrawal penalty?</h2><p>A CD early withdrawal penalty is the fee charged by your bank or credit union when you withdraw funds from a certificate of deposit account before the term ends. Financial institutions charge a fee for withdrawing CD funds early because when you open a CD you are agreeing to hold a fixed amount of money (principal) in the account for a predetermined length of time (term) in return for an agreed-upon fixed interest rate and yield (APY). The end of the fixed term is known as the maturity date.</br></br>While a CD offers a low-risk way to earn a higher, fixed interest rate on your deposits, it also requires you to leave your money until the end of the term, which can range from a few months to several years. Often, CDs with longer maturity dates earn a higher interest rate (APY). If you wait until the CD maturity date, you can withdraw all or part of your original deposit plus earned interest without penalty.</p><p>Banks and credit unions charge a CD early withdrawal penalty fee to comply with reserve requirements on time deposit accounts such as CDs. The amount of the CD early withdrawal penalty can vary based on the financial institution, CD terms, interest rate, and market conditions. If the penalty is more than your earned interest, you stand to lose some of your principal. </p><p>It’s important to review your account agreement for CD early withdrawal policies specific to your bank and your account.</p><h2>What types of penalties might you have to pay if you withdraw early?</h2><p>Before investing in a CD, it’s important to carefully review your account agreement and disclosures to understand how the early withdrawal penalty is calculated. Penalties vary by financial institution, and even between CDs offered by the same bank. Here are a few ways an early withdrawal penalty could be assessed.</p><h3>Monetary penalty</h3><p>You might be charged a percentage of interest based on the original principal or the amount withdrawn. This percentage-based fee may be calculated based on a set number of days, weeks, or months.  </p><p>For instance, depending on your financial institution, you could be charged the equivalent of three months’ interest for an early withdrawal from a CD that matures in six months or less. If you have five year CD, you might pay a penalty of 12 months’ interest or more. Or, your bank could charge a specific dollar amount such as the full amount of interest you’ve earned as of the date of the withdrawal.  </p><p>Typically, CDs with longer maturity dates have higher early withdrawal penalties. </p><h3>Loss of bonus</h3><p>On CDs offering a cash bonus, you could lose any cash bonus you earned when you opened or reinvested in the CD as penalty for early withdrawal. </p><h2>How does your financial institution calculate early CD withdrawal penalties? </h2><p>If you’re thinking about making an early withdrawal, knowing how your financial institution will calculate a CD early withdrawal penalty charge can help you make an informed decision. Here are some of the ways they can be calculated:</p><p><b>A. </b>Some financial institutions charge for a certain number of days’ worth of interest calculated on the original CD deposit amount as a penalty for early withdrawals.  </p><blockquote><p>Penalty = Interest Rate ÷ 365 (or 366 in a leap year) × Penalty Days × Original Principal Balance</p></blockquote><p>For example, let’s say your bank charges an early withdrawal fee of 60 days of interest on a 24-month CD with an APY of 4.50% and you’ve deposited $10,000. Here’s how the penalty would be calculated:</p><blockquote><p>Penalty = .045 ÷ 365 x 60 x $10,000</br>Penalty = $73.97</p></blockquote><p><b>B. </b>Some financial institutions calculate the penalty based on the amount of deposit being withdrawn from the account.</p><blockquote><p>Penalty = Interest Rate ÷ 365 (or 366 in a leap year) × Penalty Days × Amount Withdrawn</p></blockquote><p>Let’s say you withdraw $2,000 from the CD described in A above and the penalty is 60 days’ interest on the amount withdrawn. Here’s how the penalty would be calculated:</p><p><b>C.</b> And if your penalty is calculated in months, instead of days, here’s how that would be calculated:</p><blockquote><p>Penalty = Interest Rate ÷ 12 × Penalty Months × Original Principal Amount (or Amount Withdrawn)</p></blockquote><p>Using our example of a 24-month CD with an APY of 4.50% and a $10,000 initial deposit. If the early withdrawal penalty is 3 months’ interest on the original principal, here’s how the penalty would be calculated:</p><blockquote><p>Penalty = .045 ÷ 12 x 3 x $10,000</br>Penalty = $112.50</p></blockquote><h2>When could an early withdrawal be a good idea?</h2><p>While an early withdrawal from a CD account generally results in a penalty fee, there are some circumstances where it may be your better, or only, option. Here are a few situations where you might want, or need, to consider making an early withdrawal on a CD account:</p><ul><li><p><b>You need to cover a large emergency expense.</b> If you were to put an unexpected medical bill on a higher-interest revolving credit card balance, your interest expense on the card could potentially be more costly than incurring the CD early withdrawal penalty and using some or all the funds to help you pay off the medical bill. </p></li><li><p><b>You find a better investment that could earn more yield.</b> If rates have risen sharply since you made your CD deposit and you think taking advantage of a new, different opportunity could outweigh the early withdrawal penalty you would incur by accessing your CD money before maturity, it might be worth considering taking.</p></li><li><p><b>You need extra money to cover a down payment.</b> If putting the money in your CD toward a down payment on a new home could reduce the size of your loan and save you money on the cost of financing, making the early withdrawal might be worth it.</p></li><li><p><b>You forgot to close your CD account before the maturity date</b> and you don’t want to leave your money invested for another term.</p></li><li><p><b>Your accounts or property are garnished.</b> In certain cases, such as when a garnishment or levy has been issued against your income or assets, early withdrawal from your CD may be your only option if you don’t otherwise have the money to satisfy the debt owed.</p></li></ul><h2>How to avoid CD early withdrawal penalties</h2><p>Giving yourself more flexibility in your CD selection can help you avoid paying early withdrawal penalties, sometimes even if you need to access your money before the CD matures.</p><h3><b>Know when an early withdrawal penalty applies</b>. </h3><p>Carefully read your CD account agreement for information to learn what could trigger an early withdrawal penalty or fee. Even if the bank doesn’t use the word “penalty,” it must explain under what conditions you stand to lose your principal or interest earned if you withdraw your funds before the CD maturity date.</p><h3><b>Know your maturity date</b>. </h3><p>Generally, most banks and credit unions set up CDs so that they automatically renew, or rollover, at the end of the term unless you specifically tell them not to. If you have a CD that automatically rolls over and you forget to withdraw funds in time, the new CD will typically have the same term as the matured CD, however, the interest rate and yield could be lower. When a CD matures and automatically renews into a new CD, typically there is a grace period (between 5 and 15 days) during which time you withdraw your funds and close the CD without an early withdrawal penalty. </p><h3><b>Choose a no-penalty CD</b>. </h3><p>Unlike a traditional CD, a no-penalty CD offers you the flexibility to withdraw your money (including interest earned) starting seven days after you make your initial deposit without paying an early withdrawal penalty. However, typically you can only make an early withdrawal of the full balance, not a partial balance. Also keep in mind, generally, no-penalty CDs offer lower APYs and shorter terms (usually one year). </p><h3><b>Build a CD ladder strategy</b>. </h3><p>A CD ladder strategy involves splitting up your deposit into CDs with different maturity dates, allowing you to take advantage of higher long-term rates without locking up all your funds for longer than you would like. Having multiple CDs with carefully staggered maturity dates enables you make sure your never more than a few months away from being able to access your money without risk of early withdrawal penalty.</p><h3><b>Request a waiver</b>. </h3><p>Some banks may waive early withdrawal penalties in certain situations, such as: </p><ul><li><p>Depositor is declared legally incompetent, becomes disabled, or dies</p></li><li><p>CD is retitled to a new owner without a change in term or interest rate (APY) </p></li><li><p>Withdrawal is required by court order</p></li><li><p>Widespread economic or market crises</p></li></ul><h2>The bottom line</h2><p>Certificates of deposit have the potential to help you <a href="/resource-center/personal-savings/what-is-a-high-yield-cd-and-how-does-it-work">reach your savings goals faster</a> compared to regular savings accounts. However, if you need to access your money before the CD maturity date, you may incur an early withdrawal penalty which could mean giving up some of your interest earned or losing some of your principal balance. </p><p>Knowing when a CD early withdrawal penalty applies, staying on top of your maturity date, and choosing flexible CD options such as a CD ladder can all help you to maximize yields while maintaining a certain measure of “liquidity” and avoid a CD early withdrawal penalty should you need the money.</p>

Savings accounts are considered a low-risk and highly liquid place to hold cash—and typically provide a very low annual return. Recently, high-yield savings accounts are proving to be the exception.

<p>A high-yield savings account is a special type of savings account that offers a higher interest rate or annual percentage yield (APY) than a traditional savings account, helping your money grow faster. Here, we cover what is a high-yield savings account, how it works, as well as some of the benefits and drawbacks to consider.</p><h2>What is a high-yield savings account &amp; how do they work? </h2><h3>What it is:</h3><p>A <a href="https://www.happen.com/personal-savings/high-yield-savings">high-yield savings account</a> is a special type of savings account that offers a higher APY than a traditional savings account—potentially paying up to 20 to 25 times the national average of a regular savings account.</p><p>It used to be that most people would hold their savings and checking accounts at the same bank, making it easy to quickly transfer between the two. However, with rising interest rates and the blossoming of online-only banks, as well as traditional brick-and-mortar banks that support online account opening, competition for depositors has skyrocketed, creating a new category of “high-yield” savings accounts.   </p><h3>How they work:</h3><p>Generally, high-yield savings accounts work like regular savings accounts, except they can also offer a relatively higher interest rate. As with a regular savings account, the APY on a high interest savings account is variable and fluctuates, up or down, depending on market conditions. This means the rate promoted today may not be the same rate offered tomorrow, just as the rate you obtain upon opening your account is also subject to change as you own the account.</p><p>One factor affecting APY is how frequently interest compounds. Interest compounding occurs when interest accrues both on your principal balance and on your previously accumulated interest. Depending on the type of savings account you choose, interest on a high-yield account may be compounded daily, monthly, quarterly or annually.</p><p>Below are other features of high-interest savings accounts:</p><ul><li><p><b>Availability: </b>High-yield savings accounts are offered by some brick-and-mortar banks and credit unions but are most commonly available at online-only banks</p></li><li><p><b>Fees: </b>High-interest savings accounts may or may not have monthly maintenance fees like other bank accounts. In some cases, the fee may be waived if you maintain a certain account balance or meet certain conditions, such as signing up for electronic statements.</p></li><li><p><b>Opening deposit requirements: </b>It’s possible to open a high-yield savings account with $0 at some online banks, however, some financial institutions may require an initial deposit of $100 or more.</p></li><li><p><b>Minimum balance requirements: </b>Generally, you can find online high-yield savings accounts that don’t require you to maintain a certain balance. However, some financial institutions gear their high-yield savings products toward customers who can maintain very high balances, like $50,000 or more. Interest rates on these types of high-yield savings accounts may be offered on balance tiers, with higher balances earning incrementally higher APYs.</p></li><li><p><b>Protections: </b>High-yield savings accounts at banks backed by the Federal Deposit Insurance Corporation (FDIC) and credit unions insured by the National Credit Union Administration (NCUA) guarantee your deposits up to $250,000 per account owner, per account type. This means if the bank or credit union closes its doors because it can’t meet its financial obligations, you could get up to $250,000 of your money returned for each account ownership type.</p></li></ul><h3>Benefits of a high-yield savings account</h3><p>Here are some of the advantages of opening a high-interest savings account:</p><h4>1. Earn more on your savings.</h4><p>Earning a higher-than-average APY means your money works harder for you. For example, let’s say you put $10,000 in a traditional savings account earning a 0.30% interest rate compounded daily. After 12 months, your savings would have earned $30.04 in interest.</p><p>Now let’s say you found a high-yield savings account offering a much higher 3.5% interest rate compounded daily. If you made no other deposits, that $10,000 could grow by $356.18 after 12 months. This amount of money could be enough to cover a few bills or a couple of trips to the grocery store.</p><h4>2. Open your account easily, online.</h4><p>Generally, high-yield savings accounts can be opened online in just a few minutes, and you can connect an external account for easy money transfers. When opening an account, financial institutions typically ask for basic information like your name, address, Social Security number or tax identification number.</p><h4>3. Access your money quickly.</h4><p>Saving in a high-yield savings account compared to a brokerage (investment) account means you can access your money quickly. Maybe your tire goes flat on your car, and you need $500 fast to make for the repair. While there may be limitations on the number or amount of withdrawals you can make per month, you can reasonably expect to be able to quickly access your money by transferring cash from your savings into a connected checking account to make the withdrawal.</p><h2>Disadvantages of high-yield savings accounts</h2><p>Here are a few of the minor drawbacks of a high-interest savings account.</p><h3>Availability is limited.</h3><p>High-yield savings accounts aren’t offered by all traditional banks. So, if your current brick-and-mortar bank or credit union doesn’t have this type of account, you’d have to go through the process of opening an account and transferring funds to a new financial institution. Also, many high-yield options are often online-only accounts without in-person customer service. If you prefer banking face-to-face with a teller, online-only banking might not be right for you.</p><h3>Accounts may have minimum balance requirements.</h3><p>High-yield savings accounts may require that you maintain a certain balance to avoid fees or to earn the highest APY. If the account charges fees, that cost can eat into the interest you earn from the account.</p><h3>APYs are variable.</h3><p>APYs on savings accounts are variable, not fixed, so the return you’ll see over a year isn’t guaranteed.</p><p>In a climate where savings rates are projected to increase, this can actually benefit you because your rate will rise as market rates rise.</p><p>However, in an environment where rates are projected to fall, APYs on savings accounts can also trend downward. In this scenario, <a href="https://www.happen.com/personal-savings/cd">certificates of deposit (CDs)</a> are a way to lock in a high yield. CD accounts put your money into an account for a preset term during which you receive a fixed amount of interest.</p><h2>How do high-yield savings accounts compare to regular savings accounts?</h2><p>Traditional savings accounts and high-yield savings accounts are generally similar aside from the APY offered. However, one other differentiator is high-yield savings accounts may be online-only accounts where you don’t have access to branches for in-person customer service.</p><p>Larger brick-and-mortar banks with locations nationwide that do offer high-yield savings accounts may require a higher balance to earn a higher APY.</p><h2>What to look for in a high-interest savings account</h2><p>When shopping for a new savings account, the first factor to consider is APY followed by the monthly maintenance fee or any other fees that may be charged. </p><p>Next, compare opening deposit requirements across different accounts at different financial institutions to see what meets your needs. </p><p>Then, review account features (such as its smartphone app, budgeting, or automated savings tools) to see if the account has the financial tools you’re looking for. </p><p>Finally, check customer reviews to determine what other customers have to say.</p><h2>The bottom line</h2><p>Comparing <a href="https://www.happen.com/personal-savings/high-yield-savings">high-yield savings accounts</a> is the best way to find one with fees and balance requirements that meet your needs. And keep in mind that high-yield savings accounts are just one of several places you can hold your savings. For money you don’t need access to right away, Certificates of Deposit accounts may provide a higher interest rate when you lock into a term.</p><p>Depending on when you need the money, it’s prudent to have a mix of investments for different savings goals. Savings for everyday expenses and “rainy day” emergencies are better off left in liquid savings accounts, such as high-yield savings accounts, while money you won’t need to tap into for years or decades could be considered for other types of accounts.</p>

Personal Savings

Chances are, you’re managing money differently today than you were a few years ago. If your shopping, spending, and money management have moved online and onto your phone, you might want to consider whether an online-only bank is a fit for you.

<p>Chances are, you’re managing money differently today than you were a few years ago. If your shopping, spending, and money management have moved online and onto your phone, you might want to consider whether an online-only bank is a fit for you. At a traditional bank, fees and interest charges support retail branches and other services you may no longer want or need. </p><p>Online banks don’t have retail locations. Instead, they hone in on providing online loans and deposit accounts with great rates, low fees, and digital features that make managing money easier now.</p><p>Would an online bank work for you? Read on to learn more about the benefits of online banking.</p><h2>How managing money went digital</h2><p>Managing money online is now a primary way to transact. How many of these digital money moves do you recognize?</p><ul><li><p>Using your phone to deposit checks</p></li><li><p>Shopping and paying bills online</p></li><li><p>Using an app to pay or reimburse friends and family</p></li><li><p>Opening a bank, investment, or cryptocurrency account online</p></li><li><p>Paying a contractor through a payment app</p></li><li><p>Using a digital wallet</p></li><li><p>Adding multi-factor authentication (single-use passcodes) to your accounts for security</p></li><li><p>Monitoring your credit online</p></li></ul><p>You may check your real-time account balance before making a big purchase. You receive text alerts that remind you to pay bills. You use an app to pay a babysitter or split a check.</p><p>Now that your relationship with money has gone mostly digital, how well does your bank support that relationship? If you’re not sure how to answer, you might want to look into an online bank.</p><h2>What is online banking?</h2><p>Online banking is what you do whenever you use a bank’s website or mobile app, but it also refers to a type of bank that focuses on digital banking. These banks don’t rely on retail locations to serve their customers (or members).     </p><h2>How does online banking work? </h2><p>Just about everything happens online or by <a href="/mobile-app">mobile app</a>. You can:</p><ul><li><p><b>Use a banking website </b>to open and access your accounts;</p></li><li><p><b>Download an app </b>to get an instant read on transactions, transfer money between accounts, or send money to friends and family;</p></li><li><p><b>Pay bills </b>and receive security alerts on your phone; and</p></li><li><p><b>Use any ATM </b>to access cash (you may receive a refund for out-of-network fees).</p></li></ul><p>Online banking isn’t new: People have been using their bank’s websites to view accounts since the 1990s and mobile banking apps have been around for more than a decade. Online banks are taking digital banking to a new level by changing the economics of financial services.</p><p>Branch locations cost money to operate along with other trappings of traditional banking, like paper statements and paper checks. By focusing on the key digital banking features consumers want, and ditching legacy features that drive up overhead, online banks can provide a great digital experience while keeping costs low.</p><p>These savings translate to competitive rates on loans and savings, or <a href="/personal-checking/rewards-checking">rewards checking accounts</a> without maintenance fees—to name a few. You won’t get a nicely decorated branch to visit, but you will get the convenience of a bank that never requires you to visit a branch. And with less overhead, you may pay less and receive more on the loans, checking, and savings accounts you want.</p><h2>Traditional banks vs. Credit unions vs. Online banks</h2><p>When you shop for a bank online, you’ll find a wealth of options. Not every bank you find online is an online bank. Some, like credit unions, aren’t banks at all. Here’s a quick rundown on three common types of financial institutions:</p><h3>Traditional banks</h3><p>Traditional banks deliver a familiar mix of checking, savings, credit, and loans. Expect to find a network of national or regional retail branch locations, branded ATMs, online banking, mobile apps, and telephone-based customer service. Although banks can range from small community banks to nationwide megabanks, banks on the whole are full-service operations - a good place to look when you need a cashier’s check or safe deposit box. They’re also for-profit companies with profit margins to manage and shareholders to answer to.</p><h3>Credit unions</h3><p>Credit unions offer many of the same products and services as banks, but with a member-based business model that is not-for-profit. Rates and fees are typically competitive, and personalized service is a hallmark. Credit union membership is often based on where you live or work. </p><p>You can go to <a href="https://www.mycreditunion.gov/about-credit-unions/find-join-start">mycreditunion.gov</a> to find credit unions you are eligible to join. Expect a range when it comes to digital experience: Some credit unions are tech-forward while others are a few steps behind.</p><h3>Online banks</h3><p>Online banks center on digital experience instead of maintaining branch locations or their own network of ATMs. Online banks typically offer lower rates and fees on loans and higher interest on checking and savings and have strong mobile apps and customer service features. </p><p>As an example, <a href="/personal-checking/rewards-checking">Rewards Checking</a> at Happen Bank, formerly LendingClub, pays cash back rewards on Qualified Purchases using a debit card tied to Eligible Accounts, no maintenance fees, and no minimum balance requirements (aside from $25 to open the account).<sup>1</sup> Like traditional banks, online banks are regulated, for-profit companies with profit margins and shareholders to manage.</p><h2>Pros and cons of banking online</h2><p>If you’re comfortable managing your money digitally, an online bank may give you a better deal on basics like checking, savings, and loans. Because online banks are built to function virtually, they’re invested in offering technology that works. Of course, you should check out any bank you’re considering individually, to make sure they have the accounts, features, and competitive rates you want.</p><h3>Do you need a branch?</h3><p>Some people prefer banking face-to-face. You might use in-branch services frequently - for example, if you own a small business and make regular large cash deposits. Maybe you’ve developed personal relationships with the people at your bank branch, and that gives you a sense of security and belonging.</p><p>On the other hand, maybe you haven’t seen the inside of a bank branch in years. Maybe you only go grudgingly, when you can’t accomplish what you need online or at an ATM. Maybe your branch is now populated with automated tellers that handle tasks efficiently but can’t deliver a personal touch. Only you know whether you really need a branch to manage your money comfortably and effectively.</p><h3>Is an online bank safe?</h3><p><a href="/">Online banks</a> that are insured by the Federal Deposit Insurance Corporation (FDIC) offer the same protections as traditional banks. The FDIC insures up to $250,000 per depositor, per bank, for each ownership category including single accounts, joint accounts, trust accounts, and so on. Credit unions have similar insurance through the National Credit Union Association (NCUA).</p><p>Wherever you bank, online security is a serious concern. Card-not-present (online) fraud is rising; security features that protect your account data and identity are a must. Look for security tools like single-use passcodes and biometric (face ID or fingerprint) identification that works with your phone. Online banks are constantly improving security technology to stay ahead of fraud. Avoid public Wi-Fi when you’re banking or shopping. Seek out and use your bank’s security features to keep your data as safe as possible.</p><h2>9 features you may find at an online bank</h2><p>One of the best reasons to consider an online bank is their range of convenient, money-saving products and features. Here are nine useful items you might find at an online bank:</p><ol><li><p><a href="/personal-checking/rewards-checking">Fee-free rewards checking with no minimum balance requirement</a></p></li><li><p><a href="/personal-savings/high-yield-savings">High-yield savings accounts</a> and CDs that pay top interest rates</p></li><li><p>A <a href="/mobile-app">mobile banking app</a> that covers all your basic banking</p></li><li><p>Nationwide <a href="https://www.happen.com/help/checking-accounts-faq/how-do-i-earn-atm-rebates">ATM access with rebates</a> on out-of-network fees</p></li><li><p>Faster direct deposits that let you access your paycheck sooner</p></li><li><p><a href="/personal-loan">Loans with competitive rates</a> and fast online application, approval, and funding</p></li><li><p>24/7 customer service by chat or phone</p></li><li><p>Security features like multi-factor authentication and alerts that keep you connected to your accounts in real time</p></li><li><p>FDIC insurance (Member FDIC)</p></li></ol><h2>The bottom line</h2><p>In a digital-first world, an online bank can provide you with the loans, checking, and savings you want, with lower costs and a higher upside. If you already manage your finances in the digital realm, choosing a bank that does everything online and by app might not require much adjustment. Choose the right banking partner (or partners), plug in, and enjoy the benefits of banking online.</p><p></p><hr/><p><i><b>Terms and Conditions</b></i></p><p><b>1. Rewards Checking Cash Back Rewards: </b>The Debit Card Rewards Program (“Cash Back Rewards”) provides 1.00% cash-back on all Qualified Purchases using a debit card tied to Eligible Accounts. Eligible Accounts are: Rewards Checking accounts that meet the following requirements for the calendar month in review: (1) Maintain an average monthly balance of at least $2,500.00; or (2) Receives at least $2,500.00 in Qualifying Direct Deposits.</p><p><b>Qualifying Direct Deposits </b><u>are defined as</u>: Recurring Automated Clearing House (ACH) credits, including payroll, pension or government payments (such as Social Security) made by your employer, or an outside agency. We may require documentation to verify that credits are Qualifying Direct Deposits. Qualifying Direct Deposits <u>do not include </u>peer to peer payments or ACH transfers (funds transfers) from your external accounts.</br></br><b>Qualified Purchases </b><u>are defined as</u>: Signature-based purchases made using the debit card tied to an Eligible Account. These are “credit” purchases that can be made in stores and online. To make a signature-based purchase, select “credit” rather than debit at point-of-sale kiosks. The “credit” option is most often pre-selected when making purchases online using a debit card. Online subscription payments may not be considered signature-based purchases. The payment transaction type (signature-based or other) is ultimately decided by the merchant and is based on how the transaction is transmitted at the time of processing. Qualified Purchases <u>do not include</u>: (1) any goods or services purchased that are returned or otherwise credited to your Eligible Account; (2) unlawful purchases; or (3) purchases of currency, cash or cash equivalents (including, without limitation, currency from the U.S. Mint, Travelers Checks, gift cards, cryptocurrency, casino chips, peer to peer payments, prepaid debit cards, account openings, loan payments, or other cash equivalents). Any earned Cash Back Rewards will be credited to your account on or before the 10th calendar day of the next calendar month. The Eligible Account must be open and active at the time the Cash Back Reward is credited.</p><p></p>

Opening a bank account online is a convenient way to manage your money without setting foot in a local branch. Today, many online-only banks, traditional banks, and credit unions have easy online applications, so you can shop around and open an account from the comfort of your home. 

<p>Opening a bank account online is a convenient way to manage your money without setting foot in a local branch. Today, many online-only banks, traditional banks, and credit unions have easy online applications, so you can shop around and open an account from the comfort of your home. Whether this is your first time opening an account or you need a quick refresher, here’s a step-by-step guide to opening a bank account online.</p><h2>4 steps to open a bank account online</h2><h3>1. Decide where to open an account.</h3><p>Shopping around with many banks and credit unions before opening an account can help you choose the right home for your money. So, consider putting together a list of financial institutions to compare based on customer reviews, banking app features, and available perks.</p><p>Since you work hard for your money—and want to keep it safe—looking at how each bank or credit union protects your financial information and accounts is also important.</p><p>Financial institutions have different security features to protect data. Encryption is used to hide your information, and you may be required to set up two-factor authentication to verify your identity each time you log into your account.  </p><p>For example, financial institutions could ask you to set up a password and activate two-factor authentication to enter the mobile <a href="/mobile-app">banking app</a>. When logging in on a non-mobile device, you may need to put in a password and answer security questions. These security measures are in place to make it more difficult for unauthorized people to gain access to your money.</p><h4>Know how your money is kept safe</h4><p>FDIC and NCUA insurance are government guarantees that protect up to a combined $250,000 in bank accounts at banks or credit unions, respectively. In the event a financial institution closes, these guarantees ensure you’ll be able to retrieve your money. Most banks have FDIC insurance and most credit unions have NCUA insurance, but it’s worth double-checking before opening an account.</p><p>Financial institutions also provide protection in the event you lose your debit card. If someone gains access to your PIN or the card itself is lost or stolen and you report the loss within two business days, you’re typically only liable for up to $50 in fraudulent charges. You’ll be able to report the loss quickly by setting up alerts that notify you when your card is being used—even if you hadn’t yet noticed your card was missing.</p><p>Even if you haven’t lost your card but you notice unauthorized charges on your periodic account statement, you’ll have 60 days (from the date you receive your statement) to report it, which is why it’s important to always review your statements when you receive them. Reporting after two months could make you responsible for more of the fraudulent charges.</p><h3>2. Choose an account type.</h3><p>After choosing a financial institution, the second step is choosing the type(s) of account you need. Four main types of bank accounts exist—<a href="/personal-checking">checking accounts</a>, savings accounts, money market accounts, and certificates of deposit. Here’s an overview of each.</p><h4>Checking accounts</h4><p>Checking accounts are deposit accounts you can use for day-to-day transactions. They typically come with a debit card to make purchases or withdraw money at ATMs. Some accounts come with paper checks, or you can order them. You can also use checking accounts to deposit checks, direct deposit your paycheck, make wire transfers, and more.</p><p>Traditionally, checking accounts have paid little or nothing in interest. However, some high-yield checking accounts offer a higher-than-average return.</p><p>Other factors to review when shopping for a checking account are the monthly maintenance fees, ATM fees, the minimum deposit to open the account, and the minimum balance you must maintain to keep the account open.</p><h4>Savings accounts</h4><p><a href="/personal-savings">Savings accounts</a> are a place to stash money for emergencies or financial goals, such as new furniture or a vacation. Savings accounts typically offer higher APYs than checking accounts. However, <a href="/personal-savings/high-yield-savings">high-yield savings accounts</a> may offer a better return.</p><p>Unlike checking accounts, savings accounts do not typically come with checks or a debit card. Some banks and credit unions may charge a fee if you have more than a certain number of withdrawals from your savings account in a month.</p><h4>Money market accounts</h4><p>Money market accounts are like a checking and savings account hybrid. APYs for money market accounts can be comparable to those of savings accounts, and they may also limit how many transactions you can make per month. But like a checking account, money market accounts may come with a debit card and checks, giving you more payment options.</p><h4>Certificate of deposit (CD) accounts</h4><p>A CD is a deposit account that offers a fixed rate of return over a specified term. When the CD matures, you get the money you initially deposited plus interest, and you can withdraw funds or roll the CD into another term.</p><p>Terms for CDs generally range from a few months to five years or more. In general, the <a href="/personal-loan">longer your loan term</a>, the higher the APY you can earn. However, withdrawing from the CD early can result in fees or forfeiting a few months’ interest. Also, if interest rates on savings products rise due to inflation, you could be stuck with low interest until the CD matures. (In that case, paying a fee or penalty to unlock the money may be worth it.)</p><h3>3. Fill out the online application.</h3><p>The process of opening the account involves filling out an online form and choosing an account authentication method, such as security questions to answer upon login. Here’s the information you could be asked to provide when opening an account:</p><ul><li><p>Name and physical address</p></li><li><p>Phone number and email address</p></li><li><p>Date of birth</p></li><li><p>Social Security number or taxpayer identification number</p></li></ul><p>To process your application, banks may review your checking and savings account history using information obtained from a credit reporting agency. Your credit report can include information such as where you’ve opened bank accounts, and if you have any returned checks, unpaid balances, or fraudulent activity on past accounts.</p><p>Some banks may deny your application if you have an unfavorable banking history, such as a record of overdrafts or unpaid balances. However, an unfavorable banking history doesn’t mean you can’t get a checking account. Paying down unpaid bank overdrafts could help improve your chances of getting an account. You can also search online for second-chance banking options that are easier to qualify for. If you’re not sure what information is on your banking history record, you’re entitled to <a href="https://www.annualcreditreport.com/index.action">review your credit report annually for free</a>.</p><h3>4. Add money to your account.</h3><p>Now you’re in the home stretch—time to fund your account. The online application process usually includes a step where you can connect an external account to transfer funds to your new account. During the connection process, the new bank may make small deposits—and withdrawals—of a few cents in your existing bank account to verify that it is correct. You’ll then contact the new bank with the exact amounts to confirm.</p><p>If you don’t set up the first deposit into your new checking account during the application, you could fund your account later through other methods, like setting up a direct deposit with your employer, depositing cash at a branch and ATM, or depositing checks or money orders using mobile check deposit.</p><h2>How to open a bank account for a minor online</h2><p>You typically need to be at least 18 to apply for a bank account. You can open an account on behalf of a minor, but that process requires different paperwork and may require permission from the child’s parent or legal guardian.</p><p>Depending on the purpose of the account, consider whether the bank is the best place for it. Savings accounts can help teach children to save, and teens may benefit from learning to manage a checking account.</p><h2>How long does it take to open an account?</h2><p>It could take just a few minutes to open a bank account online, particularly if you already have a relationship with the financial institution. However, it might take several days if the bank needs more information from you. For example, if the bank can’t verify your identity, you may be asked for other documentation before the account can be set up.</p><h2>The bottom line</h2><p>Most banks offer online applications, so you have many options to consider. Even if you’re already a customer at one bank, expanding your options to look at what other banks offer might help you find higher APYs, lower fees, or better perks.</p><p>Before shopping around, consider how much money you have available to deposit and how often you will want access to it. Also, check if there are conditions you must meet to avoid monthly fees. While some online bank accounts have no fees, others might charge you a fee if you don’t meet direct deposit or balance requirements each month.</p><p>Fees are not the whole story, though. If you plan to use a smartphone to conduct your banking business, you’ll want to check that the bank has an easy-to-use mobile app and find out how responsive customer service is in case you need to call in for support.</p>

Personal Checking

Timing matters when refinancing an auto loan. So before opting for a new loan, make sure you understand when it’s a good idea to refinance and when it’s better to wait. 

<p><a href="https://www.happen.com/auto-refinancing"><b>Refinancing your auto loan</b></a> can help you get a lower interest rate or change the loan term, which could save you money on interest, lower your monthly payments—or potentially both. If you only recently bought your car, or you’ve had it for several years, you might be wondering if it’s too soon, too late, or the perfect time to refinance.  </p><h2>When to refinance your car loan </h2><p>Timing can be a huge factor when considering an auto loan refinance. Many lenders have required waiting periods before you can refinance or cut off periods when it’s too late. Let’s take a closer look at some of the timing restrictions lenders may have around refinancing.     </p><h3>The first 60 to 90 days of the car loan </h3><p>Most lenders require that you’ve had the loan for at least a few months before you can apply to refinance. At Happen Bank, formerly LendingClub, for example, the minimum requirement is 90 days. This allows time for the car title to transfer from the manufacturer or previous owner to your current lender. The new lender also wants to see if you’ve been making on-time payments for the first few months. </p><h3>At least 24 months remaining on the car loan </h3><p>If you’re considering refinancing, you’ll want to act while there’s still some time left on your loan because many lenders have a minimum requirement. For instance, Happen Bank requires at least 24 months remaining on the original loan term. Plus, the later in the term you are, the more interest you’ve already paid off—which means it could be more cost-effective to simply stick with your original loan and finish off the principal. </p><h2>7 signs it’s a good idea to refinance your car </h2><p>There are more telltale signs refinancing your car loan is a good option for you. Consider these common situations when it may make sense to try to refinance your auto loan. </p><h3>1. Your credit score has increased </h3><p>If you’ve been paying your debts on time, your credit utilization has decreased, or you’ve made other moves to improve your credit score, you may be able to qualify for a lower rate than you received when you first bought the car. Even a small reduction can meaningfully impact your total interest and monthly payments. When you applied for the original loan, the lender likely did a hard inquiry on your credit report. Waiting a few extra months can give your score time to recover, which may help you get a better interest rate.<sup>[1]</sup> </p><h3>2. Interest rates have dropped since you purchased your vehicle </h3><p>If prevailing interest rates were higher when you first took out your loan, it might be worth checking whether you can lower your rate. Many lenders allow you to check your potential rate without doing a hard credit check, so you can see your savings without impacting your credit score.<sup>[1]</sup> </p><h3>3. You want a lower monthly payment </h3><p>Refinancing isn’t just about potentially saving money—you can also refinance to put more room in your budget. Lengthening your term may increase your overall interest costs, but it also reduces your monthly payment. If bills are tight, refinancing to lower your payments may be the solution you’re looking for.<sup>[2]</sup> </p><h3>4. You financed your current auto loan with a dealership </h3><p>Dealer-financed auto loans are often not the best deal. Because dealers act as a go-between for shoppers and the bank, they tend to mark up the interest rate to get a cut. By refinancing directly with an online lender, credit union, or other financial institution, you’re avoiding that markup, which can save you money.  </p><h3>5. You want to pay off your auto loan sooner </h3><p>Can you swing a higher monthly payment? If so, you may be able to refinance into a loan with a shorter term. Not only will you pay off your loan more quickly, but you could also save on overall interest.<sup>[2]</sup> </p><h3>6. You want to remove a co-signer </h3><p>Maybe you needed a co-signer to qualify for your original loan, but you’ve established or improved your credit since then. If so, you can try to remove your co-signer by refinancing into a loan of your own.<sup>[1]</sup>  </p><h3>7. You need extra cash </h3><p>Some lenders offer a cash-out refinance option, which means you can take out a loan for more than the value of your car and keep the difference in cash. </p><h2>5 signs you shouldn’t refinance your auto loan </h2><p>Auto refinancing can make a lot of sense for some people—but before choosing to refinance, it’s important to make sure the timing is right. Here’s a closer look at some common situations when you may want to hold off on refinancing your loan.  </p><h3>1. The interest rate is higher than your current loan </h3><p>If your credit score has gone down or rates have gone up since you first took out the loan, you could end up with a higher interest rate through refinancing. That might be okay if your goal is to get a longer term and lower monthly payments. However, it’s important to do the math first to make sure the trade-off is worth it. </p><h3>2. You owe more than the value of your car </h3><p>Depending on how far along you are into repaying your loan and other factors, like depreciation or missed payments, you may owe more on your current loan than the vehicle is worth. This situation leaves you “underwater” or “upside down” on the loan. Most lenders won’t refinance this type of loan. If they do, the rate and terms will likely be unfavorable. Before applying for a refi, check your car’s value compared to your loan payoff amount to see where you stand.<sup>[3]</sup>  </p><h3>3. You waited too long to refinance your auto loan </h3><p>Lenders typically require borrowers to have at least two years left on the loan in order to qualify for refinancing. Additionally, it can be tough to refinance a car that’s over 10 years old or with 140,000 (or more) miles on it.  </p><h3>4. Your current auto loan has a prepayment penalty </h3><p>Paying off your current loan early could cost you a prepayment penalty fee, often charged as a percentage of your outstanding loan balance. Be sure to read the disclosures and fine print to understand whether your existing loan is subject to any prepayment fees and how much they’ll cost. Then, weigh the fee against the potential savings you’ll get with a new loan to see if it makes sense financially.<sup>[2]</sup>  </p><h3>5. You don’t want your credit score affected </h3><p>Refinancing an auto loan typically results in a hard credit inquiry from the lender, which can cause your score to drop. The dip is usually only a few points, and it’s temporary. However, if you’re in the middle of applying for a mortgage or other credit, it’s probably a good idea to hold off on refinancing your auto loan. <a href="https://www.happen.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><b>Learn more about soft vs. hard credit inquiries</b></a>.<sup>[4]</sup>  </p><h2>Is refinancing worth it?  </h2><p>Refinancing may be worth it, depending on your financial goals and situation. Before deciding to refinance your auto loans, it’s important to carefully consider your credit situation, interest rates, and your motivation for refinancing. The timing may not always be right, and in some cases it may not even be possible to refinance due to lender restrictions.   </p><p>How to get started refinancing your auto loan If you’re thinking of refinancing your auto loan, you can start the <a href="https://www.happen.com/resource-center/auto-refinance/how-does-refinancing-a-car-work"><b>refinancing process</b></a> by reviewing the details of your current auto loan, including your outstanding loan balance, annual percentage rate (APR), and time left on the loan term. Next, check your credit to make sure it’s in good shape. If it needs improvement, then take steps to <a href="https://www.happen.com/resource-center/personal-loan/how-to-improve-credit-score"><b>improve your score</b></a>.   </p><p>Check with lenders to see what kind of interest rate and terms you can qualify for. Many lenders, including Happen Bank, will show you a potential rate without doing a hard credit inquiry. When it comes to actually applying for loans, submit all your applications within a span of a couple of weeks to minimize the impact to your credit score.<sup>[1]</sup>  </p><h2>The bottom line </h2><p>Whether you want to pay off your vehicle faster, have smaller monthly payments, or save on interest, auto loan refinancing can be a powerful personal finance strategy that can be tailored to your unique financial situation. However, it’s important to carefully consider a wide range of factors to determine if the timing makes sense to refinance your auto loan.     </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-should-i-know-before-i-shop-for-auto-loan-at-a-bank-credit-union-dealership-or-other-lender-en-755/#will-my-credit-impact-my-interest-rate">Consumer Financial Protection Bureau</a>. “What should I know before I shop for a car or auto loan?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/can-i-prepay-my-loan-at-any-time-without-penalty-en-843/">Consumer Financial Protection Bureau</a>. “Can I prepay my loan at any time without penalty?” </p></li><li><p><a href="https://consumer.ftc.gov/articles/auto-trade-ins-and-negative-equity-when-you-owe-more-your-car-worth">Federal Trade Commission Consumer Advice</a>. “Auto Trade-Ins and Negative Equity: When You Owe More than Your Car is Worth” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/whats-a-credit-inquiry-en-1317/#:~:text=Hard%20inquiries,frequently%20you%20apply%20for%20credit.">Consumer Financial Protection Bureau</a>. “What’s a credit inquiry? </p></li></ol><p></p>

Auto loan refinancing is when you use a new car loan to pay down your old loan—often with a lower monthly payment or interest rate. 

<p>You might choose to refinance a car loan for many reasons, from potentially lowering your monthly car payment to reducing your total interest costs over the life of the loan. If you’re thinking about refinancing your auto loan, it’s important to understand how refinancing works. The process is surprisingly straightforward, but there are a few key things to consider before you <a href="https://www.happen.com/auto-refinancing"><b>apply for auto refinancing</b></a>.  </p><h2>What does it mean to refinance a car and how does it work? </h2><p>When you refinance a car loan, it means you pay down your existing loan with a new auto loan—usually from a different lender. You’ll make payments to the new lender until your loan is paid off, and the new lender’s name will appear on your car’s title. While refinancing won’t lower your total loan amount, you may benefit from more favorable terms.<sup>[1]</sup>   </p><p>For example, if your new car loan has a lower interest rate, your new loan will accrue less interest each month. Even if you do not qualify for a lower interest rate, you could still lower your monthly payment by extending the length of your loan term. This strategy could be helpful if your finances have changed and you need some extra wiggle room in your monthly budget.  </p><p>Alternatively, if you can afford a higher monthly payment, choosing a loan with a shorter term might help you score a lower interest rate. </p><h2>When could auto loan refinancing be a good idea? </h2><p>It’s important to <a href="https://www.happen.com/resource-center/auto-refinance/when-can-i-refinance-my-car-loan"><b>consider timing when refinancing</b></a> your existing car loan. Here are a few situations when auto loan refinancing often makes sense.   </p><ul><li><p><b>Your financial situation has improved.</b> You may want to shop for auto loan refinancing if your income or credit score have increased since you first took out your auto loan, or if you’ve paid off debts and have a lower <a href="https://www.happen.com/glossary/d/debt-to-income-dti-ratio"><b>debt-to-income (DTI) ratio</b></a>. The changes could help you score a lower interest rate or more favorable loan terms if you refinance.<sup>[1]</sup> </p></li><li><p><b>Market interest rates have dropped. </b>Even if your personal situation hasn’t improved, market competition impacts auto loan rates. When interest rates fall, lenders may offer lower rates to attract new customers. Check rates with multiple lenders to see if you might benefit.  </p></li><li><p><b>You didn’t shop around for your first loan.</b> Dealerships can markup rates which may may result in higher interest rates and longer loan terms.<sup>[2] </sup>If you originally financed your auto loan through a dealership, you may qualify for better loan terms through a bank or lender. In some cases, the terms may still be better even if your financial situation or market interest rates haven’t changed.  </p></li><li><p><b>You want to lower your monthly payment.</b> Sometimes lowering your monthly payments takes priority over getting a lower interest rate. If you need to free up room in your monthly budget, refinancing your auto loan could help you get a longer term and lower monthly payment.   </p></li></ul><h2>When could refinancing your car loan not be a good idea? </h2><p>Sometimes it’s better to wait before refinancing your auto loan. Here’s a closer look at times when you should hold off.  </p><ul><li><p><b>You can’t get a lower interest rate.</b> If market interest rates have gone up or your financial situation hasn’t changed, it may make sense to hold off on refinancing.  </p></li><li><p><b>You’re upside down on your car loan. </b>When you owe more on your vehicle than it’s worth, most lenders won’t allow you to refinance.<sup>[4]</sup>  </p></li><li><p><b>You don’t meet lender requirements. </b>Many lenders won’t offer refinancing until you’re at least a few months into your current loan. On the flip side, some lenders require a longer period remaining on the loan term. If you’re near the beginning or end of the term, you may not qualify. </p></li><li><p><b>You don’t want to pay fees.</b> Some lenders charge origination fees when you take out a new loan. In some cases, the amount is calculated as a percentage of the new loan amount and then deducted when the loan is funded. Your current loan may also charge you a prepayment penalty for paying off the loan early, often calculated as a percentage of the remaining loan amount.<sup>[3]</sup> </p></li><li><p><b>You don’t want your credit affected. </b>Many lenders, like Happen Bank, formerly LendingClub, let you check your rate without affecting your credit score by conducting a soft credit inquiry. However, once you apply, the lenders usually perform a hard credit check, which could cause your score to take a temporary dip. <a href="https://www.happen.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><b>Learn more about soft vs. hard credit inquiries</b></a>.<sup>[5]</sup>  </p></li></ul><h2>What do lenders look for when refinancing your car loan?</h2><p>Auto loan refinance terms, rates, and requirements usually vary widely between lenders. When you finance your car loan, lenders typically consider a range of factors, including information about your vehicle, current loan, and your creditworthiness. Here are some common things lenders look at when refinancing your car loan. </p><h3>1. Vehicle age, make, model, and mileage </h3><p>Lenders may refuse to refinance certain vehicle makes and models, or they may have limits on the car’s mileage and model year. For example, Happen Bank requires your vehicle to be less than 10 years old and have fewer than 120,000 miles. </p><h3>2. Current auto loan balance and remaining payments </h3><p>Your existing auto loan balance and remaining payments can also be a factor. A lender might choose not to refinance a loan if it has too low—or high—of a balance, or if you’re close to paying it off. </p><h3>3. Loan-to-value ratio </h3><p>Lenders may also look at the value of your vehicle relative to how much you owe on the loan, or the loan-to-value (LTV) ratio. A higher LTV can make it harder to get approved, especially if your LTV is over 100% and your car is worth less than the outstanding loan principal. This is also known as being “upside down” or “underwater” on your loan, and it can happen when your vehicle’s value depreciates faster than you pay down your loan.<sup>[4]</sup> </p><h3>4. Debt-to-income ratio </h3><p>Your monthly debt-to-income ratio helps lenders understand how easy it will be for you to afford your monthly payments. Qualifying for a new loan can be difficult if you have a high DTI ratio.  </p><h3>5. Your creditworthiness </h3><p>Lenders review your credit reports and credit score to help determine whether you qualify for a loan and to set your loan rates and terms. Having a long history of timely payments and low balances on your credit cards can help your credit score.  </p><h2>How to refinance your car loan </h2><p>If you’ve decided that refinancing your car loan is a good idea and the timing is right, follow these steps to get started.  </p><ul><li><p><b>Shop around.</b> Many different types of lenders—like banks, credit unions, and online lenders—offer auto refinancing loans. Check your rate at multiple companies to find a competitive offer. When done properly, rate shopping may not impact your credit score.<sup>[6]</sup></p></li><li><p><b>Get your documents in order.</b> Most lenders will need your Social Security number, driver’s license number, registration paperwork, and the car’s vehicle registration number (VIN). You’ll also need to know the payoff amount for your existing loan. You can usually find this online when you log into your loan account or by contacting your current lender.  </p></li><li><p><b>Read the fine print about eligibility.</b> Lenders will often have rules about which loans and cars are eligible for refinancing—for example, a minimum outstanding balance of $4,000 and fewer than 120,000 miles on the car. Save time by identifying each lender’s eligibility requirements before you apply. </p></li><li><p><b>Apply to refinance your car loan.</b> When you’re ready to apply, it’s important to understand that most lenders use a hard credit inquiry with each application, which can impact your credit score. If you are applying to multiple lenders, consider submitting them all within a two week window. VantageScore® count all inquiries within a 14-day period for the same type of loan as just one inquiry on your credit report.<sup>[6]</sup></p></li><li><p><b>Closely evaluate offers. </b>Compare the terms of your existing loan against your offers to decide which one will help you accomplish your financial goals. Calculate how much you could save over the life of the loan, how much you could lower your monthly payment, and how quickly you could pay down the loan.  </p></li><li><p><b>Finalize your auto refinance loan. </b>Once you’ve accepted a refinance offer, be sure to complete all of the paperwork. If the new lender is paying off the old lender, make sure your old loan is paid in full. Or if funds were deposited in your bank account, you may need to pay off the old lender directly.   </p></li><li><p><b>Make your first payment. </b>Payments on auto refinance loans can start immediately. Be sure to note the due date of your first monthly payment, and make the payment on time.  </p></li></ul><h2>The bottom line </h2><p>Refinancing a car loan can be a good idea if your creditworthiness has improved, interest rates have dropped, or you want to change your loan’s terms. You could consider refinancing your car loan when you can qualify for a new loan with more favorable terms, such as a lower interest rate or monthly payment.   </p><p>Keep in mind that applying for and taking out a new loan may<b> </b><a href="https://www.happen.com/resource-center/personal-loan/does-refinancing-a-car-hurt-your-credit"><b>impact your credit score</b></a> in the short term. However, in the long run, refinancing won’t necessarily hurt your credit if you make your loan payments on time.   </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-should-i-know-before-i-shop-for-auto-loan-at-a-bank-credit-union-dealership-or-other-lender-en-755/#will-my-credit-impact-my-interest-rate">Consumer Financial Protection Bureau</a>. “What should I know before I shop for a car or auto loan?” </p></li><li><p><a href="https://www.bankrate.com/loans/auto-loans/how-to-decide-between-bank-or-dealership">Bankrate</a>. &quot;Is it better to finance a car through a bank or dealership?&quot;</p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/can-i-prepay-my-loan-at-any-time-without-penalty-en-843/">Consumer Financial Protection Bureau</a>. “Can I prepay my loan at any time without penalty?” </p></li><li><p><a href="https://consumer.ftc.gov/articles/auto-trade-ins-and-negative-equity-when-you-owe-more-your-car-worth">Federal Trade Commission Consumer Advice</a>. “Auto Trade-Ins and Negative Equity: When You Owe More than Your Car is Worth” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/whats-a-credit-inquiry-en-1317/#:~:text=Hard%20inquiries,frequently%20you%20apply%20for%20credit.">Consumer Financial Protection Bureau</a>. “What’s a credit inquiry? </p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/how-does-rate-shopping-affect-credit-score">Experian.</a> &quot;How Does Rate Shopping Affect Your Credit Scores?&quot;</p></li></ol><p></p>

Your credit score may be impacted when you refinance your auto loan thanks to a hard credit check, but the effects are typically short-lived.   

<p>Before deciding to refinance your vehicle, it’s important to understand how it may affect your credit score. Let’s take a closer look at how refinancing a car loan impacts your credit. </p><h2>Will refinancing your auto loan hurt your credit score? </h2><p>Yes, refinancing an auto loan may hurt your credit score. When you refinance a vehicle, you’re applying for a new auto loan, then using that loan to pay down your existing car loan. During the application process, the lender will check your credit reports, resulting in a <a href="https://www.happen.com/resource-center/personal-finance/key-differences-of-a-soft-credit-check-vs-hard-credit-check"><b>hard credit pull</b></a>.<sup>[1]</sup> </p><p>Some lenders, like Happen Bank, formerly LendingClub, offer pre-qualification to <a href="https://www.happen.com/auto-refinancing"><b>check your rates</b></a> first, which shows up as a soft pull rather than a hard pull on your credit report. </p><h2>How much will your credit score decrease if you refinance? </h2><p>Your credit score may decrease after a hard credit check when you refinance an auto loan. However, it could go down even more if you’re applying for additional credit over a short time.<sup>[1]</sup> If you’re <a href="https://www.happen.com/help/auto-refinance-faq/how-do-i-apply-for-an-auto-refinance-loan"><b>applying for auto refinance loans</b></a>, you may want to reconsider whether applying for additional credit like a credit card or mortgage makes sense.   </p><p>When you refinance your auto loan, the age of your accounts—or the length of your credit history—goes down. Fortunately, this <a href="https://www.happen.com/resource-center/personal-finance/what-affects-your-credit-scores"><b>credit scoring factor</b></a> only makes up 15% of your score so your score may be impacted accordingly. Loans that are reported as “new” to the credit bureaus also signal that you’ve taken on more debt, which could lower your score.<sup>[2]</sup>   </p><p>Your credit mix, or the different types of accounts on your credit report, may not change much since you’re replacing one auto loan with another.<sup>[2]</sup>  </p><h2>How long will it take for my credit score to recover? </h2><p>According to Experian, hard inquiries from the application process can stay on your credit report for up to two years, but generally the impact on your score only lasts about a year.<sup>[3]</sup> </p><h2>When refinancing your car loan might make sense </h2><p>Refinancing your auto loan can offer many benefits, like lower interest rates or a longer loan term. However the timing may not always be right, depending on your financial situation and other factors. Here’s a closer look at when refinancing your car loan might make sense.  </p><h3>1. You got the loan from the dealership </h3><p>If you got your original loan from the car dealer, you may not have received the best rate possible. A dealership is typically an intermediary between the buyer and the auto lender, and the dealer may mark up the interest rate to compensate for their involvement.<sup>[4]</sup> You may be able to get a better rate by refinancing directly with an online lender, credit union, or other financial institution. </p><h3>2. Your credit has improved </h3><p>If your credit score has increased since you first took out the loan, and you’ve been making on-time payments on your original loan for at least a few months, you may qualify for a lower interest rate through refinancing.<sup>[5]</sup>  </p><h3>3. Interest rates have gone down </h3><p>Interest rates fluctuate often. If interest rates have decreased since you first took out your loan, you may be able to take advantage of lower rates. Rate shopping without a hard credit check can help you determine whether you qualify for a lower rate. Credit scoring systems such as the FICO® and VantageScore®  have built-in accommodations for rate shopping on installment loans. They treat inquiries related to multiple loan applications as a single event, as long as all applications are for the same loan amount and are submitted within a 14-day window.<sup>[6]</sup></p><h3>4. You need a lower car payment </h3><p>Even if you’re unable to lower your interest rate, refinancing can still help you get a lower monthly payment. You’ll refinance a lower balance than what you started with, which shrinks your monthly payments. Refinancing into a longer term may also lower your monthly payments because they’re spread over more months. This can free up cash for other monthly expenses. Just keep in mind that this strategy can result in a higher total interest cost over the life of the loan. </p><h2>When an auto refinance loan might not make sense </h2><p>Refinancing can come with a number of benefits, but it’s not always the right move. Here’s a look at common reasons when an auto refinance loan might not make sense.  </p><h3>1. Your loan is almost paid off </h3><p>If you don’t have much time left on your loan, lenders likely won’t want to refinance your loan. <a href="https://www.happen.com/help/auto-refinance-faq/what-is-auto-refinance"><b>Happen Bank</b></a>, for example, requires at least 24 months left on the loan term to consider a refinance loan. </p><h3>2. Your loan is underwater </h3><p>Being upside-down or underwater on your auto loan means the repayment amount on your loan is more than the car is worth. While it can be possible to refinance an underwater loan, it typically comes with high interest rates and unfavorable terms.<sup>[7]</sup> </p><h3>3. The prepayment penalty is too high </h3><p>Since the new lender is <a href="https://www.happen.com/resource-center/personal-loan/the-pros-and-cons-of-paying-off-a-personal-loan-early"><b>paying off your old loan early</b></a>, you may be subject to prepayment penalties in the process. Check with your original lender to see what fees you may incur, then compare it with your potential savings to make sure it’s worth it.<sup>[8]</sup> </p><h2>Can you refinance an auto loan with poor credit? </h2><p>Yes, you can refinance an auto loan with poor credit. While it’s generally better to refinance when your credit is in good shape, it may be possible to refinance a car loan even with bad credit. However, you’ll likely pay a higher interest rate as your credit score decreases. Instead, you might consider working to improve your credit score before you try to refinance your auto loan.<sup>[9]</sup>  </p><h2>How to get started with the auto refinancing process </h2><p>Refinancing your auto loan is a straightforward process, but it&#39;s important to understand what’s involved before you get started. Here are a few pointers to keep in mind.   </p><ul><li><p><b>Determine if refinancing makes sense for you.</b> Consider current interest rates, whether your credit score has improved, and other factors that may make it a good time to refinance or require you to wait. Be sure to also assess your car’s value to make sure you’re not upside-down on your existing loan. </p></li><li><p><b>Shop around. </b>Many lenders will let you prequalify without a hard inquiry to your credit score. If you choose to complete the application, be sure to have all your documents in order, like your car’s vehicle identification number (VIN), existing loan’s payoff amount, and your Social Security number. Try to compare offers within a short period of time—usually no more than two weeks—to minimize the impact on your credit score.<sup>[6]</sup>  </p></li><li><p><b>Evaluate loan offers. </b>Compare refinancing offers from different lenders to your existing loan to see how your financial situation will be impacted. Calculate how much you could save over the life of the loan, how much you could lower your monthly payment, and how quickly you could pay down the loan. With this knowledge in hand, you can confidently decide which refinancing offer will help you accomplish your financial goals.<sup>[9]</sup>   </p></li></ul><h2>The bottom line </h2><p>Is refinancing a car bad for your credit? It may impact your score, but as long as you make your monthly payments on time, your score should recover. Unless you’re planning to take out a large new loan in the very near future—for example, a mortgage—don’t let a short-term, small drop in your credit score keep you from refinancing your auto loan and saving money. </p><p>If you didn’t shop around for your current auto loan, your credit score has improved, or interest rates have decreased since you took out your initial car loan, it’s likely worth looking into refinancing options.    </p><hr/><ol><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/whats-a-credit-inquiry-en-1317/#:~:text=Hard%20inquiries,frequently%20you%20apply%20for%20credit.">Consumer Financial Protection Bureau</a>. “What’s a credit inquiry? </p></li><li><p><a href="https://www.myfico.com/credit-education/whats-in-your-credit-score">myFICO</a>. “What&#39;s in my FICO Scores?” </p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/hard-inquiry-vs-soft-inquiry/#:~:text=Hard%20inquiries%20can%20impact%20your,for%20less%20than%20a%20year.">Experian</a>. “What’s the Difference Between a Hard and Soft Inquiry?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-dealer-arranged-and-bank-financing-en-759/">Consumer Financial Protection Bureau. </a>&quot;What are the different ways to buy or finance a car or vehicle?&quot;</p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/how-soon-can-you-refinance-car-loan/">Experian.</a> &quot;How soon can you refinance a car?&quot;</p></li><li><p><a href="https://www.experian.com/blogs/ask-experian/what-is-rate-shopping/">Experian</a>. “What is rate shopping?”</p></li><li><p><a href="https://consumer.ftc.gov/articles/auto-trade-ins-and-negative-equity-when-you-owe-more-your-car-worth">Federal Trade Commission Consumer Advice</a>. “Auto Trade-Ins and Negative Equity: When You Owe More than Your Car is Worth” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/can-i-prepay-my-loan-at-any-time-without-penalty-en-843/">Consumer Financial Protection Bureau</a>. “Can I prepay my loan at any time without penalty?” </p></li><li><p><a href="https://www.consumerfinance.gov/ask-cfpb/what-should-i-know-before-i-shop-for-auto-loan-at-a-bank-credit-union-dealership-or-other-lender-en-755/#will-my-credit-impact-my-interest-rate">Consumer Financial Protection Bureau</a>. “What should I know before I shop for a car or auto loan?” </p></li></ol><p></p>

The total cost of owning a car includes the purchase price, interest on loans, insurance, fuel, maintenance, repairs, taxes, registration, depreciation, and unexpected expenses.

<p>When it comes to estimating the true cost to own a car, the sticker price is only the start. Understanding the factors that go into cost of car ownership can reduce surprises and help you budget more accurately.   </p><p>Here are six factors that impact the total cost of owning a car—plus tips for how to cut costs, where possible. </p><h2><b>1. Initial purchase price</b> </h2><p>Naturally, price is a large component of the true cost of owning a car. Purchase price can also determine sales taxes, state registration fees, and licensing fees. </p><p><b><i>How to lower it</i></b><i>:</i> Arm yourself with knowledge. Use online tools like Kelley Blue Book and <a href="https://www.truecar.com/">TrueCar</a> to research average selling prices and establish an appropriate value for your trade-in. Plug-in hybrids and electric vehicles come along with tax credits, which can offset part of the initial cost. You can also brush up on your negotiating tactics: <a href="https://cars.usnews.com/cars-trucks/advice/how-to-negotiate-the-best-price-on-a-new-car">U.S. News &amp; World Report</a> recommends controlling your emotions and knowing which fees are flexible. </p><h2><b>2. Interest rate</b> </h2><p>About <a href="https://www.consumerreports.org/car-maintenance/the-cost-of-car-ownership-a1854979198/">two-thirds of buyers</a> use financing for their car purchase, and the interest charges can contribute meaningfully to the true cost of car ownership. </p><p><b><i>How to lower it</i></b><i>:</i> Don’t settle for financing directly from the dealership. Our partners at NerdWallet recommend, “It’s wise to get pre-approved before you hit the dealership, so take a little time to compare auto loan interest rate offers from different lenders.” Making a down payment and keeping your credit score in good shape can also help you lock in a lower interest rate. </p><p>If you already have a loan, <a href="https://www.happen.com/auto-refinancing">auto refinancing</a> can save you money on interest, lower your monthly payments, or potentially do both.</p><h2><b>3. Depreciation</b> </h2><p>Unfortunately, even well-maintained cars lose value over time, making depreciation one of the largest cost factors—particularly for new cars. Depreciation may not seem like an explicit cost, but it’s one you’ll realize when you go to sell your car and purchase a new one. </p><p><b><i>How to lower it</i></b>: Buying a used car can diminish the sting of depreciation, since older cars depreciate at a lesser rate. <a href="https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/car-depreciation/">New cars can depreciate by as much as 11 percent</a> the moment you drive them off the lot. Keeping your car longer can also reduce depreciation costs. </p><h2><b>4. Maintenance</b> </h2><p>New tires, oil changes and unexpected repairs are included in the total tally for car ownership. </p><p><b><i>How to lower it</i></b><i>:</i> Longer, more comprehensive warranties and maintenance plans can help defray some costs—though these might add to the initial purchase price of the car. Reliability reviews and ratings, like those available at <a href="https://www.consumerreports.org/cars/">Consumer Reports</a>, can help you estimate expected costs and decide if a deluxe warranty is a good choice, or if a different car would be a better option. </p><h2><b>5. Insurance</b> </h2><p>Coverage is required by law in most states, and rates can vary widely. </p><p><b><i>How to lower it</i></b><i>:</i> The <a href="https://www.iii.org/article/nine-ways-to-lower-your-auto-insurance-costs">Insurance Information Institute</a> recommends shopping around for at least three price quotes and requesting a higher deductible. Bundling auto and home insurance with one company can also help save money. Rates can also be impacted by your driving record, how you use your car (daily commute versus weekends-only) and where it’s parked (in a garage versus on the street). </p><h2><b>6. Fuel</b> </h2><p>On average, fuel is the second-largest cost of car ownership—and the price goes up if you choose a gas-guzzling SUV. According to <a href="https://www.consumerreports.org/car-maintenance/the-cost-of-car-ownership-a1854979198/">Consumer Reports</a>, “You could pay more than $15,000 to fill up a Jeep Liberty over five years, while a similar-sized but more-efficient RAV4 V6 could save you $4,000 during that time.” </p><p><b><i>How to lower it</i></b><i>:</i> Pick your new car with an eye for efficiency, and consider whether an electric or hybrid vehicle could be right for you. Once you’ve made your purchase, get the most out of your MPG by avoiding aggressive driving, using cruise control and lightening your load. </p><h2><b>Calculating the cost of car ownership</b> </h2><p>Budgeting for the true cost of car ownership can get complicated, but an online cost estimator, like the <a href="https://www.edmunds.com/tco.html">Edmunds True Cost to Own® calculator</a>, can help. </p>

Auto Refinance

A small business loan can help you get the cash you need to grow your business. Getting a business loan can sometimes be tricky, especially if you’re a new business owner. 

<p>Growing your business can be an exciting time. It may also mean you need to come up with some extra cash to cover large expenses. Whether you’re looking to buy new equipment or lease a larger commercial space, a <a href="https://www.happen.com/business-loan/aof-loans"><u>small business loan</u></a> may be able to provide the funding you need to reach your goal.  </p><h2>4 steps to take before getting your first small business loan </h2><p>Business loans can be tricky, especially for new business owners, but there are some steps you can take before getting your first small business loan. Here’s a closer look at what to do before getting your first small business loan.  </p><h3>1. Research what it takes to qualify </h3><p>Small business loans from banks and credit unions often have strict requirements. For example, many lenders only offer loans to businesses that have been in business for six months to a year, and some may require a minimum of at least two years in operation.   </p><p>The annual revenue your business earns is also a deciding factor. Many lenders require a minimum annual revenue between $50,000 to $250,000.  </p><h3>2. Prepare a business plan </h3><p>Virtually any issuer of business loans, from a local financial institution to the U.S. Small Business Administration (SBA) to a private partner or investor, will want to see a business plan that shows how you plan to grow your company (and how a loan can enable that).  </p><p>A good business plan includes a “SWOT analysis” that spells out your company’s strengths, weaknesses, opportunities and threats; revenue and earnings projections for the next one to five years, plus any costs of production, distribution, and marketing.   </p><p>The <a href="https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan"><u>SBA provides advice and examples of effective business plans</u></a>. And if you need additional guidance, the SBA-affiliated nonprofit <a href="http://score.org/"><u>SCORE.org</u></a> may be able to pair you with a mentor who can give you the benefit of real-world experience. </p><h3>3. Create a balance sheet </h3><p>Lenders typically want to see documentation of your company’s assets and liabilities, spelled out in a formal balance sheet. Assets can include equipment you own, product inventory, intellectual property and money you’re owed (accounts receivable). Liabilities include debts, outstanding leases on equipment or facilities, payroll, and employee benefits costs.   </p><p>Running these numbers can also help you determine if you’re able to afford the cost of a loan.  Keep in mind that a business loan is another monthly expense on top of your existing operating costs. While the loan may provide your business the opportunity to grow, and ultimately earn more income, this may not happen overnight.  </p><p>If you’re unsure how to create a balance sheet, a financial professional, like a certified public accountant (CPA) can help.  </p><h3>4. Check your credit score </h3><p>Lenders generally check your credit when considering an application for a small business loan — whether you’re applying with your own credit or using <a href="https://www.happen.com/resource-center/business-loan/how-to-build-your-business-credit"><b><u>business credit</u></b></a>. Before applying for a small business loan, it’s a good idea to check your credit report to know where you stand.  </p><p>Borrowers with poor credit are less likely to qualify for the best rates. So if your credit isn’t in the greatest shape, you may want to consider holding off on applying for a loan until you can improve your score.  </p><h2>Determine which type of small business loan is right for you </h2><p>Business owners can choose from many different types of small business loans. Finding the right business loan depends on many factors, including how long you’ve been in business, the financial health of your business, your credit, and how much you need to borrow.  </p><p>Here’s a closer look at some of the common types of small business loans. </p><h3>Small business loan </h3><p>Traditional small business loans are available from banks and credit unions. With this type of loan, you’ll generally be able to get competitive interest rates, large loan amounts, and long repayment terms. To qualify, you’ll likely need consistent business revenue, a business that’s been established for at least two years, and good credit.  </p><h3>Government business loan </h3><p>The <a href="https://www.happen.com/business-loan/sba-loans"><b><u>SBA offers low-interest small business loans</u></b></a> with long repayment terms. Under the 7(a) program, the SBA guarantees some types of small business loans issued through banks. The SBA also has a 504 loan program that can help you cover the cost of big purchases needed to grow your business like buildings, equipment, or land.<sup>1</sup>  </p><h3>Nonbank small business loan </h3><p>Traditional lenders like banks and credit unions may not be the best option if your business hasn’t been around long enough to qualify. Entrepreneurs looking to <a href="https://www.happen.com/resource-center/business-loan/guide-to-business-financing"><b><u>finance a startup business</u></b></a> may have better luck applying for a small business loan from an online lender as online loans may have few restrictions to qualify. Online lenders often offer fast funding, sometimes as fast as the day you apply for the loan, but you’ll likely pay interest rates than with a bank or credit union. </p><h3>Microloan </h3><p>Microlenders are nonprofits that offer small, or micro, loans to businesses. Loan amounts are typically under $50,000 and the application process is detailed and lengthy. Micro loans often require lots of upfront work, like presenting a detailed business plan, financial statements, and an explanation of how you’ll use the loan. If you’re trying to fund a startup with no operating history, lack collateral, or have poor personal credit, a microloan offers an opportunity to borrow cash. </p><h2>What do you need to apply? </h2><p>Lenders may have different requirements during the application process. You’ll likely need to provide some or all of the following information: </p><ul><li><p><b>Business information:</b> Applications typically require you to share basic information about your business, including business name, address, and employer identification number (EIN). You may also have to provide a business plan or other documentation about your plans to use the loan money.  </p></li><li><p><b>Business owner details:</b> Whether you’re a solo entrepreneur or own a business with others, lenders require you to share personal information about each business owner, like Social Security numbers and addresses.  </p></li><li><p><b>Financial statements: </b>To help gauge risk, lenders generally require documentation about how your business is doing financially, like annual revenue, profit and loss statements (P&amp;L), tax returns, and bank account statements. You may need to provide this information for the business as well as any business owners. </p></li><li><p><b>Potential collateral:</b> Lenders may want you to offer assets they can seize and sell in  case you fail to repay your loan. This can include property owned by your company or, in a manner comparable to secured car loans and mortgages, equipment or other assets being financed through the loan. </p></li></ul><h2>Alternatives to small business loans </h2><p>Not all business expenses require a small business loan. And in some cases — like if your business is new or you have less-than-perfect credit — you may not be able to qualify for a business loan. If you still need access to cash, here are some options to consider:  </p><h3>Business line of credit </h3><p>If you need to fund cash flow for day-to-day expenses, a business line of credit may be a good choice. It lets you make purchases or issue checks against a preset borrowing limit, and to pay back those sums as you’re able, so that you pay interest only on the funds you use. This flexible form of financing can help you cover expenses like payroll or unexpected repairs and may be easier to qualify for than a small business loan.  </p><h3>Small business credit card </h3><p>If you don’t yet qualify for a small business loan, a business credit card could be a good option — especially if you only need to borrow small amounts of cash. Look for zero-interest credit cards or cards with perks that can help grow your business, such as cash back or travel rewards.   </p><h3>Personal business loan </h3><p>If a small business loan is out of reach, you may still be able to borrow money as an individual using a personal loan. Just keep in mind that you’ll likely still need good credit to get the best rates. </p><h2>The bottom line </h2><p>For those who qualify, small business loans can be a helpful tool to finance expenses like new equipment or other costs to help expand your business. Choosing the right fit for your business and financial situation can be tricky — especially if you need to seek funding from an online lender or microlender.   </p><p>Before applying for a business loan, it’s also important to make sure you can afford the monthly payments. If you’re not sure which type of small business loan is right for your business, check with a trusted business advisor, like a CPA. </p><hr/><p>1. <a href="https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans">https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans</a></p>

Some small businesses seem to thrive no matter what the economy is doing. What’s their secret? Here are a few business ideas to consider and tips to help you bake some resiliency into your venture.

<p>If you’ve been thinking about starting a small business, going freelance, or becoming a sole proprietor, you’re not alone: According to the U.S. Census Bureau, Americans submitted 5 million new business applications in 2022 (down only slightly from a record high of 5.4 million applications the year before). </p><p>But what type of business will thrive in this (or any) economy? Is there such a thing as a recession-proof small business? Though there’s no foolproof answer, some small businesses tend to fare better than others no matter what the economy does. </br></br>We’ve gathered some proven, recession-proof business ideas to help you prepare in the event of a downturn, plus a few tips to help you bake some resiliency into your own new (or existing) venture.</p><h2>What is a recession-proof business?</h2><p>Growing a business in any economy can be a challenge—and no venture is completely recession-proof. That&#39;s because almost all <a href="https://www.happen.com/business-loan/aof-loans">new entrepreneurs require some amount of funding</a> along with a raft of skills to launch, market, and keep a successful business running efficiently.   </br></br>However, some businesses seem better equipped to withstand a recession. For example, businesses with built-in, consistent demand for its products and services are typically less vulnerable to the ups and downs of a tight economy. And some new ventures may outperform during an economic downturn because they were created to address the needs and pain points brought about by recessionary times. </p><p>Operational skills also make a difference, especially during difficult economic periods. Developing a solid marketing plan, mastering financial skills and money management tools, and being flexible to the demands of starting a new business all contribute to a venture’s ability to endure. Starting a business can be simultaneously exhilarating and demanding. Thought and planning on the front end will save you some difficulty later. </p><h2>7 recession-proof business ideas to explore</h2><p>If you want to go into business for yourself and are looking for inspiration, consider the following seven business ideas as a place to start. While these businesses aren’t completely immune to slowing sales or fluctuating supply and demand during a recession, they do have a track record of holding up when the economy is down. They may also spark more ideas about where to look for other opportunities that sound appealing to you.</p><h3>1. Discount, Bargain, Or Used Goods</h3><p>Affordability is a good look in an economic downturn. But even without a recession in play, thrifting and bargain hunting are gaining popularity. According to U.S. Census data, retail sales at used merchandise stores are on track to top $24 million in 2022, up from $16.4 million in 2020. Online reselling, retail pop-ups, and consignment businesses are capitalizing on this recession-friendly trend, which also helps sellers raise a few dollars in a tight economy and helps make for a more recession-proof business. Discount, bargain, and used goods aren’t limited to luxury items or vintage fashion. The key here is serving up in-demand goods at affordable prices, which is a decent business model in any economy but an especially timely one if the market starts to go south.</p><h3>2. Home Repair and Maintenance</h3><p>Recession or not, the demand for home repairs and the skilled professionals who perform the work continues unabated. While new home construction and high-end home renovations may lag during an economic slump, fixing a leaky pipe will always be a priority for homeowners. Along with home repair and maintenance contracting businesses, do-it-yourself products that help homeowners make their own repairs may prove to be smart recession-proof businesses ideas to consider.</p><h3>3. IT and Technical Services</h3><p>Regardless the size of business you may be focused on serving, most can’t operate efficiently without some hardware, software, or technical service providers. Online sales and customer management platforms, remote networks, and cybersecurity issues are only a few essential aspects of business technology. Business-to-business services that support and maintain technical operations or innovate for new efficiencies tend to do well when economic waters get rough.</p><h3>4. Accounting and Financial Services</h3><p>For consumers and businesses alike, taxes and finances are always top of mind and a constant concern. When the economy is in flux, that concern may intensify. In fact, a growing number of new businesses and self-employed workers may translate into an increased need for more accountants and bookkeepers. Economic changes may also create demand for more accessible financial and investment advice as people work harder to keep their businesses and personal retirement savings on track.</p><h3>5. Auto Repair and Maintenance</h3><p>Car maintenance and repair are in consistent demand, making this a recession-resistant market—and largely a recession-proof business. While new vehicle sales slow down and people hold onto their vehicles longer during a recession, the need for services such as maintenance, repairs, and mobile auto-detailing often expands. Because a slow economy could mean less money to spend on upgrades, recession-savvy entrepreneurs may want to focus on offering the essentials over luxuries. </p><h3>6. Food, Beverages, and Groceries</h3><p>People must eat. And while some food-related businesses are not startup-friendly in a down economy (supermarkets and swanky restaurants are good examples), affordable restaurants, food trucks, bars, coffee and tea houses, and food delivery businesses feed a hungry populace. Bonus points for businesses that address immediate needs: good food at budget prices, small indulgences that don’t break the bank, or comfortable places to gather with friends, for example.</p><h3>7. Professional Consulting Services</h3><p>Generally, most large businesses look for ways to reduce overhead during a recession, sometimes by reducing headcount. Freelance workers that can quickly flex their schedules to pick up the slack may find themselves in high demand. Consultants who can help navigate a difficult economy may also find a niche. However, starting or running a professional consulting-oriented venture in an economic downturn can be tricky: Since spending is down, these types of business services must deliver significant, measurable value to attract and retain clients.</p><h2>Businesses that work in a recession</h2><p>The seven types of businesses highlighted above aren’t the only potentially recession-proof businesses out there. Small businesses that can quickly offer products and services in response to recessionary pain points can often find a market of ready and willing buyers. </p><p>For example, during the pandemic (which included a brief recession surrounded by major economic disruption), in-person fine dining establishments were hit hard. In response, online ghost kitchens offering a variety of delivered foods from a single location and restaurants that quickly pivoted to take-out found their moment. </p><p>Generally, recession-proof businesses often have one or more of the following characteristics: </p><h3><b>Adaptability</b> </h3><p>Small, nimble startups that can quickly lean into new opportunities brought about by recession have an edge. Laid off workers freelancing from home may need childcare that’s flexible instead of full time. Consumers who feel anxious about their finances may seek out the help of a financial advisor. Adaptability is also an asset when the economy picks up and needs change again.</p><h3><b>Recession-proof market</b></h3><p>Consumers with ultra-high incomes may not feel the pinch in a recession. Additionally, people who work in recession-neutral fields like healthcare and the government may have stable employment and steady incomes despite the economy. Some needs are essential: food, housing, clothing, and health.</p><h3><b>Access to capital</b></h3><p>Lean and mean is a mantra for recession-proof businesses, but access to business loans and credit may be what gets your business off the ground or helps you through a rough patch. Finding a business loan that will work for you can give you options you wouldn’t otherwise have.</p><h3><b>Unique delivery</b></h3><p>Online streaming services got their start during the Great Recession of 2007/08. Why? New technology made it possible for people to consume a lot of entertainment at a low cost without leaving the comfort of home—a perfect fit for a tight economy. Putting a new twist on an already established basic business model may help you meet a need that didn’t exist before.</p><h3><b>Affordable luxury</b></h3><p>Specialty lattes have survived many an economic downturn because they’re a small indulgence most people like to treat themselves to and can reasonably afford, even when money is tight. Consumers may be hungry for small splurges and low-cost “luxury alternatives” as budgets tighten.</p><h3><b>Financial fitness</b></h3><p>Minding your margins, managing cash flow, building and maintaining credit, and tending to your business’ overall financial health is critical during a down economy. Businesses that survive and thrive during a recession don’t just find demand—they meet that demand profitably and efficiently.</p><h2>The bottom line</h2><p>Starting a business in any economy means looking for opportunities that are responsive to the market and address the pain points of the times you’re in. Checking out recession-proof businesses is a starting point. You&#39;ll also need to consider whether a business suits your talents and expertise, whether it’s conducive to running as a small business, and if there are niche opportunities worth exploring.</p><p>Creating a detailed business plan is also critical. It&#39;s important you fully understand the opportunity you’re considering and the operational challenges of making your business a success. If you need information and help getting started, the Small Business Administration’s SCORE (Service Corps of Retired Executives) program connects up-and-coming entrepreneurs with business mentors and a library of information on starting your own business.</p>

Business Loan

The unsecured personal loan market continues to hit record highs, and despite challenging macroeconomic conditions, shows few signs of slowing down.

<p><b>Highlights:</b></p><ul><li><p>Personal loans are a growing sub-asset class of consumer credit that offer investors access to a growing $253 billion market.</p></li><li><p>Short-duration asset classes, like personal loans, typically offer favorable returns, without the same risk as longer-dated consumer assets, like mortgages.</p></li><li><p>The resilience of the unsecured personal loan market makes it an attractive asset class for banks and credit unions looking to diversify their portfolio mix.</p></li></ul><p>The unsecured personal loan market continues to hit record highs, and despite challenging macroeconomic conditions, shows few signs of slowing down. According to a May 2025 <a href="https://newsroom.transunion.com/q1-2025-ciir/">TransUnion</a> industry report, the personal loan market hasn’t just rebounded, it’s expanding. New loan originations, new account balances, and total loan balances are all up — quarter after quarter, year over year. </p><p>As banks and credit unions seek new ways to <a href="https://www.happen.com/resource-center/institutional-investing/how-diversification-builds-resilience-in-banking">diversify their portfolio mix</a>, personal loans as an asset class offer a unique opportunity to invest in shorter-duration loans with high-yields. </p><p>Let’s take a closer look at what investors need to know about what’s driving sustainable growth in the unsecured personal loan market and benefits this expanding asset class offers institutional investors. </p><h2>What is the unsecured personal loan market? </h2><p>As of Q1 2025, unsecured personal loans represent a <a href="https://newsroom.transunion.com/q1-2025-ciir/">$253 billion market</a> with a total of 29.8 million loans. Currently 24.6 million Americans have an unsecured personal loan and carry an average of $11.6K in debt per borrower. </p><h2>6 trends personal loan market trends for investors to watch</h2><p>As the personal loan market continues to expand, here’s closer look at six <a href="https://www.transunion.com/content/dam/transunion/global/business/documents/fs2025/q1-ciir-consumer-lending-report.pdf">key trends</a> investors should keep an eye on:</p><ul><li><p><b>Total balances are hitting record highs </b></p><p>In Q1 2025, total balances climbed to $253B, but the average individual consumer’s loan balance dropped to $11.6K, about a 2% decrease compared to the prior year. </p></li></ul><p><i><u>Why this matters for investors</u></i><i>: A rise in total balances shows strong growth in the personal loan market overall likely indicates continued resilience despite turbulent economic times. </i></p><ul><li><p><b>New loan originations are climbing. </b></p><p>In Q4 2024, new originations increased for the fourth consecutive quarter, hitting a record 6.3 million — an increase of 26% year-over-year. </p></li></ul><p><i><u>Why this matters for investors</u></i><i>: Growth in new originations may signal strong demand and a healthy market, creating more investment opportunities, better diversification, and scalable volume for recurring purchases or securitizations. </i></p><ul><li><p><b>New account balances are increasing.</b></p><p> Total new account balances grew 17.3% year over year to $33.9 billion in the last quarter of 2024. </p></li></ul><p><i><u>Why this matters for investors</u></i><i>: Rising new account balances might suggest greater borrower capacity and demand, supporting higher loan economics and stronger yield potential.</i></p><ul><li><p><b>Loan term lengths are falling.</b></p><p> The average loan term length in Q4 2024 fell 9.8% from the prior year to just below 28 months. </p></li></ul><p><i><u>Why this matters for investors</u></i><i>: Unlike longer-dated assets, like mortgages, short-duration loans can potentially offer attractive returns in just a few years.</i></p><ul><li><p><b>Estimated median APRs are increasing. </b></p><p>Interest rates continued their upward trajectory for prime and near prime risk tiers in Q4 2024. Rates rose to an average median APR of 21.8%, a 12.4% increase from 2023.</p></li></ul><p><i><u>Why this matters for investors</u></i><i>: </i>Higher APRs can improve gross yields, potentially leading to stronger returns. This is especially true when credit performance remains stable.</p><ul><li><p><b>Delinquency rates are dropping.</b></p><p> The overall borrower-level delinquency rate fell to 3.49% in Q1 2025, down from 3.75% in Q1 2024 and up slightly from 3.25% in Q1 2023. Many credit segments are now performing on par with, or better than, 2023 vintages, reflecting stable repayment behavior. </p></li></ul><p><i><u>Why this matters for investors</u></i><i>: </i>Consistently improving delinquency trends suggests that credit conditions are holding steady, which may offer investors greater confidence in cash flow reliability and portfolio resilience.</p><h2>Key factors promoting growth unsecured personal loans</h2><p>The <a href="https://www.transunion.com/content/dam/transunion/global/business/documents/fs2025/q1-ciir-consumer-lending-report.pdf%22HYPERLINK%20%22https:/www.transunion.com/content/dam/transunion/global/business/documents/fs2025/q1-ciir-consumer-lending-report.pdf%22%20/">TransUnion market </a><a href="https://www.transunion.com/content/dam/transunion/global/business/documents/fs2025/q1-ciir-consumer-lending-report.pdf">analysis</a> points to <a href="https://newsroom.transunion.com/q1-2025-ciir/%22HYPERLINK%20%22https:/newsroom.transunion.com/q1-2025-ciir/%22%20/">several </a><a href="https://newsroom.transunion.com/q1-2025-ciir/">factors</a> driving the lower delinquency rates in the personal loan market, and in turn, sustained growth for personal loans across all risk tiers: </p><p><b>More competition for new originations: </b>Direct mail volume has remained relatively steady since 2023; however online loan inquiry volumes were up ~42% in March 2025 over the prior year. In Q4 2024, fintechs accounted for just over 48% of total new account balances and 34% of new loan originations, accounting for an 8% market share increase over the prior year. </p><p><b>Higher loan demand in the lower risk credit tiers. </b>Super prime (FICO 781+) borrowers increased market share by ~2% and below prime risk tiers (FICO 660 and below) also saw significant growth in new loan originations. Total balances for the super prime risk tier saw the most increases, with modest growth in prime plus (FICO 721-780). </p><p><b>New advances in lender risk management practices.</b> Despite reduced delinquency rates and less risky borrower classes, lenders still appear to be maintaining cautious exposure. In Q4 2024, average loan originations were just over $6k, and loan terms were shorter for all risk tiers year-over-year — with super prime seeing the biggest decline of 13% year-over-year.</p><h2>How investors can manage rate risk with personal loans</h2><p>With <a href="https://www.reuters.com/business/fed-officials-see-two-rate-cuts-2025-overall-turn-hawkish-2025-06-18/?utm_source=chatgpt.com">two Fed cuts</a> still expected later this year, many investors are reassessing interest rate exposure. Personal loans may help manage rate risk by introducing shorter-duration assets into portfolios typically anchored to longer-term, fixed-rate instruments.</p><p>If rates decline, refinancing activity could support continued growth in personal loan originations. This asset class may also offer diversification benefits and differentiated performance characteristics, though results depend on credit quality and market conditions.</p><h2>The takeaway</h2><p>During these times of economic uncertainty, capitalizing on the personal loan market may be a win for both borrowers and investors. Once seen as a last resort for consumers in financial distress, unsecured personal loans are now a go-to option for low-risk borrowers looking to refinance high interest debt. With new originations and balances hitting historic highs, and delinquency rates on a downward trajectory, investing in unsecured loans as an asset class could have a big payoff for investors. </p>

Banks that diversify across customer segments, lending categories, income streams, geographies, and digital platforms are not courting fragility, but insulating themselves against it.

<p>Since the 2008 global financial crisis, the concept of banks diversifying their operations has sometimes been met with skepticism. Critics warned that expanding into new products, sectors, or geographies could make institutions too complex to manage and too interconnected to fail—ultimately increasing systemic risk. As a result, many banks chose to streamline operations and double down on their core competencies.</p><p>But today’s economic landscape, marked by inflation, geopolitical instability, and technological change, demands a different approach. In this environment, diversification isn’t a liability; it’s a safeguard. Banks that diversify across customer segments, lending categories, income streams, geographies, and digital platforms are not courting fragility, but insulating themselves against it.</p><h2>What happens when banks lean into diversification</h2><p>A <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4147790">report from the Wharton School at the University of Pennsylvania</a> highlights how diversification, in its many forms, may enhance a bank’s stability and ability to weather economic shocks.</p><p>Wharton finance professor Itay Goldstein, along with Michael Gelman (University of Delaware) and Andrew MacKinlay (Virginia Tech), analyzed U.S. bank diversification around the 2008 crisis. Their research found that banks that had already expanded beyond their original geographic and typical lending business boundaries were better positioned to sustain higher levels of lending, reduce risk, and stabilize revenue streams during the downturn.</p><p>The study, which examined lending trends from 1997 to 2017, <a href="https://www.thebanker.com/content/2030a19f-0c17-5e91-a971-6a033aeccad0">revealed</a> that diversified banks were more resilient and continued lending throughout the crisis. In fact, they were able to sustain higher levels of lending activity during the downturn, especially to small businesses.</p><p>Small businesses received more than twice as many loans from the most diversified banks compared to the least diversified. These loans played a critical role in helping businesses retain employees and create new jobs in local communities.</p><p>Interestingly, when diversified banks expanded into new markets or product areas, the broader banking sector didn’t suffer. On the contrary, the overall economic impact was largely positive.</p><h2>3 strategies to leverage bank diversification</h2><p>The 2008 crisis proved that diversification can be a powerful tool for stability. As banks navigate today’s uncertainties, these three strategies can help boost lending, minimize risk, and stabilize revenue:</p><ol><li><p><b>Expand into New Business Segments</br></b>Diversifying into non-lending activities—such as insurance, securities, investment banking, and trust services—can strengthen a bank’s ability to lend during economic stress. <a href="https://knowledge.wharton.upenn.edu/article/how-diversification-helps-banks-lend-more-cut-risk-and-boost-the-economy/#:~:text=%E2%80%9CDiversification%20gives%20banks%20more%20stability,not%20always%20been%20viewed%20favorably.">Insurance lines, in particular,</a> have shown strong performance during financial crises.</p></li><li><p><b>Broaden Geographic Reach</br></b>Lending across more counties or states enables banks to maintain higher lending levels during downturns. The most geographically diversified banks <a href="https://knowledge.wharton.upenn.edu/article/how-diversification-helps-banks-lend-more-cut-risk-and-boost-the-economy/#:~:text=%E2%80%9CDiversification%20gives%20banks%20more%20stability,not%20always%20been%20viewed%20favorably.">lent twice as much</a> to small businesses during the 2008 crisis compared to their less diversified peers.</p></li><li><p><b>Invest in Consumer Credit as an Asset Class</br></b><a href="https://blogs.cfainstitute.org/investor/2025/01/29/consumer-lending-unlocked-opportunities-and-risks-in-a-27-trillion-market/">Short-duration investments like personal loans</a> offer attractive returns with lower risk than long-dated assets. Allocating capital to non-mortgage consumer credit can help banks diversify their balance sheets and improve resilience.</p></li></ol><h2>Spotlight: personal loans are a growing asset class</h2><p>Personal loans are emerging as a compelling sub-asset class within consumer credit, offering access to a <a href="https://newsroom.transunion.com/q4-2024-ciir/">$251 billion market</a>. With shorter durations and higher yields than traditional fixed-income assets, personal loans can deliver strong earnings—even in a high-interest rate environment.</p><p>While long-duration, lower-yielding assets will remain part of most portfolios, personal loans offer a unique opportunity for banks to diversify and strengthen their investment strategies <a href="https://www.americanbanker.com/news/banks-face-promise-and-peril-with-weakened-bank-regulators">amid regulatory and economic uncertainty</a>.</p><h2>The takeaway</h2><p>There’s no crystal ball to predict the future of the economy or the banking sector. But one thing is clear: banks must prepare for turbulence. Once viewed with caution, diversification has proven to be a powerful force for stability.</p><p>As the Wharton study shows, diversified banks not only weathered the 2008 crisis—they helped fuel recovery. By embracing diversification across lending, geography, and investments, banks can reduce risk, support multiple local economies, and build the resilience needed to thrive in any economic climate.</p>

The typical investment mix of long-term loans and securities may turn out to yield lackluster results. Banks may have another investment option: consumer credit. 

<p>Bank leaders today are navigating a complex list of ever-changing challenges. With a premium on liquidity, commercial real estate under duress, and credit risks shifting across sectors, traditional asset strategies are being re-evaluated — forcing banks to rethink where, and how, they deploy capital. </p><p>The typical investment mix of long-term loans and securities may turn out to yield lackluster results. Banks may have another investment option: consumer credit. </p><p>In recent years, <a href="https://blogs.cfainstitute.org/investor/2025/01/29/consumer-lending-unlocked-opportunities-and-risks-in-a-27-trillion-market/">consumer credit</a> has emerged as a viable, but often overlooked investment alternative for banks that want to balance out their long-duration, lower-yielding fixed income portfolios. In particular, personal loans — a growing sub-class within consumer credit — have proven to be a solid investment option for banks, thanks to their short durations, high yields, and solid returns. Some banks choose to build a portfolio of personal loans by offering the product directly; others choose to invest in loan portfolios originated by fintech or other banks. Many banks like working with fintechs to benefit from access to the asset without the added infrastructure.</p><h2>Understanding personal loans as an asset class</h2><p><a href="https://blogs.cfainstitute.org/investor/2025/01/29/consumer-lending-unlocked-opportunities-and-risks-in-a-27-trillion-market/">Consumer lending</a> has a market size of $27 trillion (and growing) and is generally categorized into two core groups: property-backed residential mortgages and non-property-backed consumer loans. As an asset class, it offers investors access to a wide range of opportunities that provide exposure to the creditworthiness of consumers – from traditional residential mortgages and personal loans to emerging products, like buy now, pay later (BNPL) loans.</p><p>This massive growth in consumer lending has largely been fueled by changing consumer behaviors and technology advances.</p><h2>Four key benefits of personal loans as an asset class</h2><p>When banks choose to invest in consumer lending, and more specifically the sub-asset class of unsecured personal loans, they can benefit from the following:</p><h3>1. Quality borrowers</h3><p>Consumers that take out personal loans are often individuals that are actively looking to improve their financial future. Borrowers are usually in their mid-30s to mid-50s with established credit histories, higher incomes, and relatively solid credit scores. They want to find a way to manage their debt responsibly and generally use personal loans to consolidate high-interest credit card debt. </p><p>After consolidating debt with a personal loan, borrowers can benefit from one simple payment, fixed terms, and fixed interest rates. Plus, it’s common for their credit scores to increase. Happen Bank, formerly LendingClub, members, for instance, see a credit score increase of 48 points, on average, after consolidating debt with a personal loan.</p><h3>2. Solid returns banks can count on </h3><p>Personal loans often have shorter durations (with terms typically ranging from 24- to 72-months) compared to longer-dated asset classes, like mortgages. They also typically offer higher yields (typically approximately 6-8%) with a steady stream of income coming from borrowers who repay their loans. </p><p>Delinquency rates for personal loans are low and trending downward across all risk tiers. In the last quarter of 2024, TransUnion reported the 60+ days past due delinquency rate dropped to <a href="https://newsroom.transunion.com/q4-2024-ciir/">3.57%</a>, down from 3.90% the previous year.</p><h3>3. Opportunity for diversification</h3><p>With their relatively high yields and short durations, personal loans offer banks the chance to diversify their investment portfolios. Long-duration, lower-yielding and traditional fixed income assets will likely continue to be a part of a bank’s investing strategy; adding shorter-duration assets can help balance out a portfolio. </p><h3>4. A growing asset class</h3><p>Personal loans as a market segment continue to grow. The latest <a href="https://newsroom.transunion.com/q4-2024-ciir/">quarterly data</a> on the US personal loans segment from TransUnion shows a 15% uptick in originations over the previous year — marking the third consecutive quarter of year-over-year growth. </p><p>Currently, 23.5 million US consumers have an unsecured personal loan, with total loan balances reaching $251 billion, according to the latest TransUnion figures.</p><h2>A strong choice in uncertain economic times</h2><p>In this political and economic climate, <a href="https://www.americanbanker.com/news/banks-face-promise-and-peril-with-weakened-bank-regulators">the banking and lending regulatory landscape faces many unknowns</a>. A changing regulatory and macroeconomic landscape could <a href="https://www.reuters.com/world/us/financial-firms-hated-us-consumer-watchdog-rapid-unraveling-creates-limbo-2025-02-13/">keep the industry in limbo</a> for months to come. </p><p>During times of unpredictability, it can be hard for investors to evaluate and make longer-dated investments. Short duration investments can provide compelling returns with a shorter time horizon. </p><h2>What to consider when investing in personal loans</h2><p>When <a href="https://blogs.cfainstitute.org/investor/2025/01/29/consumer-lending-unlocked-opportunities-and-risks-in-a-27-trillion-market/">investing in personal</a> loans, investors can choose from a range of structures with different risk and return profiles. For instance, Happen Bank offers investors the flexibility to purchase loans on a passive or active basis, in bulk or as individual loans. Loans can also be purchased as whole loans or in security format.</p><p>Before investing in personal loans, banks should determine their objectives and where they want to play on the risk-return spectrum. They should also determine the best provider to work with—ideally one with deep experience in the space and a track record of delivering compelling returns. </p><h2>The bottom line</h2><p>With heightened uncertainty as multiple economic forces put pressure on banks’ balance sheets, U.S. banks would do well to look to new options. Despite the macro headwinds facing U.S. banks — tighter monetary policy, commercial real estate stress, and deposit volatility — personal loans stand out as a resilient asset class.</p><p>Amid falling valuations in fixed-income securities and rising credit risk in commercial real estate and corporate lending, personal loans offer a diversified, high-yielding, and risk-adjusted opportunity that aligns with the ever-evolving needs of banks.</p>