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Cashier’s Check: When You Need One and How to Get It

Cashier's check: Summary A cashier’s check is a check guaranteed by a bank, drawn from its own funds and signed by a cashier or teller. It’s one of the safest ways to make large payments on purchases. The most important difference from a regular check is that the bank guarantees its payment, not the purchaser.


You’re about to make a big purchase — maybe your first house, or a car — and even though you saved enough money for a down payment, the seller requires a cashier’s check. If you’ve never purchased a cashier’s check, you might be wondering why a personal check isn’t OK, and what kind of fees you’ll have to pay.

Here’s how cashier’s checks are used and how you can get one when you need it.

What are cashier’s checks?

A cashier’s check is a draft guaranteed by a bank, drawn from the bank’s own funds and signed by a cashier or teller. It’s used in place of cash, personal checks, credit cards or money orders.

People also use: • Money orders • Certified checks

The most important difference with a regular check is that the financial institution that issues a cashier’s check covers its face value instead of the purchaser. Sellers ask for this kind of payment because it’s guaranteed, since the funds are drawn against the bank rather than a personal account.

How can you get a cashier’s check?

A teller ensures that the purchaser has the cash to pay for the check or, if the funds being used are in an account at that bank, that there is enough there to pay for it before issuing a cashier’s check. The full amount of the check will be frozen in your account or withdrawn when the check is issued.

Fees and bank policies

Many banks charge a fee of around $10 to cut a cashier’s check, but some offer them for free to customers, depending on the type of account a customer has. At least a few charge a percentage of the check amount. Information about these fees and related policies can usually be found in the checking rates and fees pages that most institutions publish on their websites.

If you’re traveling, or in a pinch, and you can’t find a bank that will issue you a cashier’s check for cash, you may need to open an account. Our checking tool can help you compare the costs and possible charges associated with free or low-fee checking accounts.

Identification required

You’ll need to talk face to face with a teller to get a cashier’s check. You’ll have to show identification, supply the exact amount of the check you need and provide the name of the payee. You can’t get a blank cashier’s check; you must furnish the name of the payee when you purchase the check. Once the teller confirms you have the funds to cover the requested amount, the check will be written for the amount you requested, and the teller or a bank officer will sign it. NerdWallet is a free tool to find you the best credit cards, cd rates, savings, checking accounts, scholarships, healthcare and airlines. Start here to maximize your rewards or minimize your interest rates. Bev O'Shea Get Your Free Credit Score Get your free score every week.Set goals and see your progress.Signing up won't affect your score. Get your credit score

Security protection

Although funds from a cashier’s check deposited into a bank account are usually available the next day, many banks place a hold on amounts over $5,000 until the check has been cleared by the issuing bank. In some cases this can take days, but that helps protect against cashier’s check fraud. Cashier’s checks contain additional security features that make counterfeiting more difficult, and this also helps prevent scams. Try not to take a cashier’s check from someone you don’t know, and if you do receive one, wait to use the funds until several days after the check has been deposited, or check with your bank to make sure it has cleared.

If a cashier’s check is lost, banks may require the purchaser to get an indemnity bond for the amount of the lost check before issuing a replacement, according to the U.S. Office of the Comptroller of the Currency, a bank regulator. This bond ensures the purchaser is liable for the replacement check.

Cashier’s check vs. certified check vs. money order

A cashier’s check isn’t the same as a certified check, which is a personal check written by a bank customer and drawn on the customer’s account. The bank certifies the signature is genuine and that the customer had sufficient funds to cover the check when it was issued.

Why use a cashier’s check instead of a money order? Money orders are inexpensive, and you can purchase them with cash or a debit card, but there may be limits, such as the U.S. Postal Service’s $1,000 cap on the amount. Also, money orders aren’t considered guaranteed funds, since they aren’t covered by another institution.

The bottom line

Cashier’s checks are one of the safest, most practical and increasingly preferred ways to make large payments on purchases. If you have a big purchase to make and can’t use a debit or credit card, a cashier’s check can be a great way to pay a large amount of money. When you purchase one of these checks from a bank or credit union, all parties can be confident that the transaction is secure and the risk of theft or fraud is minimal.

Updated Feb. 21, 2017.

LendingPoint Personal Loans: 2017 Review

NerdWallet rating: 4.0 / 5.0 Good for: Bad credit, debt consolidation

LendingPoint offers personal loans for people with average to bad credit scores who need a fresh start on paying down and consolidating debt or building credit. LendingPoint may offer cheaper interest rates than other online lenders because it looks at more than just your credit score.

LendingPoint may be a good fit for you if:

  • Your credit score is at least 600
  • Your salary is $20,000 or more
  • You live in one of these 17 states: Ala., Calif., Colo., Del., Ga., Mich., Mo., Mont., N.J., N.M., N.D., Ohio, Ore., S.D., Texas, Utah, Wash.
LendingPoint at a glance Typical APR15.49% – 34.99% Loan amounts$3,500 - $20,000 Time to fundingNext day in some cases Origination feeVaries by state Soft credit check?Yes Apply Now


» MORE: Lenders that offer personal loans for bad credit

LendingPoint personal loan review

To review LendingPoint, NerdWallet collected more than 30 data points from the lender, interviewed company executives, completed the online loan application process with sample data, and compared the lender with others that seek the same customer or offer a similar product.

If you have average or bad credit, LendingPoint could be a cheaper place to get a loan compared with other lenders. That’s because LendingPoint looks beyond your basic credit score, grading your creditworthiness on a range of other factors. The grades don’t correspond directly with credit scores, so someone with a low credit score could still earn a high grade and get favorable loan terms, says Tom Burnside, LendingPoint’s CEO.

The other factors include:

  • Credit history and credit card debt.
  • Employment status.
  • Current delinquencies and bankruptcies.
  • Charge offs in the last 12 months.
  • Open tax liens.
  • Debt-to-income ratio.

You can be approved for a loan in as little as 15 minutes, though in some cases it takes several days. Some borrowers receive funds by the next business day.

Customizable repayment options

LendingPoint personal loans come with a lot of flexibility. You can customize some aspects of your repayments, like choosing a payment due date and scheduling your payments every other week, every 28 days or at some other interval. The origination fee can be paid upfront or added to your interest rate. You can request one loan modification during the term of your loan.

How to apply for a LendingPoint loan

You can apply on LendingPoint’s site, or you can apply on NerdWallet using the button below. NerdWallet’s lender marketplace checks multiple lenders and displays all the loans for which you qualify, based on your application. You can compare rates in one place, and applying won’t affect your credit score.

Apply Now More about LendingPoint

LendingPoint loan requirements

  • Minimum credit score: 600
  • Minimum income: $20,000
  • Minimum credit history: None
  • Debt-to-income ratio: 45% or below

LendingPoint terms

  • APR range: 15.49 – 34.99%
  • Loan amount: $3,500 – $20,000
  • Loan duration: 24 – 48 months

LendingPoint fees and penalties

  • Origination fee: Varies by state
  • Prepayment fee: None
  • Late fee: $30 after 15-day grace period
Before you take a personal loan

Consider other debt consolidation options

Check your free credit report

Learn how personal loans work

Calculate payment scenarios

Have a plan for getting out of debt

Amrita Jayakumar and Jeanne Lee are staff writers at NerdWallet, a personal finance website. Email: or Twitter: @ajbombay or @jlee_jeanne.

Updated Feb. 21, 2017.

Personal Loans Ratings Methodology NerdWallet’s ratings for personal loans awards points to lenders that offer consumer-friendly features, including: soft credit checks, no origination fees, payment options, short time to funding, interest rate caps of 36%, and absence of prepayment penalties. Features are considered for their positive impact on consumers’ credit history and financial health. To ensure accuracy and consistency, our ratings are reviewed by multiple people on the NerdWallet Personal Loans team. — Among the very best for consumer-friendly features — Excellent; offers most consumer-friendly features — Very good; offers many consumer-friendly features — Good; may not offer something important to you — Fair; missing important consumer-friendly features — Poor; proceed with great caution

Don’t Hit the Brakes on Uninsured Motorist Coverage

By Scott W. Johnson

Learn more about Scott on NerdWallet’s Ask an Advisor

Almost all states require drivers to carry a minimum amount of auto insurance. Unfortunately, many drivers ignore this law. For example, 25.9% of drivers in Oklahoma are uninsured, according to 2012 data from the Insurance Information Institute.

This is the highest rate in the nation, but every other state also has a significant percentage of uninsured drivers.

Of course, these drivers aren’t only flouting the law; they’re also jeopardizing your financial future. When a driver without auto insurance hits your car, you might be on the hook for your own medical bills and repair costs.

These economic consequences can come not only from uninsured motorists, but underinsured ones as well. With some state minimums as low as just $10,000 in personal injury coverage, a huge percentage of Americans are driving around without nearly enough liability insurance.

That’s why it’s a good idea to carry uninsured and underinsured motorist coverage. These pay your medical bills — and sometimes your property damage costs — if the person at fault in your car accident doesn’t carry automobile liability insurance or doesn’t carry enough.

Insuring against financial catastrophe

For an idea of how costly it can be to get in an accident with an uninsured motorist, just imagine the cost of even short hospital stays. Don’t forget to factor in ambulance costs, emergency room care, missed work, specialized rehabilitative care, physical therapy, and potentially even at-home skilled nursing care. Even if you’re in an accident with someone who has minimum coverage, $10,000 won’t go very far toward meeting your needs.

Many people assume that their health insurance will pay all medical bills arising from an auto accident. This may or may not be the case. Even when your health insurance does cover all your medical costs, it typically won’t pay for time off work, long-term care or cosmetic surgery — not to mention that you’ll still owe deductibles and copays.

Uninsured motorist insurance also kicks in when the at-fault driver leaves the scene of an accident. Both can work either in place of or in tandem with your health insurance and can help pay for days off of work or long-term specialized care.

Of course, you can always sue the person who caused your accident — but people who don’t have or can’t afford auto insurance often have no assets and couldn’t pay a verdict.

How much to purchase

I generally suggest clients purchase as much uninsured and underinsured motorist coverage as they have in general liability insurance. After all, if you have $100,000/$300,000 in general liability and only $50,000/$100,000 in uninsured or underinsured motorist coverage, you’re purchasing more insurance for others than for yourself. That might appear to be very nice, but is it practical?

» MORE: How much car insurance do I need?

Every state has its own rules and regulations around these policies, as with all insurance. According to the Insurance Information Institute, about 20 states require some version of the two; the rest don’t. But just because your state doesn’t require them doesn’t mean that you do not need it. Uninsured and underinsured motorist coverage can help you avoid potentially catastrophic situations.

Scott W. Johnson is an insurance agent and manager at Marindependent Insurance Services.

Millennials, Have Presidents Day Off? Get Your Investing Game Started

If you’ve got Monday off for Presidents Day, you may choose to spend it binge-watching “The OA” or brunching with your crew. But it would be smart to set aside a little time to give your finances the presidential treatment.

Not sure how to invest in your 20s or finally get that budget started? Here are some steps to take.

Bring spending under control

Overspending is one of the most common complaints about government; the powers that be are in a constant battle over how to keep the nation’s budget in check. Overspending plagues average Americans, too, especially with credit cards and the all-too-simple ways to use them (ahem, Amazon Prime). But if you are regularly living beyond your means, it’s a recipe for debt and disaster.

To start getting on track, write down all of your monthly income, including your day job and side hustles. Then write down all of your required monthly obligations: debt payments, groceries, bills, transportation costs and so on. If your expenses add up to more than your income, you’ve got to find ways to cut costs so you don’t accrue debt.

If you’re lucky, you’ll have a monthly surplus. Aim to designate a percentage of that extra cash for saving or investing, and consider setting up automatic transfers to savings or brokerage accounts each month. The remainder can be discretionary income for things like Netflix, nights out and Uber rides.

Get serious about retirement

Even presidents have to retire someday. Starting to save for retirement now can be challenging if you have huge student loans or rent payments. But the sooner you start, the more you’ll benefit later, thanks to compounding returns.

If you already have a retirement account, see whether you can afford to increase your contribution. Not there yet? If your employer has a 401(k), sign up to automatically contribute a percentage of your paycheck each month — especially if there’s an employer match, which gives you free money. Contributions are also pretax, which gives you the benefit of lowering your amount of taxable income.

If a 401(k) isn’t an option, consider opening a Roth IRA. In this retirement account, you contribute money after it’s been taxed. The money then grows, and you can withdraw it tax-free once you reach 59½.

Invest in your future

Presidents must make tough decisions, balancing what might be popular now and what might be best long term. You can look at your own investing the same way. Taking money that could be used on fun or immediate needs and putting it in the market may feel boring and unsatisfying. But investing even small amounts in nonretirement accounts can generate more returns than a savings account and help you buy a house or send your kids to college years from now.

Index funds and exchange-traded funds are excellent choices for new investors. They’re essentially a basket of various stocks and other investments that will diversify your portfolio and provide less risk than individual stocks. They also usually have relatively low fees. If you’re a newbie, learn more about how to invest in stocks before you get started.

Enjoy your day off, but don’t miss out on the chance to evaluate your finances and set yourself up for a more stable future.

Emily Starbuck Crone is a staff writer at NerdWallet, a personal finance website. Email:

Sean Talks Money: How to Give Your Child Excellent Credit

My sister Megan called me recently asking for advice on picking a new credit card. Because she’s a college student and only 19, I assumed she’d qualify only for a student or secured credit card, so I spent 10 minutes talking her ear off about those options before I bothered asking whether she knew what her credit score was.

Her answer? 778, well into the “excellent credit” range many top-tier credit cards require. I was floored. My baby sister’s credit score was only 20 points lower than my own, despite my having a regular job, bill pay history and quite a few credit accounts to my name.

After some digging, I learned that my parents had basically gifted her near-perfect credit by the time she graduated high school. Here’s how they did it and how you can try to do the same for your kids.

How it happened

Looking at Megan’s credit score dashboard at NerdWallet reveals some interesting stats:

  • The oldest credit card on her report is older than she is, at 23 years and 7 months.
  • The average age of her accounts is 7 years and 2 months. (Seven years ago, my sister was 12.)
  • 12 open accounts.
  • An unblemished payment history.
  • Over $100,000 credit line.
  • Four hard inquiries in the past year, which is above average, suggesting that her score could rise even further once the impact of those “hard pulls” dissipates.

»MORE: Understand your credit score

Those stats aren’t errors. They just reflect the potential power of “authorized user” status.

My parents didn’t have a master plan when they added Megan as an authorized user of their cards. They did so simply because giving her direct access to their cards was easier than giving her cash when she went on school trips, attended dance camps, or just stepped out for gas or groceries.

Fortunately for Megan, my parents have had many years of impeccable credit hygiene, and she automatically gained that same benefit as an authorized user of their cards. As a result, my sister has amazing credit, even though the longest-serving card she herself owns is just 1 year and 5 months old.

“The first time I found out my credit score was when I applied for an apartment and they requested my credit information,” Megan told me. “I remember sitting at the desk in my dorm room, and once I found out, I immediately called my mom and then I ran around and told all of my roommates. Sadly they didn’t share the excitement since they had no idea what a credit score was.”

Should you do this for your children?

This may sound odd, but you can add your children of any age as authorized users on your credit cards. Here are the caveats you should keep in mind:

  • The authorized user approach makes sense only if you can add your children to a card in good standing, meaning you’re paying the bills on time and keeping the balance low. Any mistakes you make on your card, such as missing a bill or charging a high percentage of your credit limit, would damage your children’s credit score.
  • If you’re concerned about what your children might do with access to your credit line, then simply don’t give them the actual cards. Add your children as authorized users and then — when the mail comes — shred the cards or bury them in your sock drawer. Your children will get the credit benefit regardless of whether their card is ever used; the credit bureaus don’t know the difference.
  • FICO and VantageScore, the two biggest credit scoring companies in the U.S., aren’t enamored of the idea of credit piggybacking. They’re working on newer versions of their credit-scoring algorithms to lessen the positive impact of being an authorized user, so your children may not benefit as much as my sister did. That said, lenders tend to be rather slow to adopt the newer credit scoring algorithms, so this may not have much real-world impact for a while.
  • If you trust your children with access to your money, you’ll also need to trust that they’ll protect your credit card information. Make sure they know credit card security basics, like to use it only at reputable websites and businesses, and to never leave cards lying around in public sight.

My mom, Kristen, has some additional advice: “Make sure your child understands the importance of credit and that it isn’t free money. They can go and buy something on credit and it be pretty easy, but they have to understand that the charge has to be paid.”

If you have a card with solid payment history, consider adding your children as authorized users. It can help them build their credit and learn other financial skills that will serve them well when they’re no longer under your roof.

Sean McQuay is a credit and banking expert at NerdWallet. A former strategist with Visa, McQuay now helps consumers use their credit cards and banking products more effectively. If you have a question, shoot him an email at The answer might show up in a future column.

Online Medicine: What to Know Before You Sign Up

By Cheryl Welch

Learn more about Cheryl on Nerdwallet’s Ask an Advisor

The world of health care is changing rapidly thanks to new advances in technology. Innovations such as patient portals and telemedicine allow patients and doctors to connect in new ways. However, there are pros and cons to both services.

Patient portals

Medical practices across the country are rolling out patient portals, which are secure websites where patients can view, download and share their health information, including blood work and lab results. They can also contact staff and doctors via a messaging system and request medical records, prescription refills and appointments — all 24/7.

Mary*, an RN in New York, loves using patient portals. She typically works overnight shifts and isn’t awake during normal business hours, so the service allows her to take care of medical tasks when it’s convenient. For example, she receives an appointment time within three days of requesting one via the portal.

Still, other patients, even the most technologically savvy, find these portals to be unfriendly. And some note that some portals aren’t mobile friendly, limiting their usefulness for patients on the go. They can also come with hidden costs. Another client, Ashley, was offered access to a free patient portal and told to email her child’s pediatrician with any questions — but later received bills for $50 per email.


Some medical practitioners also offer telemedicine, or patient appointments via telecommunications technologies such as Skype. This service increases access to medical care in underserved regions and remote areas. It can also cut down on costs associated with traditional health care.

It’s a new process, but some states — including New York — already require insurance companies to cover telemedicine as they would in-office services. But doctors don’t necessarily advertise this to their patients. Visits can cost as little as $25 and help patients avoid in-person visits for routine ailments, but many don’t know they have the option.

Patient portals and telemedicine can benefit both patients and medical personnel, but doctors should do a better job of making both user-friendly, cost-effective experiences and publicizing their availability. In the meantime, patients should ask their practitioners and insurers about online medical services, including the costs involved, before diving in.

*Names have been changed to respect the privacy of the patients interviewed.

Cheryl Welch is the president of Hudson Valley Medical Bill Advocates.

How I Ditched Debt: Well Kept Wallet

A Home Equity Loan Is a Smart Choice as Rates Rise

In recent years, home equity loans have gone the way of boy bands. So last-century. In an era of low interest rates, home equity lines of credit and cash-out refinances have been the equity-tapping products of choice.

Home equity lines of credit, or HELOCs, have been popular because they usually are built with low introductory rates, which have been scraping the bottom. Cash-out refis have been sought because with mortgage rates at a historical floor, millions of homeowners have been refinancing to lower their rates and tap the equity in their homes.

Plain-and-simple home equity loans, with the security of a locked-in interest rate that never changes, have been yesterday’s news. But as the economy improves and interest rates rebound, you may have to go throwback if you want to access some of your home value.

Regulation stalled home equity loans

At least some of the blame for the missing home equity loans can be placed on regulation. Dodd-Frank, the wide-ranging financial reform act instituted in 2010, mandated that lenders revise statements and disclosures for home equity loans, but not for HELOCs.

It required lenders to implement extensive system changes, and as a result, some companies decided to eliminate home equity loan products. Besides, low interest rates and rising home values kept lenders busy with refinance demand and HELOCs. Banks and borrowers had no interest in the additional paperwork required on home equity loans.

Rising interest rates may change demand

Mortgage rates were under 4% for all but two months for 2015 and 2016, according to Freddie Mac. But the sun appears to be setting on the sub-4% mortgage rate.

Logan Pichel, head of consumer lending for Regions Bank, believes that as rates rise, more people may back down from a move-up mentality. He says homeowners in 2017 and beyond may consider remodeling their existing house — with its already low mortgage rate — instead of buying a bigger home at a higher interest rate.

In that scenario, a home equity loan may be the right solution.

Pichel predicts many homeowners will say, “I am not going to move up into the next bigger house because I’m sitting here today on a 3 1/2% mortgage rate, and if I were to sell my home and go buy another one, I now have a 4 1/2% mortgage rate.” A home equity loan would allow those homeowners to upgrade a kitchen, add a bedroom or build an outdoor living area, for example.

And with rates expected to climb in the months ahead, the relative advantage of a HELOC with a low introductory rate is not as clear because it’s likely to increase when periodic rate resets kick in.

“Our opinion is, we’re going to see fewer move-up buyers and we’re going to see more home equity business as a result of the increase in interest rates,” Pichel says.

Johnna Camarillo, manager of equity lending at Navy Federal Credit Union, agrees.

“I think we’re going to see a shift back to fixed equity loans,” Camarillo says. “Our members tend to be more fiscally conservative, and so they like the security of knowing that ‘my payment is always going to be X number of dollars.’ Especially if they already know that they’ve got a specific purpose for their loan.”

» MORE: Check mortgage rates now.

Fix it and forget it

After that decision, Pichel says, the next move is to choose between a home equity loan and a home equity line of credit. HELOCs usually begin with a slightly lower rate than fixed-rate home equity loans.

But HELOC rates are commonly adjustable and subject to the ups and downs of short-term interest rates, at least at the beginning. Many lenders allow borrowers to carve out a portion of their balance owed and put it into a fixed-rate loan.

“As you see an increase in interest rates, you’ll have a set of individuals that will say, ‘You know what, I’m going to lock in at a fixed rate,’ ” he says.

And some customers, Pichel says, appreciate the discipline of a fixed-rate loan for reasons including:

  • They know exactly what their monthly payment will be, which helps with budgeting.
  • Tapping home equity with a lump sum rather than through a line of credit removes the temptation to pay down and then draw money from the line again.
  • With a set number of payments, borrowers knows their payoff date.

Some customers like knowing the exact numbers. Navy Federal’s Camarillo says there’s a comfort level with knowing the specific amount you’ll owe, how long it will take to pay the loan off and what your payment will be each month.

Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @halmbundrick.

It’s OK to Spend Money on Yourself — Really


People who spend too much outnumber, by far, those who spend too little. But the methods that therapists and financial planners use to help “underspenders” can guide the rest of us about when it’s OK to splurge and when we should resist.

Chronic underspenders can be so terrified about running out of money that they put off health care, ignore needed home repairs or descend into hoarding, says financial planner Rick Kahler of Rapid City, South Dakota. Framing certain expenditures as an investment and creating a plan that helps them see how much money they can spend without causing financial ruin can ease their distress, he says.

“‘Spend’ is not a good word to a frugal person,” says Kahler, author of “Conscious Finance: Uncover Your Hidden Money Beliefs and Transform the Role of Money in Your Life.” “It connotes waste.”

Planning also helps those who are trying to handle money better by paying off debt, building savings and investing for retirement. High-quality experiences or purchases that give lasting pleasure can stave off burnout and “frugal fatigue” that might otherwise cause people to abandon their money goals.

Here’s how to walk the line:

Have a budget

You don’t want to splurge one month and wind up short on rent the next. A budget helps you find out where your money is going now and what upcoming bills you need to cover. Your just-for-fun spending will come out of the income that’s not already spoken for.

Decide how to invest in yourself

Experiences tend to give us more lasting pleasure than things, but the right purchases also can be an investment in happiness. If you’re learning to play music, for example, upgrading your instrument can contribute to your well-being every time you lay hands on it. If you feel guilty spending on pleasurable things, you may need some practice.

Psychologist and financial planner Brad Klontz of Lihue, Hawaii, tells his workaholic clients to get massages so they can be exposed to what it feels like to indulge.

Don’t wait until you’ve ‘arrived’

Paying off credit card debt and building emergency savings can take years. Investing enough for retirement will take decades. And you only live once. As long as you’re on track with your goals, you should be able to afford the occasional splurge.

What does it mean to be on track? Generally, it means that you’re saving enough to replace roughly 70 percent of your income in retirement and that you’re scheduled to pay off all your toxic debt, such as credit cards and payday loans, within the next five years, while making all required payments on any mortgages, auto loans and student loans.

If you’re not on track, your splurges should be on the smaller side until you’ve got a better handle on your money. Not sure? Consider a consultation with a fee-only financial planner who can give you an objective assessment, says Klontz, co-author of “Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health.”

Save the full amount before you spend on fun

This one habit can stave off a world of regret. If it helps, you can set up a dedicated savings account. Online banks and some credit unions let you set up multiple savings sub-accounts that you can name, so you can have ones for “vacations,” “guitar,” “new wardrobe” or whatever else you desire.

Use financing carefully

Even if you know better than to finance the fun stuff, you can find yourself overspending when borrowing for big purchases such as cars or homes. Borrowed money feels less real than cash in your wallet, so you may be more tempted to spend on luxury add-ons. You wouldn’t pay $2,000 cash for a DVD player, for example, yet people often shell out that much for “rear-seat entertainment systems.”

One way to make sure you can really afford what you’re buying is to first stick to conservative loans, which means a fixed-rate mortgage that lasts 30 years or less, or an auto loan that lasts four years or less. Then add the expected payment to all your current “must have” expenses: shelter, food, utilities, transportation, insurance, child care and other minimum loan payments. If the expected total is 50 percent or less of your after-tax income, you can probably afford the new payment.

If you continue to struggle with a fear of spending, both Klontz and Kahler recommend taking those anxieties to a therapist.

“It’s always emotional and rooted in some past wounding or unfinished business,” Kahler says. “We need to examine the baggage that keeps us stuck in those feelings.”

Liz Weston is a certified financial planner and columnist at NerdWallet, a personal finance website, and author of “Your Credit Score.” Email: Twitter: @lizweston.

This article was written by NerdWallet and was originally published by The Associated Press.


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