Got questions about banking? Just ask Alex, our expert banker, to get the advice you need to be successful. Learn more about the importance of paying off your credit card. Discover the differences between an IRA and 401K. Delve into what you need to do when traveling out of state with a debit card.
Question: Is it okay to pay the minimum payment on your credit card? – Jason from Honolulu, Hawaii
Answer: At the very least you should pay the minimum balance on your credit card. It is normally a fixed amount (usually around $20 to $25) or a percentage of the outstanding balance (approximately 1% to 3%). If not paid, there will be adverse actions like being charged a late fee and the reporting of a late payment on your credit report. If possible, pay down more of the outstanding balance. Remember the more you pay now, the less you pay later and in less time. According to NerdWallet, if you only pay the minimum payment on a credit card with a balance of $6,081, at an interest rate of 14.99%, you will pay $4,064 in interest and it will be paid off in 169 months. Conversely, in the same scenario, if you make the minimum payment plus $100 you will pay $1,409 in interest and it will be paid off in 41 months.
Question: What is the difference between an IRA and a 401K? – Alyssa from Long Island, New York
Answer: There are several differences between an IRA and a 401K. While both are used to save for retirement, the biggest difference is that a 401K must be established by an employer compared to an IRA that is set up by an individual. With an IRA, the individual can choose to contribute up to $6,000 per year plus an additional $1,000 if he or she is at least 50 years old. On the other hand, with a 401K, the employer has the option to make contributions to the employee’s account. The employee can contribute up to $19,000 per year plus an additional $6,000 if he or she is 50 years or older. On top of that, the employer can contribute any dollar amount they choose as long as the total contribution is no more than $56,000 or 100% of the employee’s salary, whichever is less.
Question: I am traveling and want to make sure my debit card works. What should I do? – Hank from Boise, Idaho
Answer: Contact your bank before you leave and let them know that you will be traveling, especially if it is out of state. Give them the places where you will be going, the departure date, and return date. The bank will set up a travel notification so the debit card will not be disabled due to suspected fraudulent activity. Find out the debit card’s daily spending limit, which ATMs you can use, fees associated with using an out of network ATM, and a telephone number that you can call if there are any issues with the card. If you haven’t used your debit card in a while, make sure to test it at an ATM.
Important: For your specific questions about banking, contact your banking expert, Alex, at: firstname.lastname@example.org
Alex is starting his 17th year in the banking industry. He has worked for such notable banks as Bank of America, US Bank, and Chase. Alex has his bachelor’s degree in Business Economic from the University of California Riverside.