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WalletHub featured Finance Professor P.V. Viswanath in "What are the long-term implications of taking a short-term loan in the context of the current economic crisis?"

06/18/2020

WalletHub featured Finance Professor P.V. Viswanath in "What are the long-term implications of taking a short-term loan in the context of the current economic crisis?"

The coronavirus pandemic has deeply disrupted the U.S. economy, which in turn has hurt the incomes of many Americans. Businesses have been forced to lay off workers as they struggle to survive, which has led to nearly 39 million Americans losing their jobs since the start of the pandemic. While all state economies have begun to at least partially reopen, it will take a long time to reverse the economic damage done by COVID-19, and consequently there has been a surge in the number of Americans who need to borrow money to stay afloat.

Americans who are having trouble with their finances during the COVID-19 pandemic are searching for all sorts of options to relieve the pressure, from home equity loans to payday loans. However, people’s interest in getting these types of loans varies from state to state. In order to determine the states where people are searching for loans the most during the pandemic, WalletHub compared the 50 states and the District of Columbia across four key metrics. These metrics combine internal credit report data with data on Google search increases for three loan-related terms.

Greater interest in getting a loan indicates that more people in the state are struggling to make ends meet. It also implies there may be more strain on the state’s public assistance programs in the near future, and the state may experience a deeper recession than others will. Below, you can see WalletHub’s ranking of the states and D.C., along with a full description of our methodology.

Read the full WalletHub article.

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Wallethub featured Lubin School of Business Professor Paul Kurnit in "Ask the Experts: Tips for Filling Up Your Rewards Tank"

06/12/2020

Wallethub featured Lubin School of Business Professor Paul Kurnit in "Ask the Experts: Tips for Filling Up Your Rewards Tank"

What types of people should consider applying for one of the best gas rewards credit cards?
Using a gas rewards credit card is a good idea for anyone with good credit and not too many credit cards.

How much higher of a gas rewards earning rate do you think is needed to warrant committing to a particular gas station chain?
The commitment to a particular gas station should be carefully considered because gas prices keep fluctuating and today’s best rates may be significantly better at another chain tomorrow.

Does it make sense to get even one of the best gas rewards credit cards when gas prices are low?
Higher or lower prices should not be a factor in deciding to use a dedicated credit card for gas. The two best incentives are best prices or rewards and having a card that can segregate fuel spending from other personal purchases for accounting purposes.

Read the Wallethub article.

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Wallet Hub featured Lubin Professor of Finance P.V. Viswanath in "What are the long-term implications of taking a short-term loan in the context of the current economic crisis?"

06/04/2020

Wallet Hub featured Lubin Professor of Finance P.V. Viswanath in "What are the long-term implications of taking a short-term loan in the context of the current economic crisis?"

What are the long-term implications of taking a short-term loan in the context of the current economic crisis?

If you have a 403(b) or 401k plan that allows borrowing, there may be no problems, since the interest rates are going to be minimal for such borrowing. Obviously, with such borrowing, as for borrowing from any other source, it is important to have in mind how one will repay the loan. Especially if interest rates are high, implications for future cashflow might be severe. Hence it is crucial to try and plot out scenarios as to what will happen going forward. If your job situation is relatively secure (or you feel that you will be able to get another job once the situation improves), then you can feel more comfortable about borrowing.

What are the safest borrowing options for people in need of quick cash for financial emergencies?

Borrowing from family members is safest from a financial point of view since such loans are likely to offer more flexibility (of course one has to take into account social/personal issues which may be important). Credit unions may have low-interest loans available. Credit cards are always available (mostly), but interest rates are likely to be high and will require a lot of deliberation before going on that path.

As the coronavirus pandemic has put millions out of work and overwhelmed the unemployment offices, what policy interventions can be taken by local authorities in order to help those in need financially during this economic downturn? 

Local (anonymous) food pantries, putting together funds with local contributions that would be used for short-term lending, facilitating the creation of community groups (including on WhatsApp), setting up volunteer groups that would call up/check physically (with social distancing) on families, particularly those that are known to be older.

Read the full WalletHub article.

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Wallethub featured Lubin Professor Larry Chiagouris in "Ask the Experts: Grocery Credit Card Shopping Tips"

04/17/2020

Wallethub featured Lubin Professor Larry Chiagouris in "Ask the Experts: Grocery Credit Card Shopping Tips"

Which do you think is likely to benefit the average person more: a credit card with great rewards on groceries or a credit card with great rewards on travel?

Travel always wins out over groceries. The reason is that consumers are always searching for opportunities to save on what might be considered life's luxuries, such as travel. Luxuries and the opportunity to experience them always win out over necessities in the minds of most consumers.

Why don’t all the major grocery store chains have their own co-branded store credit card?

Many grocery store chains consist of a very low-profit margin business model. They cannot, in turn, further shrink their profit margin by sharing some of it with the banks. They have to do so when a credit card is provided to them but even now, they still prefer cash and do not want to lose cash sales. However, those with larger profit margins possess great potential for offering their card. Whole Foods and Trader Joe's benefit with a card offering.

Read the full Wallethub article.

 

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"Wallethub" featured Pace University's Lubin School of Business Professor Paul Kurnit in "Ask the experts: Paul Kurnit"

12/02/2019

"Wallethub" featured Pace University's Lubin School of Business Professor Paul Kurnit in "Ask the experts: Paul Kurnit"

What can we learn from Capital One’s marketing strategies, particularly its television advertising?

Capital One has made a breakthrough in financial services with the Capital One Cafe concept and its television advertising. The initiative puts an entirely new face on banking with the promise of a much friendlier consumer experience. This advertising is also much more embracing of a wider audience than earlier Capital One credit card advertising that was cheesy and down market.

Capital One is one of just a few credit card companies that offer cards to people of all credit levels and do not charge foreign transaction fees on any of them; how do they manage to do that and turn a profit?

The appeal is simple, and the financial benefits attract more customers. In their model profits are made in pricing charged to service establishments and vendors who accept their cards and in interest for late payments. It’s a reasonable trade-off to attract a larger, loyal cardholder base.

Which do you think sounds like more value to the average consumer: double miles or 2% back?

The first question to ask is what an average consumer is. Different strokes for different folks. For the frequent traveler double miles likely has the biggest appeal. For the heavy shopper, 2% back is a great incentive.

Read the Wallethub article.

 

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"WalletHub" featured Dyson's Assistant Professor Aditi Paul in "2019’s Best & Worst Cities for Singles"

11/20/2019

"WalletHub" featured Dyson's Assistant Professor Aditi Paul in "2019’s Best & Worst Cities for Singles"

With the rise of dating apps and therefore dates, what financial advice do you have targeted to singles on a budget?

When singles are using dating apps with the motive to meet a significant other, they should remember:

  1. > It is a numbers game, i.e., you may need to go on dates with quite many people to get to the one.
  2. > For each date, there will be an activity (or activities) they will try to engage in while getting to know each other. This activity could be going out for coffee, drinks, dinner, or even a game of Jenga.

With these two things in mind, singles should keep an account of the number of dates they are trying to go on (could be with the same person), have an overall set budget, and parse that budget wisely. For instance, if you have $50 and want to go on 5 dates, then you are looking at $10 a date. Or, if you are looking at $50 and 2 dates, then its $25.

Dates and Dollars both add up, budget wisely.

What should singles be looking for when choosing a city?

Going off of the first answer, singles should look for a city which has a thriving social scene for two reasons. First, when two strangers who have met on an app are trying to get to know one another, just having a conversation can put a lot of stress on the acquaintanceship process. Therefore, centering the date around a social activity can act as a buffer and alleviates the stress on both parties. Second, if you are choosing a city that has a handful of bars and you frequent the same bars with different dates, things might get a little awkward.

Are singles typically a net economic gain or loss for cities?

Singles are always a net economic gain. They go out on more socialization events, they pay more for each meal because there is no one to share, and probably stay in studios which may cost higher than a couple sharing rent on a 1 bedroom.

Should local authorities work to make cities more attractive to singles? If so, how?

Local authorities must work to make cities more attractive because singles flock cities more than couples. Cities keep single people company.

Take for instance, when I asked a friend of mine who decided to move to Bayonne away from NYC, he said ‘I enjoy the company of my girlfriend more than the company of the city’.

Some ways cities can become more attractive for singles are:

  1. > Make it easier for singles to rent out places. There is still a bit of stigma in certain communities from letting single people live there because they assume, they are rogue and have a reckless lifestyle.
  2. > Subsidize commuter fees/gym memberships/phone bills for single people who have just moved to the city. Sort of like the reverse of a phone family plan.
  3. > Lower city tax brackets for singles.

Read the full WalletHub article.

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"WalletHub" featured Lubin School of Business Professor Edmund H. Mantell in "Ask the Experts: Business Credit Cards"

11/06/2019

"WalletHub" featured Lubin School of Business Professor Edmund H. Mantell in "Ask the Experts: Business Credit Cards"

How important are credit cards to small business owners?

Credit cards can be vital to the survival and profitability of a small business. Many small businesses require access to virtually instantaneous liquidity; either to exploit a potentially profitable business opportunity or to satisfy a demanding creditor. A credit card can provide that kind of liquidity.

What are the best ways to use a business credit card?

The best ways for a small business to use a credit card are to finance reasonably modest short-term purchases of goods or services, or to finance periodic purchases of reasonably modest amounts. The main thing to remember is that when a business (or an individual) makes a purchase financed by a credit card, the user is incurring debt. That debt should be discharged fully at the end of the posting period, usually the end of the month. The business (and the individual) should try to avoid compound interest charges on unpaid balances.

Why use a business credit card for business instead of a personal card?

There are at least three reasons why a business should use a credit card issued directly to the business instead of a personal credit card issued to the owner of the businesses:

  1. The dollar amount of the interest (if any) paid by a business on debt directly related to the operations of business can shield some of the profits of the business against Federal Income Tax liability. The shield means the business will pay smaller Federal Income Taxes.
  2. In order to exploit the tax shield, the business taxpayer must distinguish between those interest charges directly attributable to the debt incurred by the business and those interest charges which are not. A business credit card facilitates that accounting attribution.
  3. Generally speaking, it is unwise to mingle business expenditures with non-business expenditures on a personal credit card. Such a mingling will make it more difficult to prepare accurate financial statements for the business, such as a statement of net income or a balance sheet. Those statements must be accurate to enable the owners of the business to assess its profitability.

Does a company need to be incorporated to get a business credit card?

Not necessarily. Different banks (and other institutions) define their own criteria for the issuance of a business credit card. However, it might be prudent to incorporate a business, for several reasons. The small business owner contemplating the acquisition of a business credit card should shop around.

Read the WalletHub article.

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