Ask Bankrate: Should you add a beneficiary to your savings account?

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Ask Bankrate is a recurring feature where Bankrate’s experts answer your financial questions. Visit this page for more information on how to submit your question. Click on a question here to jump straight to it.

Questions:

Q1: Should you add a beneficiary to savings accounts?

Should I have a beneficiary on my savings accounts? What are the benefits?

— Brian B.

Answered by James Royal, senior investing and wealth management reporter: “Designating a beneficiary for your account is a good idea to ensure that, in the event of your passing, the money goes to whom you want. While that money may be directed to your heirs via a will, a beneficiary designation typically shortcuts that process and may eliminate legal interference later on. Naming a beneficiary also can reduce conflict among family members, since your intentions are clear. But naming a beneficiary may create other issues that you’ll want to carefully consider, and it’s an important decision to weigh.”

Q2: How can I negotiate my balance with credit card companies?

My FICO score is low due to a high utilization rate. I haven’t missed payments in five years on over 10 accounts. How can I get funding to negotiate with my credit card companies to accept a lower than owed balance if I don’t have any chips on the table to negotiate with?

— Barry M.

Answered by Ted Rossman, credit card analyst for Bankrate: “I advise against debt settlement — settling your debts for less than you owe has a major negative effect on your credit score. I suggest working out a plan to pay back everything you owe over the next few years. You’ve worked hard to make your payments on time so far — don’t throw that away.

A year ago, I would have suggested a 0 percent balance transfer card or a low-rate personal loan as good strategies for consolidating your debt and saving money on interest. However, both have gotten much harder to obtain due to the economic uncertainty brought on by the COVID-19 pandemic. Because your credit score is less than pristine, we need to look elsewhere.

Your best strategy might be to engage with a nonprofit credit counselor such as Money Management International or another accredited by the National Foundation for Credit Counseling. These agencies can provide you with great, low-cost advice. They’ll work with you and your creditors to consolidate payments, lower your interest rates and come up with a plan to pay everything back within 2 to 5 years (typically). I believe this approach will ultimately improve your credit score and save you money on interest.

You could also try to do some of this yourself — perhaps consider asking your card issuers for lower interest rates, for instance. And look into programs like Amex Pay It Plan It, Citi Flex Pay and My Chase Plan. These are ways for existing cardholders to create installment plans for paying off their debts. The benefits are lower interest rates (often 7 to 10 percent instead of 15 to 20 percent) and a more predictable payback cycle. They’re better than carrying open-ended credit card debt. Think of them as hybrid credit card/personal loan programs that you may already be able to access. Citi and Chase also offer a different flavor of this idea (known as Citi Flex Loan and My Chase Loan) which carves out some of your existing credit card limit as a personal loan that could be used even more broadly as a debt consolidation and money-saving tool.

I also encourage you to find ways to raise your income and/or lower your expenses to help pay this debt down even faster. That could include a side hustle, selling unneeded possessions, cutting back on subscriptions, preparing your own meals rather than dining out and so on. With some creativity and hard work, you could be debt-free before long. Good luck!”

Q3: If I receive my husband’s Social Security benefits, will it impact my future benefits?

I will be 55 years old next year when me and my fiance will get married. He is currently 72 and collecting Social Security. I will receive full benefits at age 67 and max benefits at age 70. Both of these amounts are more than his current benefits. When he dies, I know that I have to be at least 60 years old to receive between 71 and 99 percent of his benefit.

My question is: If I receive his benefits when he dies, does that impact my Social Security benefits that I would receive when I take retirement either at age 67 or 70? In other words, is it a disadvantage to start receiving his benefits when he dies, or is it something I’m entitled to with no impact on my future benefits?

— Linda M.

Answered by Stephen Kates, CFP: “Congratulations on your engagement! Despite Social Security being one of the most common retirement benefits available to retirees, the rules can be confusing especially in situations like yours. My first recommendation to you and your fiance is to schedule a meeting with a representative from the Social Security Administration in your area. A local representative can walk you through your options, any paperwork you should be aware of, and answer any additional questions you might have.

To answer your question, you are correct that you can start to receive survivor benefits at age 60 and that they would be reduced to a minimum of 71 percent of his benefit. The longer you wait, the less the benefits will be reduced. If you wait until your full retirement age (67), you would be able to claim his full benefit.

The most important fact here is that this will not impact your own benefits. You will have the option to switch to your own benefits at any time after you turn 62 year old. If you switch to your own benefits before full retirement age, they will be permanently reduced. However, you are under no obligation to take your own benefits at any time and could wait until they max-out at age 70 while you continue to collect survivor benefits. You will always have the option to take the greater of either benefit available to you.”

Q4: Where can I find a bank’s asset value?

Where can I go to find out the asset value of a particular bank?

— Iles W.

Answered by Matthew Goldberg, consumer banking reporter at Bankrate: “One of the best ways to find out more about a bank’s assets is to use the FDIC’s BankFind tool. At the bank’s profile you can go to “Financials” to see total assets, return on assets and other information. Clicking on “… more Financials” and then going to the “FFIEC Call/TFR Report” for the bank will give you even more details on the bank’s financials. That report is usually updated on a quarterly basis.”