Prior to joining the company, Jivan was a partner at Foundry Commercial, where he led acquisition and development initiatives since 2013. California-headquartered CIP Real Estate specializes in the acquisition, repositioning, re-branding, and management of industrial assets. The company owns and manages over 10 million square feet of properties and has offices in major markets, including … [Read more…]
The rating agency pointed to the relative stability of FOA’s executive management team as a key factor in the ranking. While there have been some changes – such as the addition of a new chief marketing officer, chief compliance officer, and chief financial officer following the AAG acquisition – DBRS Morningstar noted that the overall … [Read more…]
Right now, nine states do not charge state income taxes, which means residents in those states don’t need to file a state-level tax return. While an obvious benefit of that is a reduction in their annual tax liability, are there also drawbacks to living in a state without income taxes?
Here, learn the pros and cons of no state income tax. This intel can help you determine if living in a state with no income tax is better for you.
Key Points
• Living in states without income tax can significantly reduce an individual’s overall tax burden, benefiting primarily high-income earners during tax season.
• Higher sales and property taxes often compensate for the lack of income tax, potentially placing a heavier burden on lower-income residents in these states.
• Tax filing becomes simpler for residents in states without income tax, eliminating the need for state tax returns and associated expenses for tax preparation.
• The absence of income tax can lead to reduced funding for essential public services, such as education and infrastructure, impacting the quality of life.
• Although no income tax may attract new residents, the overall cost of living in these states can still be relatively high, complicating financial advantages.
Currently, nine states do not have state income tax on earned income:
• Alaska
• Florida
• Nevada
• New Hampshire*
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming
*New Hampshire currently charges state taxes on interest and dividends but not on income, but it is set to phase this out after 2026, as Tennessee has recently done.
Recommended: Earned vs. Unearned Income on Taxes
At first blush, having no state income tax sounds like a win for Americans — and for many high-earners, it might be. However, there are also downsides to living in a state with no income taxes. Here’s a closer look.
While nearly everyone must file federal taxes, residents in states without income taxes will benefit from a lower overall tax bill each tax season. This can be a boost to one’s financial health.
Just because states don’t charge income taxes doesn’t mean they’re not getting revenue through different types of taxes. States without income taxes sometimes have higher sales and property taxes, for example.
Tennessee, Washington, Nevada, and Texas are all in the top 20 states with the highest combined state and local sales tax. New Hampshire, Texas, and Florida all have property taxes higher than the national average — with the former two in the top 10 states overall.
An added con to this: Unlike income taxes, which get progressively higher based on your income level and resulting tax bracket, sales taxes are the same no matter how much you make. That means lower-income taxpayers shoulder a heavier tax burden in states with no income taxes, according to the Institute on Taxation and Economic Policy.
If you live in a state without income tax, filing can be a breeze. You’ll have one less tax filing deadline to worry about.
Those who reside where state tax is collected, however, may need to invest in professional tax software or an accountant to handle their state taxes. This is of course an added expense — and creates extra steps in the tax filing process.
States use income taxes to fund projects like improving infrastructure and investing in education. Without income taxes, there could be less in the budget for such investments.
For instance, Nevada, Florida, Tennessee, and South Dakota are all among the top 10 states that spend the least amount of money per K-12 student, per a report from the Education Data Initiative. The common thread? These four states don’t have income taxes.
A lack of state income taxes may be a selling point for many people looking to move, whether they are looking for a more affordable lifestyle, a welcoming state to retire in, or to be closer to friends and family.
Why does this matter? An influx of residents to a state can be a boon to the local economy.
Though it’s not the case across all nine states without income taxes, the cost of living could be higher. Four out of the nine states were among the 20 most expensive states to live in last year: Alaska, New Hampshire, Washington, and Florida.
Now, here’s how the pluses and minuses stack up in chart form:
| Pros | Cons |
|---|---|
| Less money spent on income taxes | Potentially higher sales and property taxes |
| Easier tax filing | Potentially lower infrastructure and education spending |
| Potential state population growth | Potentially higher cost of living |
Some states may choose to enact a no-state-income-tax policy to encourage Americans to move there from other states and thus boost their economy. IRS and Census data backs up this theory.
It may also reflect local political sentiment: Conservative politics tend to favor lowering taxes, while progressive politics often prioritize the social programs that can be achieved through higher taxes.
Recommended: Tips on Saving Money Daily
States with no income taxes save residents money — on their income taxes. However, many states without income taxes can be expensive in other ways. They might have a higher sales tax, higher property taxes, and/or a higher cost of living.
Before deciding on a move to a state without income taxes, it’s a good idea to view the whole picture by researching sales and property tax rates and overall cost of living.
Recommended: Tax-Friendly States that Don’t Tax Pensions and Social Security Income
Some taxpayers may say that living in a state with no income tax is better, but others might not. In general, high-income earners benefit more from a lack of state income taxes, since they may enjoy reduced taxes. Low-income earners, however, may actually shoulder more of the tax burden when states generate revenue from sales tax.
Taxpayers should also consider how much they value lower taxes versus more social programs and investments in things like infrastructure and education. Each individual will have their own opinion.
States without income taxes may save you a lot of money when it’s time to file taxes, but there may be hidden costs of living in such states, like higher sales and property taxes. Before moving, it’s important to consider the full picture to better understand the potential impact on your finances.
Regardless of where you live, it can be a wise money move to take advantage of a high-yield bank account to grow your savings. When you open a SoFi Checking and Savings account, you’ll enjoy a competitive annual percentage yield (APY) on deposit and pay no account fees, both of which can help your cash grow more quickly. Plus, there’s the convenience factor: You’ll spend and save in one place, and qualifying accounts can access their direct deposit paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
Though it varies, it is common for states without income taxes to make up for that lack of revenue through other forms of taxes, primarily sales and property taxes.
Food costs contribute to a state’s total cost of living. In 2022, four of the 20 most expensive states to live in had no income taxes. While that doesn’t inherently mean food costs are higher in such states, it may validate that a disproportionate number of states with no income tax have higher costs of living.
High-income taxpayers benefit more from living in states with no income taxes. The more money you make, the higher percentage of your income you must pay in taxes, so high-earners will likely save more.
In addition, states with no income tax may see less spending on education, which can affect the quality of learning for students. High-income earners can probably more easily afford private schools for their children; such schools do not rely on taxes to operate. Low-income earners may not be able to afford private schools.
Photo credit: iStock/mihailomilovanovic
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SOBK0123005
Source: sofi.com
Your credit utilization is the percentage of your overall credit limit that you’re using, and it can have a major effect on your credit score. As your credit usage decreases, it can positively affect your score since it shows you’re responsible with credit. On the flipside, high credit utilization can ding your score as it suggests you’re overspending
If you’re wondering how to lower credit card utilization, there are some steps you can take to do so and help build your credit score.
Credit card utilization, or simply credit utilization, is how much of your credit limit you’re using on your revolving credit accounts. You can calculate this percentage by taking the total of your credit card balances and dividing it by your total credit limit.
For instance:
• Say you have two credit cards with limits of $3,000 and $5,000 respectively.
• You have a balance of $600 on the first card and $1,000 on the second card.
• By taking the total of your balances — $1,600 — and dividing it by your overall credit limit — $8,000 — and then multiplying by 100 to get a percentage, you’d end up with a credit utilization rate of 20%.
When it comes to your credit score, scoring models look at various factors, including your credit utilization on both individual accounts and overall. In other words, if your overall credit utilization is high, or one of your revolving accounts has a high balance, your score could be negatively affected.
Considering that credit utilization determines 30% of your FICO® score, which is the scoring model used by most lenders, it’s a major factor that affects your credit score.
As a credit card rule, you should aim to keep credit utilization under 30%. While this is the baseline, the lower your credit utilization is, the better. Many financial experts recommend keeping that figure closer to 10%.
A lower credit utilization rate demonstrates to lenders that you are responsible with your credit and don’t appear to rely on credit too heavily.
The good news is that you can raise your credit score relatively quickly just by lowering your credit utilization. Here’s how to lower credit utilization.
Making payments before the due date arrives or the billing cycle ends could mean your balance goes down before your credit card issuer reports the amount to the credit bureaus. You could even make a payment right after your purchase goes through.
Having a lower credit card balance lowers your credit utilization, even if your credit limit remains the same.
Budgeting carefully and reducing your spending could prevent you from racking up excessive credit card debt and getting stretched too thin financially.
However, that’s not to say you can’t use your credit card. Rather, limit your spending to what you can afford to pay off in full that billing cycle. Additionally, if you find your debt starting to balloon, consider pausing your credit card usage until you’ve gotten your balance under control so your credit utilization isn’t pushed higher.
If you’re carrying a balance on a credit card, one option to pay it off is taking out a personal loan. You could qualify for a lower interest rate, which can make the debt easier to get a handle on paying off. Plus, a personal loan is an installment loan, which means it won’t count toward your credit utilization.
However, you need to make sure you can still afford the payments and can qualify for competitive rates and terms. Some lenders may charge an application or origination fee — take this amount into consideration when deciding whether it’s worth going this route.
Increasing your credit card limit can lower your credit utilization even if your outstanding balance remains the same. To get a credit limit increase, contact your credit card issuer to request one, either by calling the number listed on the back of your card or logging onto your online account.
Keep in mind that your credit card issuer may not approve your request. You may have to meet certain criteria to qualify, such as having a history of on-time payments and responsible credit usage.
Opening a new credit card can increase your overall credit limit and therefore potentially lower your credit utilization. Keep in mind that you most likely won’t know what your credit limit will be until you’ve been approved for the card.
Plus, submitting an application generally triggers a hard credit inquiry, which could have an effect on your credit score.
It might sound logical to close credit cards that you haven’t been using, but doing so could have negative consequences. More specifically, closing a credit card lowers your overall credit limit, which could increase your credit card utilization even if your credit card balance remains the same.
Recommended: What is the Average Credit Card Limit?
You could ask your spouse, family member, or close friend to add you on their credit card as an authorized user. If the primary cardholder maintains a low balance and has a high credit limit, it could lower your overall credit utilization.
Before going this route, however, speak with the primary cardholder to determine whether becoming an authorized user will help your credit score. You’ll also want to be clear on how you plan on using the card, or if you’d rather be a cardholder in name only.
Most credit card issuers will report your payment activity and account balance every 30 days to the credit bureaus, though the reporting date might not coincide with your payment due date. If your card issuer reports your payment activity before you make a payment, it could look like you have a high balance, which could increase your credit utilization rate.
To remedy this, contact your card issuer to determine when it reports to the credit bureaus. Aim to pay off as much of your balance as you can before that, or request a new due date that’s ahead of when your issuer reports to the bureaus.
If you lower your credit utilization, you could build your credit score. Remember, your credit utilization is one of the major factors that affects your credit score. Aim to keep your credit utilization well below 30% — try using any of the methods mentioned above to do so — in order to help maintain your score.
Credit utilization — the percentage of your overall credit limit you use — can have a major effect on your credit score. It’s best to keep your utilization as low as possible, but the benchmark generally recommended is that it should reach no higher than 30%. If your credit utilization rate has crept up, there are some tactics you can try to lower it, from paying down your balance to getting a new card.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
You can decrease your credit utilization by paying off your balances early, asking for a credit limit increase, applying for a new credit card, and cutting down on spending.
You can keep your credit utilization below 30% by watching your spending and balances across all your credit cards.
It’s best to keep your credit utilization below 30%. That being said, the lower your credit utilization rate, the better.
Zero utilization doesn’t hurt your credit score. However, 0% utilization doesn’t necessarily help your credit score either, as you can’t demonstrate on-time payments and other positive credit behavior.
Photo credit: iStock/Farknot_Architect
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
SOCC-Q324-020
Source: sofi.com
Update 8/11/24: Just adding now a direct link for the Blue Business Plus 50,000 offer with 0% APR. This is still targeted and won’t work for most people. (ht Parts_Unknown-) Some readers in the comments are reporting seeing this offer show up in their Amex login so you can check there as well.
No direct link to offer, shows for some people when logged in
Blue business cash:
Blue business plus:
Neither offer is an all time high, but might be worth considering for some people if you can get the offers to show.
Source: doctorofcredit.com
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn to navigate pet insurance options, costs, and smart budgeting strategies for your pet’s health care.
Is pet insurance worth it? How can pet owners afford the rising costs of veterinary care? Hosts Sean Pyles and Ronita Choudhuri-Wade discuss the ins and outs of pet insurance and various budgeting strategies to help you manage pet care expenses effectively. They begin with a discussion of the importance of pet insurance amidst escalating vet bills, with tips and tricks on the potential financial benefits of pet insurance, the low adoption rate of pet insurance in the US, and interesting trivia like the first US pet insurance policy issued for Lassie. Then, NerdWallet pet insurance expert Sarah Schlichter joins Sean and Ronita to discuss the basics of pet insurance. They discuss the different types of pet insurance plans available, common misconceptions about pet insurance, and other critical factors to consider, such as deductibles, co-pays, and policy exclusions. Plus: potential hidden fees and the nuances of claim payouts, key features to look for when comparing providers, and alternative financial strategies such as vet subscription services.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected].
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
You know you need to insure your health. You know you need to insure your car and your house. But what about your four-legged family members? Is there actual value in pet insurance?
Sarah Schlichter:
These days, there are so many advanced treatment options out there for animals to help them extend their lives, but not everyone has the budget to take advantage of those, and so pet insurance can help with that and really spare your family a heart-wrenching decision about how much treatment you can afford to try.
Sean Pyles:
Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.
Ronita Choudhuri-Wade:
And I’m Ronita Choudhuri-Wade.
Sean Pyles:
This is episode two of our nerdy deep dive into the cost of pet ownership. Last time we walked you through some of the financial considerations before deciding to buy or adopt a pet, and one of the potentially significant expenses is those trips to the vet.
Ronita Choudhuri-Wade:
Yeah. You never know when your dog is going to find something on the sidewalk and decide to eat it, and I am looking at you, Mo. Or your cat decides to jettison one of its nine lives, run up a tree, and somehow not land on its feet coming down. I don’t know. Does that happen?
Sean Pyles:
It could happen. I’m sure it does every day somewhere in the world. But even routine checkups at the vet can be pricey. Immunizations aren’t free. Then, maybe your pet pal needs some special prescription food or medication. Enter pet insurance.
Ronita Choudhuri-Wade:
Yeah, this is a big question for a lot of people. Is pet insurance worth it? And how do I know if a plan is a good one?
Sean Pyles:
I think I just heard Mo in the background.
Ronita Choudhuri-Wade:
Mo has thoughts on pet insurance as well.
Sean Pyles:
Of course. I hope it’s not as complicated as human health insurance, at least in this country.
Ronita Choudhuri-Wade:
Not quite. But there definitely are options that you’ll want to look at and consider before deciding to go with pet insurance, and we’re going to explore those today. Do you have pet insurance, Sean?
Sean Pyles:
I do not. Though, I do have a membership to a vet care service that provides essentially preventative care. I pay around $70 a month for my dog Pepper and closer to $50 for my cat Argus. The price is kind of steep, but both pets have garbage teeth and need annual cleanings, which is included in my membership. I don’t know. I guess it’s kind of worth it. But I do always wonder whether I should switch to pet insurance, especially before my pets develop some preexisting condition that insurance wouldn’t cover. What about you, Ronita? Do you have insurance for Mo?
Ronita Choudhuri-Wade:
So we do. Mo has a lot to say. He’s happy with his pet insurance. We knew we were getting a terrier, and there’s a lot of energy, there’s a lot of curiosity, so we thought we’d look into it sooner, basically as soon as we decided to get Mr. Mo. But really what helped us decide on pet insurance is that my husband’s work provided a discounted premium rate, and that, the money, and the costs, and the discounted rate essentially cinched the deal for us. But while almost 87 million households owned a pet in the U.S. in 2023, only 5.7 million pets were insured, according to the Insurance Information Institute. And those pet owners paid $3.9 billion in premiums. And dogs are insured far more than cats. It’s almost 80 to 20%. Do you want some more pet insurance trivia, Sean?
Sean Pyles:
Oh, yeah. I’m all about the pet trivia.
Ronita Choudhuri-Wade:
Okay. Fun fact, the very first pet insurance policy issued in the U.S. was back in 1982 for Lassie, the actual TV star Lassie.
Sean Pyles:
Wow. I mean, why wouldn’t you? You do have to protect the talent after all. Also, additional fun fact about Lassie, she has a star on the Hollywood Walk of Fame. All right. Well, listeners, we want you to bark and meow at us with your stories about your pets and what it takes to keep them in kibble. What are you sacrificing in your budget to have an animal? Do you have pet insurance? We want to hear any and all pet stories over the course of this series. To share them, leave us a voicemail or text the Nerd hotline at (901) 730-6373. That’s (901) 730-NERD. Or email a voice memo to [email protected]. And if you have any audio of your pets, all the better. Ronita, where do we start today?
Ronita Choudhuri-Wade:
Today we’re talking with fellow Nerd Sarah Schlichter, who is an expert in all things pet insurance.
Sean Pyles:
That’s coming up next. Stay with us.
Ronita Choudhuri-Wade:
Sarah Schlichter, welcome to the Smart Money podcast.
Sarah Schlichter:
Hi, Ronita. Thanks so much for having me.
Ronita Choudhuri-Wade:
We’re very happy to have you here. Now, first question, do you have any fur babies?
Sarah Schlichter:
Yes, I do. I have a rescue lab named Sylvie. She’s very sweet. She’s actually sleeping on the sofa behind me, and so hopefully we don’t get any deliveries and she doesn’t bark through the interview.
Ronita Choudhuri-Wade:
Oh, I love that name, Sylvie. That’s cute. We have you on because you are our NerdWallet pet insurance expert. So let’s start from the beginning. And just tell us, what is pet insurance, and how does it work?
Sarah Schlichter:
Pet insurance is a bit like human health insurance in some ways. It can help you pay your vet bills if your pet gets sick or hurt. Like human health insurance, it often has deductibles and copays. So you should know it’s not going to pay 100% of your pet’s medical expenses, but it can come in handy if something major goes wrong, like God forbid your dog gets hit by a car and needs surgery or something like that. But there are a few key differences between human health insurance and pet insurance. One nice thing about the pet version is that there’s usually no in-network or out-of-network stuff. With most plans, you can just take your pet to any licensed vet. That’s nice. But not as nice is that you’ll generally have to pay the full bill up front and then submit the receipt to your insurance company for reimbursement. There are a small handful of pet insurance companies out there that can pay your vet directly, but in most cases you’ll initially have to foot that bill.
Ronita Choudhuri-Wade:
Can you explain the different types of pet insurance plans available?
Sarah Schlichter:
Sure. The most common type of pet insurance plan in the U.S. is called accident and illness insurance, and it’s just what it sounds like. It’ll reimburse you if your pet is accidentally injured or if your pet gets sick. There is another alternative that’s cheaper and also less common, and it’s called an accident-only plan. That can cover things like a broken leg or a snake bite, but it’s not going to help you if your pet gets cancer, diabetes, allergies, basically any illness. Neither of these plans is going to pay for routine care, so they’re not going to reimburse you for your pet’s annual checkup or a rabies vaccine or even a spay or neuter surgery. Some folks think it’ll cover that, but it won’t. So if you do want those things covered, you want to look for a wellness or preventive care plan, which many companies will let you add to an accident and illness plan. These work a little bit differently. They usually have set reimbursement levels for certain services, so they might pay you up to $50 for a checkup or up to $150 toward your dental cleaning.
Ronita Choudhuri-Wade:
What are some common misconceptions people have about pet insurance?
Sarah Schlichter:
One big one is that you can wait to buy the pet insurance until something goes wrong. For example, say you discover a lump on your dog’s side. You take him to the vet, and unfortunately it’s cancerous and the vet said he needs surgery. You might think, “All right. Well, I’ll just buy pet insurance to pay for the surgery.” Unfortunately, insurance is almost never going to cover problems that your pet had before you bought the policy. These are known as pre-existing conditions. You’ll see them excluded on just about every plan. For the dog that has the cancerous lump, you can still buy pet insurance and it’ll pay for any new problems in the future, but it’s not going to pay for that surgery.
Ronita Choudhuri-Wade:
Sarah Schlichter:
Yeah, that’s right. In addition to pre-existing conditions, there are usually a lot of other exclusions in a pet insurance plan. Some companies don’t cover your exam fees. Say your cat’s throwing up, you bring her in, and the vet gives her some medicine and IV fluids. That plan would pay for the medicine and the fluids, but it wouldn’t pay for the vet’s actual examination fee. Other things that sometimes aren’t covered are prescription food and supplements. There’s also a lot of variation in the way insurance companies cover tooth issues and dental disease. I hate to say this, no one likes to hear this, but you really do need to read the policy because all the details are in there. The nice thing is that most pet insurers offer sample plans on their websites that you can read through before you buy. And if you’re confused, a lot of companies you can either call or even live chat, and they should be able to answer your questions so you don’t buy something you don’t understand.
Ronita Choudhuri-Wade:
Yeah, that’s a good tip. I remember with Mo, when he ate something… What he ate we still have no idea. But he ate something, and then we had to take him to an emergency vet. My husband and I were scrolling through the policy in this kind of high-stress moment trying to figure out what is covered and what’s not. On that point, Sarah, what are some factors that pet owners should consider when deciding if pet insurance is right for them and their pets?
Sarah Schlichter:
The first thing I would suggest is looking at your budget and being honest about whether you’d be able to handle a big emergency vet bill. If your dog needs a $2,500 surgery, could you pay for it or would you end up going in debt? If paying for something like that would be a financial hardship for you, then pet insurance might be a good safety net. Then, you also want to consider your own personal comfort level with risk. The tricky thing about deciding whether to buy insurance is that we don’t know the future. You don’t know whether your new kitten is going to be healthy for his whole life or if he’ll end up developing some expensive chronic issue that you have to keep paying for.
Ronita Choudhuri-Wade:
Right. And what if your pet is mostly healthy?
Sarah Schlichter:
Well, in that case, you could end up paying thousands of dollars for insurance and really not getting much in return. For most of us, it’s not appealing, but some people would not want to buy pet insurance because of that. You might want to just set up a savings account, a dedicated high-yield savings account specifically for pet expenses. That way the money is there if you need it, but you can spend it on other things if your pet never has any major issues. But on the other hand, for some people, having pet insurance can really give them peace of mind. You may never need the insurance, but at least you know you’re not going to have to agonize over whether you have enough money to give your pet the best possible care.
Ronita Choudhuri-Wade:
When we got pet insurance, it was really about that, just having that sense of security. Especially with Mo, because he’s a terrier, right? He is a toy fox terrier, but he’s a terrier, so he jumps and is very active. We just knew that there’s a high chance he might knock into something, eat something, do something with himself, and so that’s why we decided to get pet insurance. On that topic, how could age, breed, and health condition of a pet influence the decision?
Sarah Schlichter:
Well, if you’ve got a young healthy pet, that’s when you’re going to find the most affordable rates. It’s going to be cheaper then. Also, your pet probably isn’t going to have any pre-existing conditions yet, and so that can also make pet insurance more appealing because most things should be covered. For someone with an older pet, especially one who already has a chronic condition, I don’t know, kidney disease, or arthritis, or whatever it might be, insurance is not going to help with whatever they already have. Then, the other problem is for older pets, the monthly cost of insurance can be quite steep. You may decide that it’s just not worth it to you at that point. You’ll just go ahead and keep paying the bills yourself. Then besides age, the type of animal that you have, kind of like what you just said, that can affect how much you pay for insurance and even whether you want insurance. As a general rule, cats are usually cheaper to insure than dogs are. Bigger dogs usually cost a little bit more than smaller ones. But there are certain breeds that tend to have higher rates. One example is a French bulldog. They’re kind of famous for their breathing problems, and that can get kind of expensive. And just in general, the more expensive animals to insure tend to be the ones more likely to need medical care. And that makes sense, right? That’s why insurance companies charge more because they’re higher risk. You’ll just want to weigh that when you’re deciding whether to buy insurance. You may decide, “Insurance for my Frenchie, it’s too expensive. But I know she’s got higher risks, so I’m going to set aside more in savings to self-fund just in case she runs into these problems that the breed is known to have.”
Ronita Choudhuri-Wade:
What are some scenarios where pet insurance would be especially beneficial?
Sarah Schlichter:
One terrible thing I’ve heard about from the vets that I’ve talked to is economic euthanasia. That’s when people have to have their pets put down, even though treatment is available, but they can’t afford it. That’s probably the biggest thing that pet insurance could help prevent. I mean, these days there are so many advanced treatment options out there for animals to help them extend their lives, but not everyone has the budget to take advantage of those. Pet insurance can help with that and really spare your family a heart-wrenching decision about how much treatment you can afford to try. Then, the other scenario really is an emergency, like you were talking about earlier. I mean, most of us don’t plan for our dog to swallow a sock or tear a ligament or whatever, but it happens, sometimes at the worst possible time for you financially. So, insurance can just reduce that unexpected financial hit.
Ronita Choudhuri-Wade:
I see. All right. Let’s get to brass tacks here. What are some typical costs associated with pet insurance?
Sarah Schlichter:
The average cost of accident and illness insurance in the U.S. is about $56 a month for dogs and $32 a month for cats. That’s data from an industry organization called the North American Pet Health Insurance Association. If you want just the accident-only coverage, it’s much cheaper. It averages about $17 a month for dogs and $10 a month for cats. But obviously there’s a ton of variation. For example, our dog is older and we pay about a hundred dollars a month for her. In general, like I said before, you can really expect rates to go up as your pet gets older. Then on top of the premium, you’ll have to pay your deductible before you start getting reimbursed. Then, even once you’ve met the deductible, you’ll usually still have to pay a percentage of your vet bills. That might be 10, or 20, or 30%.
Ronita Choudhuri-Wade:
Could you break down what factors influence the premium costs?
Sarah Schlichter:
Sure. So aside from what I already mentioned, like the breed and the age of the animal, where you live also makes a difference. If you’re in an area where the cost of living is high, you’re probably going to pay more for pet insurance because vet expenses are probably also high in that area. Then beyond that, your cost is really going to depend on how you customize your plan. So if you want a plan that pays 90% of your vet bills rather than 70%, you’re going to pay more for that plan. But on the other hand, if you choose a higher deductible or a lower annual coverage limit, that’ll make the plan cheaper. One last thing to keep in mind is that, as I kind of said earlier, insurers don’t all cover the same things. So a plan from one company might look cheaper at first until you realize, “Oh, it’s going to cost me extra if I want to add exam fees, or physical therapy, or these other types of coverages.” And another plan that might cost more because it includes more of those coverages, and so that might be worth it to you.
Ronita Choudhuri-Wade:
Would you say there are any hidden costs or fees that pet owners should be aware of?
Sarah Schlichter:
There can be, yeah. Sometimes there’s a small fee if you want to pay your premiums monthly instead of paying the full year upfront. Occasionally you’ll see an account setup fee, usually a one-time fee when you first buy the plan. Then, you might also see little things on your vet bill that aren’t reimbursed, like taxes or waste disposal fees, stuff like that. Then, there’s one thing that’s a little bit complicated to explain, but it has to do with the way the insurance company calculates your claim payout. If an insurance company subtracts your deductible from your vet bill before they apply your copay, they’ll actually end up reimbursing you more than they would if they applied the copay first and then subtracted the deductible. It’s complicated. I’m not going to go into all the math, but this can make a difference over time, and it’s something I would recommend checking for when you’re reading that sample policy. Again, you want to see whether the copay is applied first or the deductible, and what you want is for the deductible to be applied first. That’s something we’ve actually been adding to our pet insurance reviews on NerdWallet just so people understand what to look for. We give some examples of the math, how much of a monetary difference it might make.
Ronita Choudhuri-Wade:
That’s really important to look into and could save you some money. Okay, so we’re familiar, unfortunately, with deductibles, copays, and coverage limits in human healthcare. How do those things impact the overall cost and value of a pet insurance plan?
Sarah Schlichter:
Well, adjusting all of those parts of your plan can help you control how much you pay for the insurance. You can usually make your plan cheaper by choosing a higher deductible, less reimbursement, or a lower coverage limit. But if you choose any of those things, the plan is not going to help you as much with your vet bills, so it’s really about how much of your pet’s care you’re willing and able to pay for yourself. I do want to just caution people about the deductible in particular. Don’t choose a thousand dollar deductible if you’d have a hard time paying that much in an emergency. Choose something smaller. But on the other hand, if you’ve got the money in your savings account and you just want the insurance in case of something really catastrophic happening, then a high deductible might make a little more sense for you.
Ronita Choudhuri-Wade:
What should pet owners look for when comparing different pet insurance providers? We know there’s a couple out there, and we see the ads for them all the time. Are there any specific features or services that can make one pet insurance plan, say, better than the other?
Sarah Schlichter:
The biggest thing, really, is what’s included and what’s not included in each company’s plan. There are certain things that one company might include, another will charge extra for, and company B over there is not going to cover at all. Things I would look for include exam fees, dental diseases, alternative treatments, like acupuncture, prescription food and supplements, and behavioral treatments. For example, say your dog is being really aggressive and you bring her to the vet for that. Will the plan cover it? Some will, some won’t.
Ronita Choudhuri-Wade:
I’m kind of blown away at the fact that there’s dog acupuncture. I didn’t know that was a thing.
Sarah Schlichter:
Yeah, I mean hydrotherapy and homeopathy, and chiropractic. There’s all these different things now for pets. And again, some of these depend on where you live, whether they’re going to be available to you. But yeah, some pet insurance plans will include coverage for all of those things.
Ronita Choudhuri-Wade:
Are there waiting periods for some of the plans?
Sarah Schlichter:
Just about every pet insurance plan will have some version of a waiting period. Usually when you buy a pet insurance plan, you can’t make a claim immediately. You may have to wait maybe three days for an accident claim, 14 days for an illness claim. So if I buy a plan on the first day of the month and my cat breaks his leg on the second day, the plan most likely is not going to pay for his treatment. Plus, the condition would be considered pre-existing because it happened before the coverage was effective. So if my cat needs follow-up treatment for that injury, even after the waiting period is over, I’m out of luck because it’s a pre-existing condition. Obviously, with that in mind, shorter waiting periods are better. I would also keep an eye out for companies that have extended waiting periods for things like knee injuries or hip dysplasia. You could have to wait six months or even a year for coverage for some of these things with certain companies. And then finally, you might also want to check how quickly companies process claims. The fastest companies will promise to get most claims turned around within a few days. Other insurers might take a month to pay your money back. Obviously, that could make a big difference if you’re on a tight budget. If you’ve got some big vet bill on your credit card and you need the reimbursement to pay it off, you probably don’t want to wait 30 days. So that’s another thing to check.
Ronita Choudhuri-Wade:
What advice would you give to someone who is on the fence about pet insurance?
Sarah Schlichter:
It’s a tough decision. It’s very personal. As I said earlier, it’s impossible to know in advance whether you’re going to get your money’s worth out of this plan or not because you don’t know how healthy or lucky your pet will be. Personally, my husband and I decided to get pet insurance for our dog for a couple of reasons. First, I would rather pay for the insurance, even if we don’t use it, than not have it if she got really sick. The peace of mind, it really was worth it to me. Then secondly, I guess I could say marital harmony. We didn’t want to have arguments over how much to spend if our dog ever got sick. I actually had a coworker once who spent $20,000 trying to save her sick cat. Unfortunately, the cat died anyway, which was terrible. But my husband didn’t understand how anyone could spend so much on a pet. And I agreed, yeah, that is a ton of money. But if you really love your pet, could you live with yourself if you didn’t do whatever it took to save them? Because we have insurance, we don’t have to have that argument.
Ronita Choudhuri-Wade:
Yeah, and I hear you on that. When we got Mo, we hadn’t really… We knew about pet insurance, but we didn’t know enough. Only when it was offered at a discounted rate through my husband’s work did we actually look into it. We felt similar to you where it’s like, “Okay.” The peace of mind, the security that we have. It makes sense. But there are alternatives to pet insurance, right?
Sarah Schlichter:
Probably the best strategy, other than pet insurance, is to set up a separate savings account for pet expenses. You could even put the money you would’ve spent on insurance premiums into that account instead. That way you’re paying yourself instead of the insurer. And if you have the self-discipline to save that money on a regular basis, it could be a better option. But otherwise, if you don’t have cash on hand, you could end up going into debt, like my coworker did, unfortunately, or having to create a crowdfunding account to help you pay an emergency vet bill. Some vets will work with you on setting up payment plans if you’ve got a really big bill, but it’s not something you can always count on.
Ronita Choudhuri-Wade:
What about subscription services that are offered by some vet companies? Can you explain what those are and how to evaluate whether that’s a better option than insurance?
Sarah Schlichter:
Sure. You’ll sometimes see these offered by bigger chains of vet hospitals, like Banfield or VCA. The plans do vary. But in general, what I’ve seen is that these are more similar to wellness plans than to standard pet insurance. They’re typically going to pay for things like your checkups, vaccines, and preventive screening tests rather than help you with an emergency surgery, something like that. In some ways, they could be a nice complement to an accident and illness policy. The pet insurance will cover you if something goes wrong, whereas the subscription plan can handle the routine stuff that you have to pay for every year. What I’d advise people is, number one, compare the vet subscription service to the wellness coverage you can add to an accident and illness plan. See which one seems like the better value to you. Then second, make sure either of those plans is actually cheaper than just paying for routine care yourself. It’s actually relatively easy to budget for your pet’s annual checkups and shots. It’s not like unexpected injury or something like that. The only real reason to get a wellness plan is if it saves you money. If a vet subscription plan includes services that your pet doesn’t actually need or that you’re not going to use, you’re probably better off just paying for the routine stuff yourself.
Ronita Choudhuri-Wade:
So just to review, what would you say are, say, the top three things listeners should know when deciding on pet insurance?
Sarah Schlichter:
Number one, just know it’s not going to pay for everything. Make sure you understand what is and isn’t covered before you buy the plan, and choose limits and deductibles that you feel comfortable with. Number two, keep in mind that the cheapest plan isn’t necessarily the best value. You may want to spend a little more on a more inclusive policy or a higher coverage limit if that’s in your budget. And finally, I would make your decision with the idea that this might be a policy you have for your pet’s entire life. I mean, with other types of insurance, like your auto or your homeowner’s policy, you might shop around every year or two. And if you see a better deal, it’s pretty easy to switch companies. But with pet insurance, because it doesn’t cover pre-existing conditions, you might end up realistically not being able to switch to another insurer if your pet has already developed a chronic issue. So if you switch, the new company isn’t going to cover that condition. I just really advise you to make sure you feel comfortable with the company and the plan you choose for the long term.
Ronita Choudhuri-Wade:
Sarah, this was so helpful and got us thinking about things that maybe we wouldn’t have considered before, and we know what to look for when looking at a pet insurance policy. Thank you so much for helping us out today.
Sarah Schlichter:
It was my pleasure. Thanks for having me.
Sean Pyles:
Ronita, what I’m thinking about after your conversation with Sarah is just one word, uncertainty, uncertainty about whether your pet will have some injury that would make pet insurance worth it, uncertainty about whether my wellness care membership is a good idea over the long run or if I should switch to pet insurance. The hard part, as ever, is that it’s impossible to predict the future. You just don’t know what’s going to happen with your pet and what your break-even point might be with your insurance.
Ronita Choudhuri-Wade:
There is a lot to consider when looking at pet insurance, and it seems like timing does play a part. Sometimes the idea of getting pet insurance may only pop into mind when something happens. But the fact you usually have to wait until it kicks in makes getting it early a good idea.
Sean Pyles:
Well, I suppose, just like so many other things, you have to weigh the risks of not having insurance and what that means if you end up with thousands of dollars in vet bills. I think on my end I’m going to crunch the numbers and see if I might be better off sticking with my current wellness membership and setting aside some cash into a savings account for future veterinary emergencies or maybe making the jump to pet insurance.
Ronita Choudhuri-Wade:
Yeah, that’s a tough decision, and it’s a good idea to make that call sooner than later. Pet care costs can start to skyrocket as they get older, and then the really hard decisions come in. Are you going to make pet care decisions purely based on cost? And sometimes you just have to. We’re going to talk about that in our next episode. Here’s a preview.
Angela Beal:
A pet owner could expect to pay a minimum $2,000, probably more, for an emergency situation. I think setting aside maybe $50 to $100 per month in a savings account and letting that account grow would be a good idea.
Ronita Choudhuri-Wade:
For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at (901) 730-6373. That’s (901) 730-NERD. You can also email us at [email protected]. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
Sean Pyles:
This episode was produced by Tess Vigeland. I helped with editing. Kim Lowe helped with fact-checking. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all their help.
Ronita Choudhuri-Wade:
And here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean Pyles:
And with that said, until next time, turn to the Nerds.
Source: nerdwallet.com
The share of respondents who said it’s a good time to buy a home decreased from 19% to 17%, while the percentage who said it’s a bad time to buy increased from 81% to 82%. Meanwhile, the net share of those who say it’s a good time to sell a home decreased 2% month over … [Read more…]
There are many reasons you might consider signing up for a new credit card. Many people look at their credit card as simply a financial tool to help them meet their goals. For others, a particular credit card can be a status symbol. Meanwhile, others view the credit card they use as an extension of their personality. For these individuals, many credit card issuers allow you to personalize the design and appearance of your credit card.
Generally, if you want to get a customized credit card, you can do so when you sign up. However, if you already have your card and are wondering how to get a custom credit card, you may still be able to ask your issuer for a new card design.
Credit card personalization is the ability to design and personalize the appearance of your credit card. Many issuers allow you to customize the appearance of your credit card in different ways, such as by selecting a unique background, uploading a photo to serve as your card’s backdrop, or adding the logo of your favorite sports team.
That way, when you’re using a credit card, it can become a conversation starter rather than simply a way to pay for purchases.
Keep in mind that the way your credit card looks won’t in any way impact what a credit card is and how it functions — customization is simply for appearance’s sake.
The list of banks that allow personalized credit cards can change as different issuers update their policies. Here are a few banks that are known to allow personalized cards:
• Discover: Discover allows you to customize any card to “show your true colors.” You simply need to log into your online account to select a new design for yourself or any authorized users on your account.
• American Express: Sometimes American Express offers different options for some of their credit cards. For instance, the Art x Platinum collection features artwork from Kehinde Wiley and Julie Mehretu.
• Wells Fargo: Wells Fargo allows you to use one of your own photos or a photo from their library to serve as the face of your credit card.
• Chase Bank: The Chase Disney Visa and Chase Disney debit feature favorite motifs on your card.
Because policies change, your best course of action is to contact your issuer directly, either through your online account or the phone number listed on the back of your card.
There are several different ways you might be able to customize your credit card. This includes:
• Selecting from a limited number of design options offered by the issuer
• Getting a credit card featuring your favorite professional sports team
• Taking advantage of limited time designs
• Uploading a personal photo to use as the face of your credit card
While some issuers will allow these options, keep in mind that how credit cards work and their specifics will vary by issuer. As such, some issuers do not allow for any credit card customization.
There are particular credit card requirements and steps that you should follow when trying to get a customized credit card.
Recommended: Does Applying For a Credit Card Hurt Your Credit Score?
Sometimes, you can choose your credit card customization as part of the initial application process, such as if you’re getting a credit card for the first time. In other cases, you’ll need to log in and verify your account in order to get a personalized credit card.
Once you’ve been verified and are either in the credit card application process or account screen, you will choose your design. Some credit card issuers present you with a list of images or designs to choose from, while others allow you to upload a completely custom design.
Once you’ve chosen your design, you will have to confirm your design to make sure that it’s what you want and that everything looks good. Your new customized credit card will then arrive at your house through the mail.
From there, the regular credit card rules — like the importance of making on-time payments — will apply, though you can feel like you’re swiping in style.
Recommended: When Are Credit Card Payments Due
If you want to use your credit card as a way to express yourself, some credit card issuers allow you to customize the design of your card. You might be able to choose between a set of options, while others will allow you to upload an image of your choosing to serve as the face of your credit card.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
You shouldn’t have too much of a delay for getting a customized credit card as compared to any other credit card. The one scenario where there can be a delay is if you’re using your own uploaded image. In most cases, issuers will have someone personally review each uploaded image to make sure it meets their standards.
While an authorized user can sometimes get a custom card, it will usually have to be managed through the primary cardholder. Policies differ by card issuer, so check with the primary cardholder and/or issuer to see what might work for you.
In many cases, you can change your credit card design. You can find out if this is possible — and if it is, start the process of getting a personalized credit card — by contacting your credit card issuer.
Photo credit: iStock/MStudioImages
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
SOCC-Q324-016
Source: sofi.com
Best Buy Rewards can now be redeemed for gift cards. Best Buy cardholders earn Best Buy Rewards on their purchases. Points value:
And so it’s now possible to redeem points at the same value for non-expiring Best Buy gift card instead of an expiring Best Buy rewards certificate. (Note: some people prefer the certificates since it reduces the base cost and saves sales tax.)
Anyone enrolled in the Best Buy Rewards program can earn Best Buy Rewards on their purchases. Best Buy Cardholders can earn more on Best Buy purchases and also can sometimes earn on purchases elsewhere.
Source: doctorofcredit.com
Remember those old internet ads promising one “weird trick” to improve your fitness forever? I never clicked on those, but I wonder if the trick was “exercise often.” Because that would work.
Similarly, I’m asked all the time about the best way to use credit card reward points — specifically, points issued by banks designed to cover a variety of travel expenses. Three-quarters of credit card accounts offered rewards in 2022, according to the Consumer Financial Protection Bureau, and many come with flexible redemption options. The answer is surprisingly simple: Learn how to transfer those points to travel loyalty programs.
Transferring points isn’t a particularly easy or obvious option. But the value of the points from popular issuer loyalty programs — such as Chase Ultimate Rewards®, American Express Membership Rewards and Capital One miles — can vary dramatically depending on how they’re used. That’s why NerdWallet offers both a “baseline value” and “maximized value” in our point valuations.
The baseline value is how valuable points are when used for booking travel directly through the issuer’s rewards portal, such as Chase Travel℠ or Capital One Travel. The maximized value relates to how much these points are worth when transferred to their best partner program. For example, the baseline value of American Express Membership Rewards is 1 cent, while the maximized value (when transferred to the best partners) is 2 cents.
$99 for a $6,205 luxury resort?!
See how this family saved $$$$ thanks to 1 credit card and how you could, too. (Limited time bonus now!)
Most credit card reward programs make it easy to use your points for their baseline value. They usually show the cost of using points right next to the cash price when searching for travel on their booking platforms.
To be clear: There’s nothing wrong with using your points this way. Sometimes it’s actually the most valuable redemption option. And you generally get benefits like earning miles on flights booked this way. But there is another way.
American Express puts the “transfer points” option at the bottom of a hard-to-find menu on its account page. Don’t be deterred.
Figuring out how to actually transfer your points is one thing. Then comes the real challenge: Which partner program should you transfer them to?
This is the step where most people — including me — are most likely to get deterred. Each credit card program has a long list of transfer partnerships ranging from well-known U.S. brands like Delta Air Lines to international airlines like EVA Air. Which transfer partner is “best”?
Many articles about maximizing points focus on redemptions that yield the best dollar-per-point value, which are almost always business and first class awards. But it’s worth asking: Is that what you want?
If you were planning to fly in a premium cabin already these articles can be helpful. But there are many problems with trying to book these awards, including restricted availability, complex booking processes, large fuel surcharges and other fees.
Flying economy might give you a worse dollar-per-point value than flying first class, but you might be able to squeeze more trips out of your points. And transferring points to loyalty programs for economy flights could still give you an edge over booking directly through an issuer. Don’t suddenly turn into a champagne-swilling points maximizer just because some article told you to.
Also important: Don’t transfer your points until you know the redemption you want to book is actually available. Otherwise you’ll be stuck with a bunch of points in random programs, and this one trick will turn into a big hassle.
The thing about this one weird trick — just like exercise — is that it requires persistence. It’s not a magic bullet.
Credit card holders earn $40 billion worth of rewards each year, according to a 2022 report from the Consumer Financial Protection Bureau. And most of those rewards won’t be used to maximum effect.
By simply considering transfer partnerships as an option when using your credit card points, you’ve already put yourself 10 steps ahead of most people.
Source: nerdwallet.com