Non-QM lender First Guaranty Mortgage Corp. (FGMC) filed for Chapter 11 bankruptcy protection at the end of June — leaving four warehouse lenders on the hook for more than $415 million.
Sprout Mortgage imploded in early July, leaving its employees out in the cold. The lender so suddenly shuttered its doors it failed to file advanced notice of the layoffs, as required under federal law. It has since been sued by its former employees.
Just weeks later, a leaked text message from Flagstar Bank provided an inside look at how dire the current climate is for many non-QM lenders. The bank calls out 16 non-QM lenders in the text message, indicating it is ramping up scrutiny of its loan reviews, prior to advancing warehouse funding.
The examples, all within about a month, illustrate a non-QM lending world in disarray, turned upside down in recent months as originators battle an unassailable force over which they have no control: fast-rising interest rates. It’s an ongoing battle, which already has been lost by at least two lenders, FGMC and Sprout.
And others in the sector, warehouse lenders included, must now navigate the fallout, heed the warning signs and take action to avoid a similar fate. One executive said “it would be naïve” to think Sprout and FGMC will be the only casualties, given the current environment. In time, he said, they may well end up being “more of a trend than outliers.”
The Flagstar text message leaked to the media in mid-July confirmed, going forward, funding advances for non-QM mortgages will require advance approval by the lender’s warehouse lending arm. The bank also indicates it may adjust “haircuts” — the percentage of the loan the originator must fund itself to ensure it has skin in the game.
Thomas Yoon, president and CEO of Excelerate Capital, a full-service non-QM lender, said the move essentially means Flagstar now will “monitor every loan because they don’t want [to fund loans] that will be hard to sell in the open market, and then they’re stuck with that loan.”
“So, they are going to babysit now,” Yoon said, adding that from a business standpoint, it will slow down the loan originators’ processes. “Someone at Flagstar has to physically look at the deal and make sure it aligns with what they want before they’re able to fund, and that’s going to cause delays.”
Flagstar spokesperson Susan Cherry-Bergesen verified the authenticity of the text message when contacted by HousingWire and confirmed its content: The bank is adjusting its loan-review process. The leaked message included a list of 16 non-QM lenders that would be affected by the changes, according to published reports.
“We were at a meeting with one of our warehouse providers [recently] and … they asked a smart question: “Is Acra Lending on that list?” recalled Keith Lind, CEO of Acra Lending, a leading non-QM lender. “Of course we’re not.
“…If lenders didn’t take rates up fast enough, or they didn’t liquidate their positions fast enough, there’s going to be warehouse facilities where the loans [made to lenders] are worth less than the equity [skin in the game] that the originator posted. That’s probably a little more common than people think.”
Lind said many lenders are now trying to digest a plethora of lower-rate loans, essentially “orphaned by the market.” During the height of the refi boom and earlier this year, scores of loans were originated at interest rates much lower than current market rates, which have risen dramatically in recent months.
As a result, there exists a mismatch between those legacy lower-rate mortgages and the new higher-rate loans. That’s the case even though the lower-rate loans are widely considered to be well-underwritten, quality loans. As of mid-July, according to Freddie Mac’s purchase mortgage-market survey, the 30-year fixed mortgage stood at 5.54%, compared with 3.22% as of the first week of January 2022 and 2.88% in July 2021.
The market’s interest rate woes contributed to non-QM lender FGMC’s downfall. FGMC and its affiliate, Maverick II Holdings LLC, filed for Chapter 11 bankruptcy protection June 30, leaving four of the country’s major warehouse lenders with claims totaling $418 million, according to court filings.
Those warehouse lenders are Customers Bank, Flagstar Bank, JVB Financial Group and Texas Capital Bank.
Another non-QM lender also was swept up in the “orphaned” loan market. Sprout Mortgage on July 6 closed its doors suddenly, leaving hundreds of employees without jobs and paychecks. Real estate agents and their clients also received no advance warning and multiple deals fell through as a result, sources told HousingWire. The lender also did not file a WARN Act notice — required of any employer of more than 100 that has a mass layoff at one location involving more than 50 employees.
“The New York State Department of Labor has not received a WARN notice from Sprout Mortgage,” states an email from the department sent in response to a HousingWire inquiry. “We do not comment (confirm nor deny) on potential or pending investigations.”
The failure to provide proper notice of the layoffs prompted a class-action lawsuit by former Sprout employees. The litigation — lodged in early July in U.S. District Court for the Eastern District of New York — seeks to recover wages due the workers.
The current interest-rate spread pressure-cooker tends to be even more acute in the non-QM sector, compared with the prime-mortgage market, according to John Toohig, managing director of whole loan trading at Raymond James in Memphis.
“[There’s] a lot of underwater coupons due to rapidly rising rates,” Toohig said. “The problem with non-QM is that most banks won’t be the liquidity source for those loans in whole-loan form [purchasing] vs. the aggregators putting them into RMBS [private label securitization deals] — which doesn’t work right now [either].
“So, I wouldn’t be surprised that there is some pain coming at the warehouse-line level [revolving lines of credit used to fund mortgage originations] as loans start to age. The good news for prime jumbo [is] banks want to own those loans and balance-sheet them. The same cannot necessarily be said for non-QM.”
Non-QM mortgages include loans that cannot command a government, or “agency,” stamp through Fannie Mae or Freddie Mac. The pool of non-QM borrowers includes real estate investors, property flippers, foreign nationals, business owners, gig workers and the self-employed, as well as a smaller group of homebuyers facing credit challenges, such as past bankruptcies.
Because non-QM, or non-prime, mortgages are deemed riskier than prime loans, in a normal market they generally command an interest rate about 150 basis points above conforming rates, according to Excelerate’s Yoon.
Excelerate and Acra each raised rates rapidly starting early in the first quarter of this year to stay ahead of the fast-rising interest rate curve, according to Yoon and Lind. The rapid surge in rates in the market is being fueled, in part, by the Federal Reserve’s ongoing benchmark rate bumps, intended to battle inflation. The consequence of failing to anticipate the velocity of rate increases could result in a lender getting stuck with millions of dollars in underwater loans — mortgages that are well-underwritten but valued under par, the lending executives said.
In other words, these lower-rate — now “scratch and dent” — loans are at a competitive disadvantage in terms of pricing in securitization and loan-trading liquidity channels because they are worth less than the newer crop of higher-rate mortgages. Lind put it this way: “These aren’t bad loans, just bad prices.”
“I don’t think [Sprout and FGMC] are the only two lenders that are in a bind,” Lind said. “I’m sure there’s other originators that are in difficult situations, given this movement in rates and probably their inability to get liquidity or to sell loans fast enough.”
Yoon said the Sprout and FGMC failures are likely going “to be more of a trend than outliers.”
“A lot of lenders took on, or funded, these really low-coupon loans,” Yoon continued. “And they probably had them sitting in their gestation pipelines thinking that the things will get better, and they could sell them off. That day never came.
“What I’ve been told through warehouse lenders and Wall Street aggregators is that there’s several billion dollars’ worth of these [low-coupon] loans out there, still sitting on balance sheets. At some point, they [lenders] will have to pay the piper, right? It’s naive to assume we’re not going to see more casualties.”
***
Q&A
HousingWire contacted half a dozen non-QM lenders seeking interviews for this story, including Angel Oak Cos., Deephaven Mortgage, CarVal Investors, Verus Mortgage Capital, Acra Lending and Excelerate Capital. All the lenders, as well as the now-failed Sprout Mortgage, participated in a prior story on the same subject — the state of the non-QM market, which was published in April.
This time around, only Acra and Excelerate agreed to participate. Representatives of the other lenders declined to comment or make executives available for an interview, with most saying the executives didn’t have time. The top executives at Acra and Excelerate, Lind and Yoon, respectively, each declined to comment on specific competitors in the non-QM market, but they did share their views on current market conditions and the challenges faced today by non-QM lenders in general.
Lind and Yoon stressed they are not predicting with certainty other non-QM lenders will fail, nor do they hope that will be the case. Both, however, predict due to the runup in rates, there will likely be painful losses incurred by some non-QM lenders, which will have to be dealt with somehow.
All non-QM lenders now face the same economic challenge — coping with the fallout from interest rates rising at a faster clip than the market has seen in decades. Following are comments from Acra’s Lind and Excelerate’s Yoon on a range of issues affecting the non-QM lending space.
Interest Rates
We saw the market [earlier in the year] and knew it would only get worse, at least in the short-run, and we put our rates above market at that time sharply. …We’re positioned really well to navigate the current market. That doesn’t mean it’ll be easy, but you know, we’re positioned better than most, so we feel fortunate about that. … When we raised our rates that significantly in the first quarter, it essentially blew up our pipeline in the short-run, but we felt like we needed to do that. …Going into October, November, December [of last year] and into January [2022], everyone was thinking, including us, that we’re going to have a banner 2022. Then the market changed on us overnight. There was only a handful of us that that made the move [to raise rates sharply], and they are positioned well going forward. — Thomas Yoon of Excelerate Capital
We’ve moved rates 18 times in 2022 [to date] — mostly up, with maybe one or two down. Listen, everyone’s got a different execution or [liquidity] outlet. I can just tell you that we’re breaking even or making a little bit of money in the first few quarters [of this year], and our rates are higher than others. I don’t know how some of these other people [lenders] have been able to do it. But if they have, then kudos to them. …You’ve probably heard this before: Don’t fight the Fed [the Federal Reserve]. The Fed is bigger than everyone. Well, guess what? So is the housing market, and you don’t fight the housing market. Everyone’s like, “Oh, I’m going to keep rates low because I need market share.” I think it’s always better to be prudent and pay attention to rates. It’s not a race [or sprint]. This is a marathon to be successful in this business. That’s the way we look at it. — Keith Lind of Acra Lending
Warehouse Lenders
The biggest problem in non-QM right now is the fear of liquidity, right? It’s whether they’re able to sell off their closed loans. If they don’t, then it becomes a burden and a debt. The biggest, I think, challenge that these non-QM platforms face — outside of what’s happening in the market — is will they maintain a stable relationship with their warehouse lines. …I expect lower limits in warehouse funding capabilities and more haircuts, so that they [warehouse lenders] feel that they’re protected. Oftentimes, warehouse divisions are a real profit-maker for banks, but we’re going through a cycle change, and originations have dropped 40-plus percent nationally. It means that everyone’s taken a hit. …Most warehouse lenders are banks and, of course, they’re feeling it too. —Yoon of Excelerate Capital
Regional banks [who are warehouse lenders] have a lot more exposure now and could be holding loans that are underwater. I’ve heard some of them are comfortable with the risk, and they’ll just wind down these positions over time. It’s still a good return for the bank. Others are looking for exit strategies. … Some of these regional warehouse lenders may ultimately do a full turbo feature where they collect all interest and principal, and the originator gets nothing. It’s going to be harder for the little guy [smaller originators] to come back because warehouse providers, as well as people that are lending money [generally], are going to demand more capital. — Lind of Acra Lending
Raising Capital
If you’re a [non-QM] executive and have a $300 million negative on the balance sheet [due to underwater loans], any company that’s going to provide capital is going to question whether [the leadership of the lender] knows how to run a mortgage-banking platform in this marketplace. …It’s not like they will be using that capital to build technology or to hire more great talent or [launch] a new system. To be clear, it’s to make themselves whole, right? That’s a tough, tough sell in today’s market. — Yoon of Excelerate Capital
You don’t throw good money after bad, right? — Lind of Acra Lending
Market Share
We took flack for raising our rates and recalibrating ourselves. A lot of our competition, for example, kept their rates really low and kept them low for all of the first quarter. They took on a massive risk, and their logic was that the market will turn for the better … and they’ll be able to sell these [loans] off at a profit, instead of just breakeven. They looked at it as an opportunity to gain market share. Everyone that did that, you know, they were wrong. — Yoon of Excelerate Capital
The originators that have made it through the first two quarters in [good] financial shape absolutely I would expect all of us to gain market share. There are going to be [originators] that go out of business, as we’ve seen, and they’re probably not the last, and then others are probably going to struggle. — Lind of Acra Lending
Survival Strategies
Our liquidity channels are still really viable. We have strong relationships with our aggregators and outlets. We’re very fortunate, but we also recognize how volatile [this market] is. We have to be nimble. So, we have a plan A, but we also have plan B and C ready, just in case. …The market is moving so quickly, so we’re shooting higher [on rates] than we normally would to make sure that the collateral bought is worth something when they securitize it — [a process that can take months]. The dramatic move [in rates] that we saw in the first quarter and second quarter, I don’t think it’s going to be that exaggerated [going forward], but we’re constantly chasing the bogey here, so to speak. — Yoon of Excelerate Capital
There are three aspects that we focus on. First of all, we focus on rates. And I told you, we’ve moved rates 18 times since January 3. We were at a 4.5% coupon, and now we’re low 8% [range] in terms of where our portfolio is. …Two is liquidity. If you don’t have strong liquidity, and you’re not getting off loan sales fast enough and at the [right] prices, that’s going to be difficult. So, rates, liquidity and then lastly operational expenses. Are you managing your expenses? We took our headcount from 450 down to 350. We did that two months ago. And we’re still looking at that, to make sure that that we are managing expenses and salaries. We’ve not only reduced headcount, but we’ve made adjustments to salaries. — Lind of Acra Lending
Downturn Duration
We’re going to go into a recession — if we’re not already in it right now. I hope that it’s a mild recession. We’re prepping as if this is going to be a 12- to 24-month downcycle for us as an industry. If it [ends] earlier, we look at that as very fortunate. But we anticipate that this year and the bulk of next year is going to be trying times for us. We’re taking a very conservative approach. — Yoon of Excelerate Capital
I’m going to take the view that until we have a better understanding of where we are with inflation and taming it, that this market is going to be choppy. And when the overall market has a more comfortable understanding of where inflation is, and that it’s under control, I would think that things will fall back into order. …There’s still a lot of tailwinds in the housing market, however. We’re short [some] 5 million homes [in the housing market], and I think from an investor perspective, depending on the price and the homes picked, there’s good cash flow every month. I think that’s why you’re seeing more and more people, as far as mom-and-pops [small landlords, who are non-QM borrowers] getting into the housing market as opposed to the equity market moving forward. I like the tailwinds in housing, for sure. — Lind of Acra Lending
Investing isn’t unlike a martial art. Victors are decided not by brute force, but by reaction time and technique.
Call options are one such technique that when applied correctly can lead to a nice profit. BUT (and that’s a big but), like any investment, if you miscalculate (which is easy to do), you’re out a lot of money.
That’s exactly why call options are for advanced investors that know how to time the financial markets better than your average newbie buyer.
What’s Ahead:
What is a call option?
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A call option is a contract that gives you the option, but not the obligation, to purchase a stock, bond, commodity, or other security at a locked-in price within a certain time limit.
Here are a few of the various terms you’ll need to know when it comes to buying calls:
The strike price is the price of each share within the call option.
The premium is the price of the call option contract itself.
The expiration date is the date on which the call option expires, usually a week, month, three months out.
Let’s say TSLA is selling at $100. You think it’s going to go up to $120, so you purchase a call option for a strike price of $100 and an optionpremium of $3 per share.
Remember, you’re not buying the stock yet, just the right to buy 100 shares at $100 per share. So you’ve just paid $3 x 100 = $300 for the call option. The expiration date is three months out, so you have some time to watch the market’s volatility.
TSLA rises to $120 as you had predicted, so you execute on your call option and purchase your 100 shares at $100. Let’s do the math to see how you made out.
Your premium total for the call option was $300.
Your strike price for the TSLA shares is $100 x 100 = $10,000.
So in total, you’ve paid $10,300.
Your shares are now worth $120 x 100 = $12,000.
So you’ve made $12,000 – $10,300 = $1,700.
If you’d put more serious money on the table and purchased 10 call options for $100,000 plus a premium of $3,000, your profit would’ve gone up by 10x = $17,000. Maximum profit right there.
How is a call option different from a put option?
A put option is simply the reverse of a call option. It’s a contract that you pay a small premium for in order to get the right, but not the obligation, to sell the underlying shares at a certain price point within a certain time limit.
What is a covered call?
A covered call is when you sell call options on stocks that you actually own. Covered calls are used to make a little extra income on the stocks in your portfolio that you think will remain steady or even drop, while others think they’ll increase.
For emphasis, covered calls are “covered” because you actually own the shares and are able to sell if the holder of your call option chooses to execute their right to buy (in contrast to a short call, defined below).
Let’s say you own 1,000 shares of AAPL at $100 and sell call options for a strike price of $110 and a premium of $3. Another buyer thinks that AAPL is about to skyrocket, so they purchase all 10 of your call options.
Remember: you haven’t sold them the shares yet, just the right to buy them if they choose to execute on the option. You’re betting that shares of AAPL will stay steady or drop and the buyer won’t buy. The buyer, by contrast, is betting that your shares will increase in value enough to offset his premium and strike price.
Turns out, AAPL doesn’t rise above $105 by the expiration date, so your buyer allows the options to expire. Your covered call paid off. You keep your shares and the buyer’s premium of $3 x 1,000 = $3,000.
What is a long call?
A long call is when you purchase a call option because you believe that prices will eventually rise before the expiration date.
In the example above, the buyer of your call options was making a long call. They believed that the prices of AAPL would rise high enough to offset both their premium and the strike price by the expiration date. In this case, the strike price was higher than the current market value, meaning the call option was “out of the money”.
If AAPL had risen to, say, $150 before the expiration date, they would’ve executed on their call options to purchase 1,000 of your shares at $110 = $110,000. Factoring in their premium of $3,000, they paid you $113,000 for 1,000 AAPL shares now worth $150. Their total profit is $150,000 – $113,000 = $37,000. Their long call paid off.
What is a short call?
If a covered call is selling options on shares that you currently own, a short call is selling options on shares that you don’t currently own. It’s a high-risk strategy that advanced investors and hedge funds might use to sway the market, make premiums, and lower a stock price.
To use a realistic (if unscrupulous) example, let’s say the market indicates that shares of Xeris Pharmaceuticals are about to skyrocket in value from $100 to $200 thanks to a new miracle drug. You believe that the drug will get rejected by the FDA, so you offer 100 short calls for $150 at a premium of $5 and an expiration date of 1 month.
You’re telling the market “I promise to sell you 10,000 shares of XERS at $150 within the next month, for an upfront premium of $50,000.”
The market thinks you’re nuts and buys up all 100 of your call options. You immediately net 100 x 100 x $5 in premiums, or $50,000.
In Scenario one, let’s say the drug gets rejected and XERS shares plummet to $50. Nobody executes on your calls, so get to keep the $50,000 of premiums.
In Scenario two, let’s say shares of XERS did rise to $200 by the expiration date. All of your buyers execute on their options, but you don’t have the shares to sell them. You now have to buy up 10,000 shares at $200 and re-sell them for the strike price of $150 to your call buyers. Your net loss (minus commissions et al) is 10,000 x ($200 – $150) = $500,000, minus your premium of $50,000 = $450,000.
This example illustrates why short calls are so risky. The maximum upside of short calls is the premium only, or in this case, $50,000. But the downsides are limitless; if XERS had skyrocketed to $1,000 per share, you’d be out millions.
Are call options safer than other investments?
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Call options are often considered a very risky asset. They’re inherently complex, and because they’re more commonly traded by advanced investors and institutions backed by limitless market data, amateurs can quickly find themselves in the red facing a lot of potential losses.
While it’s great to understand the basics of call options, don’t consider them until you’re a more experienced investor. There’s a lot of money on the line if you don’t know what you’re doing. You’re better off sticking with a less risky asset such as a mutual fund.
Read more: How To Invest: Essential Advice To Help You Start Investing
When are call options useful?
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There are three common reasons why more advanced investors might leverage call options (again, I need to reiterate that this is not the right investment for beginners).
Income
Selling options is a quick way to make a few bucks off of your existing assets. As illustrated in the example above, you can sell a covered call on stocks in your portfolio that you believe will stay steady or even lose a little value. There are tools out there like E*TRADE‘s Options Income Finder that can help you ID shares in your portfolio that are ripe for passive income generation.
Plus, selling calls with a strike price above the current market price is a low-risk income-generating strategy; even if your buyer’s long call pays off and they execute their right to buy, you’ve still netted their premiums plus the difference in your purchase price and strike price.
Low-risk speculation
Call options also give you the ability to “invest” in a stock without having to purchase shares upfront.
Let’s say you foresee shares of TSLA skyrocketing, but you need some time to save or sell off your other positions to afford some TSLA. You can lock in a decent strike price by paying a few hundred bucks in premiums today and buy yourself some time. Later, if TSLA doesn’t rise like you thought it would, you can simply let your options expire.
Tax management
Call options are also a common way a buyer can prevent a “taxable event” through realized gains.
Let’s say you need to squeeze some income out of your 100 shares of AMZN. You could sell, but you’ll be subject to commissions and capital gains taxes on your newly-realized gains.
Read more:Gains And Losses: What Will Be Taxed And What Can I Claim?
So instead of selling your position, you can sell a covered option on your shares. In this case, the only cost to you, the buyer, is the time and legal bill for setting up the options contract. Many option sellers (aka, online brokers) can set up options contracts for a low fee, and once your buyer picks them up, you can reap in the premium right away.
Summary
Call options are financial contracts that can be leveraged to squeeze a little extra income out of your existing portfolio and help you invest in the stock market without having to purchase shares upfront.
Make no mistake; options trading is an advanced investing technique (maybe not a black belt, but perhaps a yellow belt right in the middle). It’s worth reiterating, too, that short calls can put you at unlimited risk for little immediate upside, so they’re not at all right for the beginner trader.
But if you learn the ropes and take it slow, options trading can make your portfolio go a little further.
One of the trickiest aspects of homeownership is unloading an existing property while acquiring a replacement.
Aside from being stressful, it can also be difficult it not impossible thanks to financing constraints and unwanted contingencies, which a home seller likely won’t accept in a hot market.
Unfortunately for those in this predicament, real estate is red hot at the moment, thanks to a lack of inventory and record low mortgage rates.
This means contingent offers, where you must sell before you commit to buy, aren’t likely to be accepted. And worse yet, even an offer that requires a mortgage could be denied in favor of an all-cash offer.
Enter “Knock Home Swap,” which as the name implies, looks to solve this common conundrum by giving the concurrent home buyer/seller some helpful tools to compete.
How Knock Home Swap Works
First you get pre-approved for a mortgage with Knock Lending LLC
This allows you to make offers on a replacement home with down payment assistance included
Once you find the right home you can move in and make just the new mortgage payment
In the meantime, your old home will be prepped, listed, and sold while they cover monthly mortgage payments
We’ve heard of home swapping before, with it being a common feature with popular iBuyers.
For example, Opendoor, HomeLight, Reali, and Offerpad all offer trade-in programs where you can sell them your home and buy one from them at the same time.
But unlike an iBuyer, Knock doesn’t purchase your old home from you—instead, it’s sold on the open market via a licensed real estate agent. Ideally for a much higher price.
To close the buy/sell gap, they integrate a “competitive mortgage,” along with an interest-free bridge loan (similar to the one Compass offers) that covers the down payment on the new home, along with mortgage payments on the old home.
You can also claim up to $25,000 for “home prep and repairs” on the old property so it sells quickly and for top dollar, similar to the service provided by Curbio.
So it’s almost like Knock combined several different fintech offerings into one to make the home selling, buying, renovating, and mortgage financing process one smooth transaction.
In exchange for all these services, Knock charges a 1.25% convenience fee when you close on your new home, which can be rolled into the mortgage if you wish.
Once your old home sells, you pay back Knock for any monies advanced, such as down payment assistance, mortgage payments, and home preparation costs.
Speaking of, they’ll advance up to six mortgage payments on your old home, $25,000 in home renovation costs, and up to 5% down payment on the new purchase.
Which Homes Qualify for Knock Home Swap?
Property must be located in their service area (new markets launching soon)
Must be single-family residence, condo, or townhome that is eligible for traditional home loan financing
Title must be clear and held by seller
Must be owner-occupied or vacant (no tenants)
Knock must value home at $150k or higher (or combined value of old/new homes must be at least $350,000-$400,000)
At the moment, Knock Home Swap is live in a limited number of cities, mostly located in Florida and nearby states.
Those cities include Atlanta, Austin, Charlotte, Dallas-Fort Worth, Fort Lauderdale, Houston, Jacksonville, Orlando, Miami, Phoenix, Raleigh-Durham, San Antonio, Tampa, and West Palm Beach.
Several more markets are expected to launch this year and in 2021, so stay tuned.
It should be noted that both homes must be in those markets in order to qualify. Additionally, the property cannot be in an age-restricted community, nor can it be a distressed sale or bank-owned.
They also won’t go for homes with a solar lease, unpermitted additions, or significant foundation or water damage.
It is available exclusively through local broker and real estate agent partners who have been trained as Knock Certified Agents.
Why Use Knock Home Swap?
You can buy a new home before selling your old home
You can get down payment assistance (up to 5%) for new home purchase
They provide the home loan and bridge financing that pays old mortgage before you sell
Can get up to $25,000 in home renovation costs fronted to sell your home for top dollar
Fee is only 1.25% plus standard real estate commissions and closing costs
There are several reasons why an existing homeowner might consider using a service like Knock Home Swap.
For one, it can be difficult to buy and sell a home at the same time because contingencies are often frowned upon.
So again, if the market is hot, or a particular property you have your eye on is popular with other buyers, the seller likely won’t accept a contingent offer.
Additionally, there can be complications when trying to juggle two mortgages at once, especially if affordability is already stretched.
There’s also the sheer timing of things when selling one property and acquiring another – will you need a leaseback before you move into the new home?
With Knock Home Swap, you can get the ball rolling on your new home and concurrently renovate and prep your old home to list, without worrying about where you’re going to live.
And you aren’t selling your home at a basement price to an iBuyer – it’s sold on the open market after suggested repairs are made, meaning it should go for a decent price.
Additionally, there’s more certainty overall if one company has approved your mortgage and is covering the old one while your former property sells.
In terms of gotchas, they do charge a fee of 1.25% for the service, which while not free, seems reasonable. I believe it’s based on the new home sales price.
Of course, they are also originating your mortgage and presumably taking full real estate agent commission on both the new home and the old home.
This could mean a standard fee of 2.5% to 3%, which might be more expensive than what other discount real estate brokerages charge.
Still, you seem to get a lot of good value out of it, and if the repairs they suggest result in a higher sales price for your home, it could cover the fees and then some.
Knock Lock and Shop
In early October 2022, the company unveiled a new solution known as “Lock and Shop,” which is basically a mortgage pre-lock option.
It allows prospective home buyers to lock an interest rate while shopping for a property to buy.
If rates go up during that time, they will enjoy their lower, locked interest rate regardless.
If rates happen to go down, they might receive the option of a float-down to capture some of that improvement.
The rate lock periods are being offered in 60, 75, 90, and 120-day increments, with longer lock periods resulting in higher interest rates. And vice versa.
The Lock and Shop feature can be used in conjunction with Knock Home Swap and Knock GO (Guaranteed Offer), which allows first-time home buyers to compete with all-cash buyers.
Knock also recently launched an interest-free equity advance loan that can be used to buy down your mortgage rate and/or increase your down payment to lower monthly mortgage payments.
It can also be used to cover the cost of a rate lock extension via the Lock and Shop program.
Can you invest in ChatGPT? There are two answers to that question. First, no you cannot. OpenAI, the company behind the software called ChatGPT, is not publicly traded. Second, that doesn’t mean you cannot invest in AI at all. You can get into this industry by investing in companies like Microsoft, Google and other firms that are tied to developing the new generation of AI technology. Here’s what you need to know.
Consider working with a financial advisor as you explore which asset classes to invest in.
Why Invest In AI?
Depending on who you are, AI is about to change everything all at once or nothing at all. Since the release of art-bot AIs like DALL-E and chatbot AIs like ChatGPT, some observers have rushed to dub this the dawn of a new age. Occasional enthusiasts have literally compared the invention of AI to the industrial revolution or even the invention of agriculture itself.
On the other end of the spectrum, skeptics have dismissed the current generation of artificial intelligence as little more than a digital party trick. These writers have rushed to point out every mistake made by the nascent, still-in-beta products as proof that the underlying technology is irredeemably flawed.
Where this will all land is hard to say. Normalcy bias is a powerful thing, so the “nothing to see here camp” might be based on little more than the assumption that since a digital mind didn’t exist yesterday, it cannot exist tomorrow. On the other hand, right now ChatGPT could be a difference of degree masquerading as a difference of kind. It does the same thing that computers have always done best, finding patterns in existing data, just on a massively expanded scale.
What seems most likely, as the consulting firm McKinsey writes, is a “fourth industrial revolution,” in which advanced software gains the ability to automate non-routine tasks. This would be a massive leap forward in technology, akin to when computers gained the ability to automate repetitive and routine functions, and is certainly worth paying attention to on both a social and a financial level.
How Can You Invest In ChatGPT?
As a threshold level, you cannot invest in ChatGPT. ChatGPT is the big name in AI at time of writing, although the field is moving so quickly that may no longer be the case by the time you read this. It is a software package produced and owned by OpenAI, which is a private company based in San Francisco.
If you are an accredited investor, it’s theoretically possible that you could buy an ownership stake in OpenAI by purchasing privately held shares. But their investor list includes some of Silicon Valley’s most influential billionaires, so it might take an eight-figure check to even get someone returning your calls. If that is your profile, though, you are most likely better off investing through one of the venture capital firms that own a stake in OpenAI, including Sequoia Capital or Andreessen Horowitz.
For retail investors, generally the closest you can get to investing in ChatGPT is by purchasing shares of Microsoft (MSFT) stock. The company has invested more than $10 billion into the company, giving it a significant ownership and profit stake and access to OpenAI’s software as the basis of a next-generation version of the search engine Bing.
Beyond that, you can invest in companies that have a relationship with OpenAI’s product and success.
On the back end, this can mean investing in vendors who provide the hardware and software solutions that ChatGPT relies on. The most noteworthy company there would be NVIDIA (NVDA), which produces the advanced chipsets used for artificial intelligence machines. The share price has been rocketing skyward since Oct. 10, 2022, when the stock traded at $112.27 to June 1, 2023, when it was trading at approximately $400.
On the front end, you can invest in companies that intend to use ChatGPT in their own products. Several firms have announced strategic partnerships with OpenAI to begin integrating the artificial intelligence into their own lines, such as Salesforce (CRM) and Snap (SNAP). One report by Forbes even suggests that Coca-Cola (KO) may integrate OpenAI into its business model.
It’s not the same as investing directly in OpenAI itself, but it still will give your portfolio exposure to ChatGPT as a product.
How Can You Invest In AI?
Beyond investing in OpenAI, you can also look to invest in AI as a field overall. Over the past year, artificial intelligence has become a sort of four-minute mile. Nobody could build a system remotely like DALL-E or ChatGPT just a few years ago. Now, new breakthroughs emerge every few weeks from any number of places. So a good way to invest might be by looking for those other companies.
The most prominent AI companies right now are probably firms like Alphabet (GOOG), Tesla (TSLA) and Amazon (AMZN). All three are either heavily invested in their own artificial intelligence software or are helping to develop third-party programs. This is generally the closest thing you can get to investing in OpenAI, since in all three cases you will be investing in a firm developing AI software.
Beyond that, as with ChatGPT partnerships, you can begin looking for companies that will thrive on artificial intelligence. With this approach, your goal is to try to identify firms that can take advantage of the opportunities that AI offers. What sectors and companies will use this tool? Who will become more profitable in the long run because of it?
One way to answer this is by investing in the technology sector in general. You can buy stock in exchange-traded funds (ETF) or mutual funds that are indexed to the tech sector, or funds which are indexed to the NASDAQ market. You can also try to identify firms and sectors that will do well with artificial intelligence technology, such as companies that do automated customer service, large data-management firms and logistics companies. All of these are sectors that need to handle large volumes of data with complex, non-routine outputs, which is exactly what AI is likely to specialize in.
Bottom Line
You cannot invest directly in OpenAI, the company behind ChatGPT, but that doesn’t mean you can’t invest in artificial intelligence. By seeking out companies and sectors most likely to profit off of data-driven, non-routine transactions, you can find companies that will likely thrive on this technology.
Technology Investment Tips
We’ve just scratched the surface of investing in artificial intelligence. In fact, if this technology has the potential that its enthusiasts claim, pretty soon it will be as ubiquitous as investing in electricity or Wi-Fi.
A financial advisor can help you sort through your options when it comes to investing in artificial intelligence and other technologies. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
Are you a Millennial or Gen-Xer that has contemplated investing but doesn’t know where to begin? Micro-investing apps are a way to get your feet wet and are designed to encourage the younger generation to start investing.
If you are new to or know little about micro-investing, this guide will give you the information you need to get started. It will cover the best micro-investing apps for Millennials and everything you should know about micro-investing including what it is, how it works, and how to choose an app.
What’s Ahead:
Overview of the best micro-investing apps for Millennials
Acorns
This is one of the first and most popular micro-investing apps around. Account portfolios range from conservative to aggressive. This app will recommend portfolios based on your age, the risk you are willing to take, and what age you anticipate you will retire. Acorns takes the hassle out of investing by providing a micro-investing service. With one click, you can get started with any amount and automatically invest it according to your risk tolerance level–no more worrying about saving up money for each separate investment.
And if that’s not enough, Acorns also rewards its customers while shopping at partner stores through their Found Money program; they offer cash back without all the work because you’ll have an extra boost in your portfolio every time you shop online or offline. Acorns makes it easy for anyone to start investing – even kids. You can open accounts on behalf of those under 18 years old and build them up as parents monitor progress from afar via their family plan option.
Acorns has some really fun and interactive educational resources for those who are new to micro-investing, too. No minimum deposit is needed, so you can start investing with just $5. You’ll also get a referral bonus when you refer someone else or find a job offer — Acorns will match your investments up to the first year in which they work there. In other words, it’s free money.
The fees for micro-investing with Acorns are based on the level of account that you sign up for. The monthly fees can be as low as $3 per month or as high as $5 per month. You can choose between Personal and Family account levels:
Personal – $3 per month gives you the benefits from personal services such as a checking account with a debit card and no account fees or ATM fees and the ability to earn up to 10% bonus investments.
Family – $5 a month, and the entire family can invest. You can add any number of kids with no extra fees and access exclusive offers, in addition to the benefits from the Personal account type.
You can sign up for this micro-investing app through their website or by downloading their app on a device that uses iOS or Android operating systems. As with other micro-investing apps, you provide information about yourself, create a username and password, pick the type of account you want to sign up for, fund your account, and begin investing. One drawback of Acorns is that fees can add up for a low-balance account (the relative expense ratio gets smaller as you invest more), and transferring to another provider will cost $50 per ETF.
Learn more about Acorns or read our full review.
Robinhood
Robinhood is a micro-investing app that lets you buy and sell stocks, ETFs, options, and cryptocurrencies with zero trading fees. It’s the best place to start investing online because it’s the only free investment app on the market.
Robinhood was created by a couple of engineers who wanted to make stock trading more accessible for everyone. They had no idea that their little side project would eventually become one of America’s most popular financial apps.
The app is available for iOS or Android devices as well as through a web browser. To sign up for an account, you must be 18, with a valid ID to pass the company’s Know Your Customer (KYC) process. Robinhood also provides $3 – $225 in free stock when you sign up through their mobile app on iOS or Android device or their website.
Robinhood does not offer multiple account types to choose from but doesn’t charge any commission fees. Hence, trades are always at a flat rate of $0 per trade, making it a viable option for newer investors. Note that if you decide to transfer out of Robinhood, you’ll pay $75 – otherwise, there are no fees.
Learn more about Robinhood or read our full review.
Betterment
This app is designed for hands-off Millennial investors. Betterment works similar to other apps, with multiple portfolio options and automatic rebalancing of your portfolio. Betterment is a low-cost, automated investing service that takes care of everything for you. You can invest with as little as $25 and get the help of a financial advisor when you want it. It’s a robo-advisor that offers many different types of investments including index funds and exchange traded funds (ETFs) so your money will be diversified across multiple asset classes to reduce risk.
Betterment was founded in 2008 by Jon Stein who wanted to make investing easy and accessible for everyone. He created an automated system where users could set up their account, choose what type of portfolio they wanted, and then let Betterment take care of the rest – automatically rebalancing every day to keep things evened out.
There are two types of Betterment accounts:
Betterment Digital – 0.25% annually of assets managed featuring no minimum requirements, with the option to purchase a financial advisor package. You receive free automatic rebalancing of your portfolio when it drifts 3% or higher.
Betterment Premium – 0.40% annually of assets managed, and you must maintain a balance of $100,000. In addition to Betterment Digital features, you receive unlimited access to certified financial planners by phone or email.
You can purchase a consultation with financial advisors with packages ranging from $199 to $299 for individuals with a Betterment Premium account.
Betterment makes it easy to get started with your investing. Signing up is quick and accessible through the mobile app or web-based browser, you can link an account for deposits via bank transfer, wire transfers are also available but not recommended due to fees (for example $25 on top of any other charges).
Once signed up Betterment will set up a portfolio that reflects your goals based on questions asked when signing in such as what level of risk do I want? Based on these responses they’ll design a personalized investment plan just for you.
Learn more about Betterment or read our full review.
Twine
This micro-investing app allows you to invest and reach financial goals with a spouse, partner, or friend. Unlike other micro-investing apps, the focus is placed on low-cost ETFs instead of micro shares. Funding your account is done through recurring or one-time deposits, and you need $100 in your account to begin investing, though you can start an investment account with $5.
Twine was founded with the mission of making small, smart investments in people’s futures. They’re a micro-investing company that allows you to set up financial goals and an expected timeframe for these goals so they can reach them quicker than if it were on your own.
To do this, Twine has created three portfolio types: conservative, aggressive and moderate; which are designed specifically based on how much money is needed when investing as well as what time frame someone needs their goal met by.
There are two ways to get started: one being merely setting up a user account online or through an iPhone app (iOS). You can also invite another person to invest alongside you via email invitation – meaning not only will both of your funds grow together but Twine will help you reach your goals faster.
Twine micro-investment accounts are charged either $0.25 per month for every $500 invested or 0.60% annually with no minimum.
The process of signing up is similar to other apps. You provide your information, set a financial goal, invite someone else to invest with you, and begin funding and investing while monitoring your progress along the way.
On the downside, the mobile app is only for iOS operating systems only. It is more costly than other micro-investing apps and lacks the features that most of these apps offer, such as funding options and the option of fractional shares.
Learn more about Twine or read our full review.
Stash
Stash makes it easy and affordable for anyone to utilize and open an account. With Stash, you have more freedom and flexibility than other micro-investing apps.
Stash lets you invest in as little or much as you want and pick the companies, organizations, or causes that you trust. As your holdings grow, so does your potential to invest in what you believe in.
Stash eliminates any fees, commissions, or transaction charges–and they’re always working on adding more stocks to their portfolio for even more possibilities. With the new Stock-Back debit card featuring rewards in stocks opposed to store credit points (which can be converted into cash), it’s just a smarter way to use money every day.
There are two tiers of accounts with Stash:
Stash Growth – $3 a month gives you access to the benefits of Stash Beginner plus Smart portfolio and additional personal features. Smart Portfolio is a Stash feature that builds a custom portfolio for you based on research and risk level.
Stash+ – $9 a month allows you to enjoy the benefits of Stash Growth with bonuses. You can open accounts for your kids (max two kids), receive $10,000 in life insurance, and access additional and exclusive Stock-Back card bonuses.
There are three options you can choose from to add money to your Stash account.
Set recurring deposits to your Stash account.
Round-up purchases are made with your linked debit card, and the difference is invested.
Smart-Stash is a feature where your spending and earnings are analyzed, and money is stashed based on this information. You can then set transfer amounts to $5, $10, or $25 max.
The signup process is easy and straight-forward. You answer a few questions, pick a plan, add money to your account, sign up for the banking services offered to receive the Stock-Back debit card, and begin investing. You have the option to create and track your goals using the Stash app.
One minor drawback is the fees, as with any micro-investing app, are the biggest drawback of Stash. The subscription fees per month can add up if you have a low balance. The annual average expense ratio is roughly .25%.
Learn more about Stash or read our full review.
Public
This is a micro-investing app that incorporates the use of the social networking community with investing. It uses social networking as the basis for swapping strategies and learning from others.
Public is the easiest way to invest. You can invest in stocks, ETFs, and crypto-all in one place with any company and get their take on new money, wrapping up your earnings neatly at monthly intervals so that you don’t have to worry about throwing away all of your cash on material things.
It’s like an investment buffet where all of your favorite individual stocks are united in one easy-to-manage account with no minimum balance requirements and commission fees. All you need is a slice of Public, some greasy fries (tip not included), and the best TV binge ever.
You only pay fees when purchasing shares. There are no membership levels, no account fees, and you can begin using your account when you sign up.
The signup process is easy and convenient. You can sign up through the mobile app available from the Apple Store or Google Play Store.
The biggest drawback of the app is the risk of following advice from strangers about strategy and investing.
Learn more about Public or read our full review.
SoFi Invest
No account minimum and you can start investing with $1? Sign me up!
SoFi (social finance) is a financial planning company formed in 2011 and offers various products, including micro-investing. SoFi allows you to trade online through their app when you want and what you want. This micro-investing app is designed for Millennials looking for a lot of perks.
SoFi Invest is perfect for newbies who want to be hands off without sacrificing returns. You’ll still have plenty of options though – if you’re more adventurous and want control, go ahead and customize how your fund performs by adjusting frequency, risk tolerance, investment view, holdings duration, and cash flow strategy.
With this money-saving feature the only thing that will cost you is an ACAT transfer fee when transferring outside funds into your share class account through an ACH bank-to-bank or wire payment method – seriously easy stuff for any price-sensitive investor out there.
There are no account or asset management fees, and you do not need a minimum account balance to get started.
There are two options for signing up with SoFi Investing:
SoFi Active Investing – Allows you to control what you invest in based on your preferences, including the risk level you are comfortable with. You have access to a community of micro investors like yourself, certified financial planners, and other valuable resources at no cost.
SoFi Automated Investing – This is a more hands-off approach allowing you to use an automated platform to build and manage your portfolio. You receive the same perks offered with SoFi Active without investing time in researching and managing your portfolio.
You can sign up for SoFi Investing using a desktop or their mobile app. You will be asked for basic information. The signup process, including creating your account and scheduling a deposit, takes about 2-5 minutes to complete. It takes 1-2 business days for funds from your deposit to post to your account after your account is approved.
On the downside, SoFi does not offer tax-loss harvesting, and it has a limited track record compared to other micro-investing providers.
Learn more about SoFi Invest or read our full review.
Stockpile
This is a micro-investing app designed for young beginner investors who need something simple to get started with investing. You can access this app through a web-based browser or a device using iOS or Android operating systems.
Stock options can be complicated, but Stockpile makes it easy. With their fractional shares, you’ll have an easier time growing your investment portfolio and don’t have to worry about commissions.
It’s a great option for kids who want to get started early with their own investing or do so on behalf of others as well. When you’re ready to buy the gift that every investor loves, they offer physical stocks in addition to gift cards plus support from their customer service team if you need any assistance along the way.
There are different ways to fund a Stockpile account, link your bank account, and redeem a gift card. You can connect your checking account to move money in and out of your Stockpile account free of charge or use your debit card for a 1.5% convenience fee. If you use your debit card to fund your account, it is done instantly. Using your checking account takes 3-5 business days.
Gift cards cost $2.99 for the first stock. Additional stocks are $.99 each. Purchasing gift cards with credit or debit have an additional fee of 3% of the gift card’s value. Physical plastic cards cost an additional fee ranging from $4.95 – $7.95, depending on the card’s value.
The cost to trade on Stockpile is $0.99 per buying/selling trade. There are no annual or account management fees associated with the account.
The process for opening a Stockpile micro-investing brokerage account is simple. You create an account by providing basic information, fund your account, and begin choosing from the available stocks and ETFs.
Despite the user-friendly interface and simplicity of this app, there are drawbacks. This includes limited account and investment options and minimal tools available to analyze and research stocks.
Learn more about Stockpile.
Summary of the best micro-investing apps for Millennials
App
Minimum to start
Unique features
Acorns
$0
Family plan includes a checking account, retirement account, and custodial accounts for children
Robinhood
$0
Invest in cryptocurrency
Betterment
$0
Tax-loss harvesting
Twine
$0
Shared savings and investment goals for couples
Stash
$0
Get “stock-back” on debit card purchases
Public
$0
Follow and engage with others a la social media, only with investments
SoFi Invest
$0
Ability to connect with Certified Financial Planners
Stockpile
$0
Buy stocks with any dollar amount
How we came up with our list of the best micro-investing apps for Millennials
When we were looking for apps to include on this list, there were a few things we wanted to focus on. Before you decide on an app, you need to compare different brokerages and what they have to offer. That said, we looked at apps that had strong reviews, were easy to navigate, and most of all, had little to no fees, including:
Withdrawal fees.
Cancellation fees.
Transaction or investment fees.
Account opening fees.
Monthly or annual fees.
Expense ratio fees.
You want to make sure that you know the actual cost of micro-investing apps and how fees are charged. This includes a flat rate or percentage of transactions.
What is a micro-investing app?
Micro-investing is a way to invest without needing a lot of money to get started. These apps are designed to get the younger generation involved with investing and overcome barriers that prevent Millennials from investing. The funds placed in these accounts are used to invest in fractional shares or ETFs.
Depending on the micro-investing app you select, you can link your debit card and have purchases that you make with the card rounded up to the next dollar then deposited into your account. You can also have automatic transfers of a specific amount placed in the account. A few apps will monitor and analyze your spending and earnings and set money aside that can be transferred to your account to purchase micro shares of ETFs or fractional shares of stock.
Why should you use a micro-investing app?
Micro-investing is a new platform when it comes to investing. However, it is gaining popularity among Millennials that don’t have a lot of money to invest. The main feature of this type of platform can invest micro amounts of cash. Other features are considered bonuses.
Here are other benefits of micro-investing:
Automated process including rebalancing portfolio and transfers of funds to a portfolio account.
Minimal management fees.
No minimum requirements to begin investing.
Some providers have an option for purchasing fractional shares.
Most apps allow you to manage your account from an iOS or Android device.
Why shouldn’t you use a micro-investing app?
If you’re a more advanced investor and you want more control over the individual stocks you invest in, a micro-investing app may not be the right option for you. Micro-investing apps are designed to make investing easy and accessible to newer investors (or investors who don’t want to deal with the hassle). That often comes at the cost of lacking some features more advanced investors would enjoy – like stock charts and the ability to do intense analysis.
Most important features of a micro-investing app
When you’re looking for an excellent micro-investing app, there a few key features you need to be aware of:
Good reviews
The first thing you’ll notice when you download the app is the number of customer reviews and how well the app is rated. It helps to look through what other customers are saying about the app before you decide on one. For example, some apps get buggy with new versions or newer phones.
Clean interface
The last thing you want when you’re trying to simplify your investing experience is a cluttered interface that makes investing confusing. Look at the screenshots of the app. Download it to play around with it. Watch videos of it on YouTube. Get a sense as to whether it will be easy for you to use before deciding.
Little to no cost
Most micro-investing apps make their money in ways that aren’t hitting you. Meaning, they might not pay an interest rate on your balance (and instead take that for themselves), or they might collect interchange fees when you use your debit card. Either way, micro-investing apps shouldn’t cost you an arm and a leg, so be sure to understand the pricing structure before you sign up.
While it’s still possible to request mortgage forbearance via the CARES Act if you’re having trouble making monthly payments, this option will eventually come to an end.
In fact, you might only have about two months left to contact your loan servicer for relief. So if you think you’ll need help, act sooner rather than later to avoid missing out.
This cutoff date depends on the type of mortgage you have, e.g. an FHA loan or a conventional loan.
What’s the Last Day to Apply for Mortgage Forbearance?
Fannie and Freddie loans – when the “national emergency” ends
FHA loans – June 30th, 2021
USDA loans – June 30th, 2021
VA loans – June 30th, 2021
Oddly, it’s not even known when that date is, at least when it comes to mortgages backed by Fannie Mae and Freddie Mac.
That’s because the GSEs currently have the end date for relief set to the end of the national emergency. So it might be a moving target given COVID-19 seems to just be getting started.
Seeing that the other agencies have extended into the first six months of 2021, the hope is Fannie/Freddie will also do at least that.
The FHA had set a deadline of October 30th, 2020 (which was extended to December 31st , 2020, then Feb. 28th, 2021, then to March 31st, 2021, and now to June 30th).
Similarly, the USDA had announced a deadline of December 31st, 2020 for approving forbearance requests, then aligned it with the FHA’s February 28th, 2021 cutoff date, and has since extended it until June 30th, 2021.
With regard to VA loans, it’s the same story as the FHA as government-backed home loans appear to have the same cutoff dates (other than USDA).
Whether these end dates all get extended in light of the continued uncertainty and ongoing economic disruption remains to be seen.
They’ve already been extended several times, so it won’t be a surprise if they move them into the future again, especially with COVID continuing to keep the economy shuttered.
Loan Servicers Will Have Their Busiest Season Ever
I spoke to Sapan Bafna, senior leader, Advanced Delivery Engines for CoreLogic, who is responsible for developing IntelliMods, a web-based loan modification decisioning tool, to get his take on how things might go once the CARES Act forbearance option runs out.
In short, he believes loan servicers will experience “their busiest season ever” as they process post-forbearance requests for millions of homeowners.
He developed IntelliMods as a result of the 2008 economic crisis and believes the industry will be held accountable for underusing technology and available data.
In other words, they could make a complete mess out of things once borrowers exit their CARES Act forbearance plans.
And that won’t be good for the industry, which only recently got past the many loan modification and foreclosure snafus from the Great Recession.
Still, things don’t seem nearly as bad this time around, at least for most homeowners.
[How Is Mortgage Forbearance Paid Back?]
What Will Be the Most Common Outcome Post-Forbearance?
Fannie and Freddie loans will likely go the payment deferral route
FHA loans will use the COVID-19 Stand Alone Partial claim option
USDA and VA loans will have full suite of existing home retention options on the table
When asked what would be the most common outcome after forbearance ends, Bafna broke it down by loan type.
He believes borrowers with Fannie- and Freddie-backed mortgages will take advantage of the payment deferral option, followed by a loan modification if they’re unable to resume making their regular mortgage payments.
For FHA loans, he expects most to go with the COVID-19 Stand Alone Partial claim option, followed by four new modification options that have been specifically created for the COVID-19 pandemic.
For USDA loans and VA loans, he believes “homeowners will be offered the full suite of existing home retention options.”
If all else fails, it is possible that some homeowners will have to go the deed-in-lieu of foreclosure route, or simply be foreclosed on.
The good news for the overall market is because of severe inventory shortages, additional foreclosed properties likely won’t put much if any downward pressure on home prices.
Of course, he did say “Some local markets have been hit particularly hard by the pandemic recession and will experience elevated unemployment and home-price weakness in 2021.”
At the same time, more resilient metros will rebound and actually see additional home price appreciation next year.
With regard to short sales, which were big after the most recent housing crisis, Bafna believes they’ll be “a small component since we currently see only around 3% of mortgages with negative equity.”
The House Rich, Cash Poor Conundrum
While it sounds like most homeowners will see relatively positive outcomes post-forbearance, he highlighted another issue regarding the many borrowers nationwide who are now house rich and cash poor.
Because property values have increased significantly over the past several years, but incomes have lagged, some homeowners may have difficulty refinancing their mortgages or otherwise accessing their home equity.
As such, a borrower experiencing financial distress because of the pandemic-related recession will be at the greatest risk of losing their home.
And while they might be able to sell via traditional channels due to their amassed equity, they’ll still incur moving costs, lose any homeowner-related tax benefits, and “forego the opportunity to build equity in their homes as prices rise in the future.”
This exemplifies the problem with real estate, which is an illiquid asset. Often there’s a lot of money trapped inside that can’t be easily accessed.
There are some options out there, like reverse mortgages and innovate products like Noah’s home equity sharing program, but no one solution is totally ideal.
The good news, even if hard to access, is homeowners have lots of equity this time around, which is a big improvement from a decade ago when their mortgage balances grossly outweighed their property values.
That should allow the real estate market to absorb the negative impact of the COVID-19 pandemic, even if it goes on for another year or longer.
Read more: There Will Be a 3-Month Waiting Period to Get a Mortgage After Forbearance
What’s the Difference Between Short Calls and Long Calls?
Every time a call option contract transaction takes place there is a seller and a buyer. The seller is said to have gone short the calls and the buyer is long the calls. “Short calls” and “long calls” are simply shorthand for these two positions and strategies.
Short calls are a bearish options strategy used to profit from an expected sideways to downward price action on a security. On the other hand, a long call is a bullish options strategy that aims to capitalize on upward price movements on an asset such as a stock or exchange-traded fund (ETF).
Short calls are the opposite strategy to long calls and their potential payoffs reflect that. Long calls have the potential to be unlimited in gain, and short calls the maximum gain is the premium.
What Are Short Calls?
“Short calls” is shorthand for pursuing the strategy of selling a call option.
Short call sellers receive a premium when the call is sold. The seller hopes to see a decrease in the underlying asset’s price to achieve the maximum profit.
It is also possible for the seller to profit if the underlying asset price stays the same. Options prices are based on intrinsic value (the difference between the strike price and the asset price) and time value.
If the asset price remains stable, intrinsic value will also be stable. However, as the option nears expiration the time value will drop to zero due to theta decay.
Furthermore, there are two types of short calls, naked and covered calls. Short calls are “naked” when the seller does not own the underlying asset. Short calls are “covered” when the seller owns the underlying asset at the time of sale.
Short calls have a fixed maximum profit equal to the premium collected and losses are undefined. Theoretically, a stock could rise to infinity, so there is no cap on how high the value of a call option could be.
Therefore short calls can be highly risky. For this reason, traders should have a risk management plan in place when they engage in naked call selling.
Short Call Example
It’s helpful to see an example of a short call to understand the upside reward potential and downside risks involved with such a strategy.
Suppose your outlook on shares of XYZ stock is neutral to bearish. You think that the stock, currently trading at $50, will trade between $45 and $50 in the next three months.
A plausible trade to execute would be to sell the $50 strike calls expiring in three months. We’ll assume those options trade at $5. The breakeven price on a short call is the strike price plus the premium collected.
In this example, the breakeven price is thus $50 plus $5 which is $55. You profit so long as the stock is below $55 by the time the options expire but will experience losses if the stock is above $55 by expiry.
Two months pass, and the stock is at $48. The calls have dropped in value thanks to a minor share price decline and since there is less time until expiration. The drop in time value relates to decaying theta, one of the option Greeks, as they’re called. Your short calls are now valued at $2 in the market.
Fast-forward three weeks, and there are just a few days until expiration. The stock has rallied to $49, but the calls have actually fallen in value. They are now worth just $1. Time decay has eaten away at the value of the calls — more than offsetting the rise in the underlying shares. Time decay becomes quicker as expiration approaches.
You choose to buy-to-close your options in the market rather than risk a late surge in the stock price. Most options are closed out rather than left to expire (or be exercised) as closing options positions before expiration can save on transaction costs and added margin requirements. You cover your short calls at $1 and enjoy a net profit of $4 on the trade ($5 collected at the trade’s initiation and a $1 buy back to close the position).
Pros and Cons of Short Calls
Pros of Short Calls
Cons of Short Calls
Benefits from time decay
Unlimited risk if the underlying asset rises sharply
Can be used in combination with a long stock position to generate extra income (covered call)
You may be required to deliver shares if the options holder exercises the call option
The underlying stock can be sideways to even slightly higher and you can still profit
Reward is capped at the premium you received at the onset of the trade
Finally, user-friendly options trading is here.*
Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.
What Are Long Calls?
Long calls are the opposite strategy to a short call. With a long call, the trader is bullish on the underlying asset. Once again, a key piece of the options trade is the timing aspect.
A long call benefits when the security rises in value, but it must do so before the options expire.
Long calls have unlimited upside potential and limited downside risk. A long vs short call differs in that respect since a short call has limited profit potential and unlimited risk.
A long call is a basic options strategy that is often a speculative bullish bet on an underlying asset. It’s a good options strategy for those just starting out since there is a limited loss potential and the strategy itself is not complicated.
Long Call Example
Buying a long call option is straightforward. Long calls vs short calls involve different order types. With long calls, you input a buy-to-open order and then choose the calls you wish to purchase.
You must enter the underlying asset (often a stock or ETF, but it could be an option on a futures contract such as on a commodity or currency), along with the strike price, options expiration date, and whether the order is a market or limit order.
Suppose you go long calls on XYZ shares. The stock trades at $50 and you want to profit should the stock rise dramatically over the next month. You could buy the $60 strike calls expiring one month from now. The option premium — the cost to buy the option — might be $2. Because the call is out-of-the-money, that $2 is composed entirely of extrinsic value (also known as time value).
Since you are going long the calls, you want the underlying stock price to rise above the strike price by expiration. It’s important to know your breakeven price with a long call — that is the strike price plus the premium paid. In our example, that is $60 plus $2 which is $62. If the stock is above $62 at expiration, you profit.
After three weeks, the stock has risen to $70 per share. Your calls are now worth $13.
That $13 of premium is made up of $10 of intrinsic value (the stock price minus the strike) and $3 of time value since there is still a chance the stock could keep increasing before expiry.
A few days before expiration, the shares have steadied at $69. Your $60 strike calls are worth $10. You decide to take your money and run.
You enter a sell-to-close order to exit the position. Your proceeds from the sale are $10, making for a tidy $8 profit considering your $2 premium outlay.
Pros and Cons of Long Calls
Pros of Long Calls
Cons of Long Calls
Unlimited upside potential
The premium paid can be substantial
Risk is limited to the premium paid
You can be correct with the directional bet and still lose money if your timing is wrong
Is a leveraged play on an underlying asset
There’s a chance the calls will expire worthless
Comparing Short Calls vs Long Calls
There are important similarities and differences between a short call vs long call to consider before you embark on a trading strategy.
Similarities
Traders use options for three primary reasons:
• Speculation — Speculators often do not take positions in the underlying stock. Investors can buy a call and hope the underlying asset rises or they can sell a call and hope the asset price drops. Either way, the investor is taking a risk and could lose their investment, or more in the case of naked short calls.
• Hedging — Short sellers of stock may sometimes buy call options to hedge their stock positions against unexpected price movements.
• Generate Income — Covered short calls help to generate extra income in a portfolio. The seller sells a call that is out-of-the-money, collects the premium, and hopes the stock doesn’t rise to that strike price. However, the investor can also choose a strike that they would be happy to sell at such that, if the stock rises and the option is exercised, they are happy to sell their shares.
Differences
Long calls are a bullish strategy while short calls are a neutral to bearish play.
Potential profits and possible losses are the opposite in long calls vs. short calls. A long call has unlimited upside potential and losses are limited to the premium paid. A short call has an unlimited loss potential with a max profit that is simply the premium collected at the onset of the trade.
Time decay works to the benefit of an options seller, such as when you enter a short call trade. Time decay is the enemy of those who are long options.
When implied volatility rises, the holder of a call benefits (all else equal) since the option will have more value. When implied volatility drops, options generally become less valuable, which is to the option writer’s benefit.
It’s also important to understand the moneyness of a call option. A call option is considered in-the-money when the underlying asset’s price is above the strike price. When the underlying asset’s price is below the strike, then the call option is considered out-of-the-money.
A call writer prefers when the call is more out-of-the-money while a call holder wants the calls to turn more in-the-money.
Short Calls
Long Calls
Neutral-to-bearish view
Bullish view
A more advanced options play
A trade that is good for options beginners
Limited reward, unlimited risk
Unlimited reward, limited risk
The Takeaway
Long calls and short calls are two options trading strategies you can use to place a directional and timing wager on an underlying asset — often a stock or ETF. Buying calls is a bullish play while selling calls is a neutral to bearish strategy.
If you’re ready to try your hand at options trading online, You can set up an Active Invest account and trade options from the SoFi mobile app or through the web platform.
And if you have any questions, SoFi offers educational resources about options to learn more. SoFi doesn’t charge commissions, but some fees apply, and members have access to complimentary financial advice from a professional.
With SoFi, user-friendly options trading is finally here.
FAQ
Are long calls better than short calls?
Long calls are not necessarily better than short calls. Using one versus the other depends on your outlook on how a security will move between now and expiration.
Long calls appreciate when the underlying asset rises in value. Short calls, on the other hand, are useful if you have a neutral to bearish view on a security. Short calls drop in value as time value erodes and when the underlying asset’s price falls.
Like long calls, it is important that your directional bet and timeframe line up with the calls you look to sell short.
How do short calls and covered calls differ?
Short calls are often naked positions. That means they traded outright without having an existing long stock position. Naked short calls are risky since there is unlimited loss potential should the stock rise.
Covered calls work by owning shares of a stock, then selling calls against that long stock position. Covered calls are a common options trading strategy whereby a trader looks to enhance a portfolio’s income by collecting a premium while the underlying shares trade sideways or decline in value.
The downside of covered calls is that your shares can get called away from you if the stock price rises above the strike price. Covered calls have the benefit of protecting the trader from unlimited losses since the long stock position offsets the short calls’ unlimited loss potential.
Photo credit: iStock/Prostock-Studio
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes. SOIN0221023
One important distinction between advanced award travelers and those newer to the world of points and miles is how each group searches for award space.
Those with experience earning and burning points and miles will carefully study various partner award charts, looking at where to transfer their flexible points and what sweet spots they can utilize. Meanwhile, beginners may log into their United MileagePlus or American Airlines AAdvantage account, search for the destination they want to visit and book the first award they see regardless of price or convenience.
While anyone can accrue a good amount of points by earning welcome bonuses on top travel credit cards, this difference in redemption strategies is huge. Using the right partner program to book your award could save you as much as 50%, depending on the carrier and route.
With major programs switching to dynamic pricing and 500,000 miles for one-way business-class flights to Europe becoming increasingly common, it’s more important than ever to know the best ways to maximize your points and miles.
Today, we’ll look at some of the best value sweet spot award redemptions. While this list is not exhaustive, if you plan to travel to one of these destinations and have points at your disposal, these are surefire ways to get an excellent redemption value every time. If you’re new to the world of points and miles and any of these destinations interest you, you can use this as a road map to instant success.
ANA premium cabins to Japan with Virgin Atlantic points
Virgin Atlantic’s partner award chart for ANA is one of the best sweet spots out there. While availability can be hard to come by, and the first-class rates recently increased, this remains an incredible use of Virgin points.
The sweet spot
For this sweet spot, it’s important to know that the prices differ if you’re flying from the West Coast versus the central and eastern U.S. You can also book one-way flights for half the round-trip prices noted below.
ANA’s new business class is called “The Room,” and its new first class is referred to as “The Suite.” Both are excellent products that we are big fans of here at TPG — and flying in either means you can visit the always-popular Japan.
You’re allowed an open-jaw routing as long as you stay within the same region of the U.S. (West or Central/East). This means you can mix and match airports wherever you find award space.
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For example, flying from Washington, D.C.’s Dulles International Airport (IAD) to Tokyo’s Narita International Airport (NRT) and then returning from Tokyo’s Haneda Airport (HND) to New York’s John F. Kennedy International Airport (JFK) would be a valid itinerary, costing only 95,000 points in business or 170,000 points in first class.
Availability can be scarce — you will have the best luck booking 12 months in advance (as soon as the seats are loaded) or last minute (less than 14 days before departure when unsold seats are often loaded for awards). Your best bet for finding availability is to search for it using the United MileagePlus website and call Virgin’s Flying Club to book.
Related: Feels like first class: Flying ANA The Room business class from LA-Tokyo
Earning Virgin Atlantic miles
Virgin Atlantic miles are among the easiest to earn. You can transfer points from Chase Ultimate Rewards, American Express Membership Rewards, Citi ThankYou Rewards, Capital One, Bilt Rewards and Marriott Bonvoy to Flying Club. Keep an eye out for transfer bonuses from Amex or Citi that could drop your costs even further.
Related: How to redeem Chase Ultimate Rewards points for maximum value
Iberia business class to Spain with Avios
Iberia Avios can unlock one of the cheapest ways to fly to Europe in business class.
The sweet spot
The key to this sweet spot is to fly a nonstop, Iberia-operated flight of 3,001 to 4,000 miles on off-peak dates (check Iberia’s peak and off-peak calendar). This is because Iberia uses a distance-based award chart for its flights.
Iberia operates several transatlantic flights that fall into the 3,001- to 4,000-mile distance band. As such, you can book Iberia flights between the following city pairs for just 34,000 Avios, plus modest taxes and fees:
Boston Logan International Airport (BOS) to Adolfo Suárez Madrid-Barajas Airport (MAD).
BOS to Josep Tarradellas Barcelona-El Prat Airport (BCN).
JFK to MAD.
JFK to BCN.
IAD to MAD.
While flights from Chicago’s O’Hare International Airport (ORD) to MAD are slightly outside this range, they also price at 34,000 Avios one-way in business class.
Earning Avios
There are three primary ways for U.S.-based travelers to earn Iberia Avios:
Related: 4 versions of Avios: When to use Aer Lingus, Qatar Airways, Iberia and British Airways
Qatar Airways Qsuite business class to the Middle East or Africa with AAdvantage miles
Qatar Airways has won numerous awards for its innovative Qsuite business-class product, regarded as one of the world’s best business-class experiences.
The sweet spot
If you don’t live near a Qatar Airways gateway, you may be able to find an itinerary that allows you to connect domestically in the U.S. for the same cost.
You can search for award availability online, even if you don’t have the necessary miles. Just note that award space may be difficult to come by, so check back regularly if you can’t find flights on your desired route.
Earning AAdvantage miles
There are a few American Airlines cobranded cards you can use to quickly accrue AAdvantage miles.
The information for the CitiBusiness AAdvantage Platinum Select Mastercard and AAdvantage® Aviator® Red World Elite Mastercard® has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
You can also transfer Marriott Bonvoy points to American Airlines AAdvantage at a 3:1 transfer ratio. Additionally, if you pay your rent with Bilt Rewards or spend on the Bilt Mastercard® (see rates and fees), you can transfer your points 1:1 to AAdvantage. Points transfer from Bilt to AAdvantage instantly.
Related: Best uses of American Airlines miles
Cathay Pacific business class to Asia or Africa with Alaska miles
The Alaska Airlines Mileage Plan used to be one of our favorite airline programs, as the program once offered some incredible award flight sweet spots. Sadly, Alaska has removed many of its award deals, but Cathay Pacific is one of the remaining Mileage Plan sweet spots that you should book before it disappears.
The sweet spot
Flying with Cathay Pacific from the West Coast to its Hong Kong International Airport (HKG) hub will cost 30,000 miles each way in economy. If you can find available seats in premium cabins (which is difficult), you’ll pay 50,000 miles per person in business class and 70,000 miles per person in first class.
You can also continue on to several points in Asia, such as various destinations in India and Dubai International Airport (DXB), paying just 50,000 miles per person for a one-way flight in economy. Expect to pay 62,500 miles for a one-way business-class ticket and 70,000 miles for a first-class ticket.
Unfortunately, Cathay Pacific’s premium cabin seats are extremely tough to find. If you find availability, we recommend booking immediately. If you need to cancel your ticket later, Alaska will redeposit the miles and refund the taxes and fees without penalty.
Earning Alaska miles
Alaska miles aren’t the easiest to earn, as they are not linked to any major transferable program. Thankfully, Alaska’s broad list of airline partners means you can earn when flying with many different airlines.
Alaska Airlines also has two cobranded credit cards with Bank of America.
Alaska Airlines Visa® credit card: Get a $100 statement credit, 50,000 bonus miles and Alaska’s Famous Companion Fare from $122 ($99 fare, plus taxes and fees from $23) with this offer. To qualify, make $2,000 or more in purchases within the first 90 days of opening your account.
Alaska Airlines Visa® Business card: Get 50,000 bonus miles, a $100 statement credit and Alaska’s Famous Companion Fare from $122 ($99 fare, plus taxes and fees from $23) with this offer. To qualify, make $3,000 or more in purchases within the first 90 days of opening your account.
Related: Which credit card should you use for Alaska Airlines flights?
Short-haul flights on British Airways with Avios
With dynamic pricing in some programs showing up to 100,000 miles for a single flight in economy, British Airways is a good alternative. The Executive Club program offers low prices on short flights.
The sweet spot
British Airways only charges 4,750 Avios each way for off-peak flights it operates from London to destinations up to 600 miles away. This includes destinations in Ireland, Scotland, Denmark, France, Germany, Austria and Italy. Taxes will set you back just $31 (this can vary depending on current exchange rates), though you also have the option to reduce this to $1 by redeeming 9,250 Avios.
Award flights include full-size cabin baggage and checked baggage.
Earning British Airways Avios
The easiest way to earn a meaningful number of Avios for everyday spending is by applying for the British Airways Visa Signature Card. You’ll earn 75,000 Avios after you spend $5,000 on purchases within the first three months of account opening. TPG values Avios at 1.5 cents each, making the full bonus worth $1,125.
The British Airways Visa Signature has a $95 annual fee and earns 3 Avios per dollar spent on purchases with British Airways, Aer Lingus, Iberia, and Level. Plus, you can earn 2 Avios per dollar spent on hotel accommodations when purchased directly with the hotel. All other purchases earn 1 Avios per dollar spent.
British Airways is also a transfer partner of Capital One, Chase Ultimate Rewards, American Express Membership Rewards, Bilt Rewards and Marriott Bonvoy, making Avios one of the easiest currencies to earn.
Points transfer from Capital One, Chase, Bilt and Amex at a 1:1 ratio (in addition to occasional transfer bonuses of up to 40%), while Marriott Bonvoy points transfer to Avios at a 3:1 ratio. Plus, you’ll get a 5,000-Avios bonus for every 60,000 Marriott points transferred.
Related: 5 reasons why you should care about British Airways Avios
Air France-KLM Flying Blue promo awards
From paid ticket sales to redemption promotions, there are endless opportunities to book travel at a discount. However, few sales are as reliable as the Promo Rewards we see each month from Air France-KLM Flying Blue.
With Flying Blue adopting dynamic pricing with highly variable rates in all classes, this monthly offer is an excellent way to save on award travel.
The sweet spot
These monthly Promo Rewards regularly appear on the Flying Blue website and offer discounts on flights to and from select cities or region pairs. All discounts are only bookable through the end of the month, and there’s a set travel window.
Each month, the destinations, discounts and classes change, so keep an eye out for what is currently available. In the past, we have seen deals like:
39,000 miles in business class from Miami International Airport (MIA) to London’s Heathrow Airport (LHR), flying KLM.
22,500 miles in premium economy class from IAD to Munich Airport (MUC), flying Air France.
11,250 miles in economy from ORD to Stockholm Arlanda Airport (ARN), flying Air France.
Earning Flying Blue miles
Boosting your Flying Blue balance is easy since the program partners with all major transferable points currencies.
You can transfer points at a 1:1 ratio from American Express Membership Rewards, Bilt Rewards, Capital One, Chase Ultimate Rewards and Citi ThankYou Rewards. You can also transfer Marriott points at a 3:1 ratio, with a 5,000-mile bonus for every 60,000 points you transfer.
Based on our tests, Amex, Bilt, Capital One, Chase and Citi transfers should post almost instantly. However, that wasn’t the case with our test transfer from Marriott, which took three days to arrive in our Flying Blue account.
Related: Is KLM premium economy worth it on the 787 Dreamliner?
Domestic United flights with Turkish Airlines’ Miles&Smiles
United’s dynamic pricing means you won’t find a set price for flights booked via the MileagePlus program. However, when there is saver-level inventory (the X fare class for economy or the I fare class for business), Turkish Airlines’ Miles&Smiles becomes one of the best options available.
The sweet spot
For any domestic flight in the U.S., including to or from Hawaii, Turkish requires just 7,500 miles each way in economy. If you’re lucky enough to find domestic first class, those award tickets only cost 12,500 miles each way.
For example, we found a round-trip ticket in economy from San Francisco International Airport (SFO) to Hawaii’s Ellison Onizuka Kona International Airport at Keahole (KOA) that only requires 15,000 Turkish miles plus $11.20 in taxes and fees.
This exact same flight would be 25,800 United miles.
The key to this sweet spot is finding saver-level inventory. You can search for these fares on United.com, though note that award tickets in any fare class other than X for economy and I for business class are not bookable through partner programs.
Earning Turkish miles
Miles&Smiles partners with a trio of programs: Capital One, Citi ThankYou Rewards and Bilt Rewards. You can transfer rewards from any of these programs at a 1:1 ratio, and our tests indicate that transfers should process instantly.
Related: The ultimate guide to Citi ThankYou Rewards
Bottom line
When it comes to making award reservations, you need certain stars to align. A little bit of flexibility is required to make the process run smoothly, and that might mean changing the dates of your trip a bit or opting for a destination with more plentiful award space. If these three things fall into place, you’ll have a solid award flight.
However, there’s a fourth element to the equation: value. If you can score one of the above sweet spots, you’re essentially guaranteed to get incredible value from your redemption.
Additional reporting by Andrew Kunesh and Ethan Steinberg.
Inside: Trade and Travel is a legitimate investing course to learn how to make money in the stock market. See my personal view as a student.
I have been in the personal finance industry for a long time and have watched gurus with CFP and many more designations struggle to make money consistently in the stock market.
There are many concepts on how to trade the stock market.
Teri’s IWT system works.
It’s legit.
I’m a part of her investing course. I have seen the results. $1000 a day club in my LIVE account. Yes.
So, you get to read my Invest with Teri review first.
Teri is able to break down investing into the stock market like no one else I have seen.
You can read a book or blog and find many different concepts that work for them. Then, walk away with your head spinning and quit on the idea of trading and lose a bunch of money along the way. This is why most people leave it to professionals (which is a mistake with that pesky 1% asset management fee).
The Invest with Teri Method is a 7 Step Process that simplifies how to invest in the stock market.
She goes into detail on each of the seven steps to make sure you pick the right companies, limit your risk, know when to buy, and when to take profit.
Plus you have access to a private Facebook group and countless hours of coaching calls to really understand the IWT method.
This is how I am choosing to finance the life I want.
Okay, now that we got that out of the way… let’s dig into the details of the Invest with Teri review and learn how to travel and travel.
This is what you want? Right?
Make more money and have more time freedom.
Enough sitting on the sidelines… read this IWT review and then sign up today.
Honestly, if you have any money in the stock market, you need to take this course to understand the fundamentals.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What Are Online Stock Trading Classes?
If you’re interested in taking stock trading classes, there are a few things to consider before jumping into the world of investing. Stock trading is an investment that can be profitable if done correctly and is a way to grow your money.
Stock trading courses are a great way for newcomers to learn about the stock market. Also, courses are fantastic for those who want to refine their investing skills or maybe stop the bleed of money from trying on their own.
The Invest with Teri Ijeoma course provides a more structured learning path and can help you avoid some of the common mistakes made by novice traders.
In order to get the most out of a stock trading course, it is important to find one that matches your individual needs and goals. Plus one that can offer support and guidance because learning to trade is a learning curve.
Who Should Take Stock Trading Classes?
It is possible to learn the ins and outs of stock trading on your own without taking any classes.
However, for those who want a more structured learning experience, or for those who want to have access to a community of traders, stock trading classes can be a great option.
Taking stock trading classes can be a great idea for people who are interested in getting into the industry. The stock market is one of the most popular industries to get involved with, so it is likely that you’ll want to pursue a side hustle that may lead to a career in this field.
There are many different types of stock trading classes available, so it is important to do your research and find the one that best suits your needs.
Even if you are an index fund investor doing it on your own, this investing class is great knowledge to understand how the market works beyond “I hope it keeps going up.”
Must Read: How To Invest In Stocks For Beginners: Investing Made Easy
Trade and Travel 2.0
Right now, Teri and the rest of her coaches are doing a MAJOR overhaul on the signature course.
Her design team is currently working really hard to create an updated look and feel so you can experience Trade and Travel even better than before.
However, there will be changes – some we know about and some we don’t.
What we Know Today:
A significant Price increase happened (like double to $10k)
Shorting and gaps will be included in the main Trade and Travel course.
Limited time support on coaching calls. (However, a subscription model for additional coaching will be available.)
What You’ll Learn in the Trade and Travel 1.0 Course
The Trade and Travel course is an online course that will teach you everything you need to know about the world of trading, and more!
First of all, Invest with Teri along with Trade and Travel are used interchangeably. They are both the same AMAZING course that will teach you to make money in the stock market.
You will learn the Teri Ijeoma trading strategy.
The Invest with Teri 1.0 course is divided into two sections:
Travel & Travel – This is the basic course to understand fundamentals and to learn how to make money as the stock market goes up.
VIP Program – This is an advanced course that covers shorting, gaps, and options.
The great news… you can start with the basic Trade & Travel program and upgrade to VIP at a later date.
If any of this sounds foreign to you, Teri is one of the best teachers I have ever met. She breaks break down investing in the stock market like no one else I have seen. She is able to take difficult concepts and make them easy.
Simply put, Teri offers a course that teaches you everything you need to know about investing.
Later, in this Invest with Teri review, I will detail the difference between the two courses and what you will learn.
Teri’s Purpose of Trade and Travel – Financial Independence
The purpose of the course is to help students learn how to generate wealth.
Students can use the extra income earned from the course to supplement their income, pay off debt, or save so they can solidify their financial independence.
There is no doubt that in order to achieve financial independence, you need to invest in yourself. This means learning new skills, working on your mindset, and making smart choices with your money.
With a positive attitude and a determined spirit, anything is possible!
Want to Learn More about Investing?
How do you trade with Teri?
The privilege to have one-on-one coaching with Teri herself is very rare. However, she is known to offer group mastermind sessions for her VIP students.
So, in order to trade with Teri, you must enroll in the full $5000 course and wait for the next opportunity to trade with her.
Trade And Travel Program
The Trade and Travel program is the fundamental part of the investing course. This section will teach you the basics of the stock market and how to make money on the way up.
Teri’s trading strategies focus on risk management and she has seen many of her students achieve success with trading.
To be upfront in this Trade and Travel review, you will learn:
Learn how to pick stocks
Understand how the stock market works and how you can make money off it
Recognize why risk management is the most important aspect of trading
Understanding how to read charts
Learn the best places to buy and sell a stock could be
Be able to tell the story of the candles
Understand if your stock trade has a strong likelihood of being profitable
Determine how many stocks to buy based on your risk tolerance
How to place a trade at your brokerage
Manage your trade and exit based on your trading plan
That is a highlight of what you will learn in the basic Trade and Travel program.
Trade And Travel VIP Investor Program
The VIP program is the advanced piece of the course once you learn the fundamentals of the Trade and Travel program.
For those looking to upgrade to the VIP program, you will learn:
Make money when the market goes down.
How does shorting the stock work
When to look for gaps and what they mean
What is globex?
Options! This is everyone’s favorite part of the course!
Understand how to make money with option contracts
Risk management with options
Plus so much more!
Plus you can rewatch all of the curriculum and coaching calls over and over until you get it. That aha moment!
Both Travel & Travel and VIP offer live zoom training each week. Plus there is a vault of recording coaching calls to review.
Supportive Trading Community
Teri has built a supportive trading community of fellow students who have gone through the course.
Each trade cuzzin offers encouragement, advice, moral support, and feedback to each other.
This supportive community can help people overcome their anxiety and doubts when trading and investing.
You can find this supportive community on Facebook groups, Telegram groups, Clubhouse clubs, local meetups in your city, and people have connected to create a mastermind group. Honestly, there are plenty of people available to make sure you are successful on your journey.
Don’t forget… There are weekly live calls and chart parties.
This is how many people have turned 10k into 100k.
My Personal Trade and Travel Reviews
This is one of the best educations I have received.
My biggest regret is that I did not enroll in the course sooner (same as the time before I upgraded to VIP).
In all honesty, this course is a better education than spending hundreds of thousands on a college degree.
Personally, I meet Teri during FINCON, a huge conference for personal finance content creators and brands.
I loved how Teri spoke during her presentation and quickly reached out to learn more about her Invest with Teri course. Also, I was intrigued by the $1000 in a day club.
As always, I investigate every single company or platform that I recommend.
Obviously, this course has an eye-shocking price tag when you first see it. However, once you start earning your money back, you quickly realize how undervalued her course is.
As I always tell my readers… if I wouldn’t put my time, energy, or money on the line, then I am not going to tell you about it. I will only recommend products, services, and courses only that I truly know that work.
My View as a Trade and Travel Student
After a few months of debate if I could afford to spend the money on this investment course…
I became a Trade and Travel student in February 2021.
As outlined above, the course is jam-packed with information. I thought with my background in personal finance I would have a leg up over the others. However, I quickly learned that I need to view the stock market from Teri’s point of view and put blinders on to others’ opinions or styles of trading.
There are a ton of ways to make money in the stock market. This is one of them.
You can google and probably find many more investment courses and rabbit holes to follow. Investing is one of the most popular Reddit Personal finance topics. People want to learn to trade and most are looking to be fed information.
You have heard that saying, “teach a man to fish and he will never go hungry.”
The same holds true for completing this course, “Teach a trader to make money and you will be more profitable than your dreams.”
The best thing about life is you get to decide what you want to do, spend your time, and budget your money. Investing in this course is a big pill to swallow and I get it. However, I would not be so adamant about telling others about this course since I see a path for people to stop the stress with money.
I am successful with trading. Now, it is your turn to become successful.
This is by far the best investing course I have ever seen. 1000% recommended by me personally.
$1,000 In A Day Club
Here is proof. I made the $1k club in my live account and $10K in SIM.
I am a part of the trading community.
What exactly is the $1000 in a day club?
This exclusive club is for those traders who have made over $1k in a day.
Many IWT traders have received this plaque and part of this $1000 in a day club.
If you want to invest money and make $1000 a day this is how to start.
This is how I am choosing to finance the life I want.
Get one step closer to reaching your dreams and financing your life!
How Long Does It Take to Learn to Trade Stocks?
The time it takes to learn how to trade stocks depends on your personal learning style.
It typically takes 2 to 3 years to learn how to trade stocks.
By taking an in-depth course, you can shorten your learning curve.
Teri’s Approach to Learning to Trade Stocks
More importantly, the results you see trading stocks will depend on the effort put in to learn the curriculum, manage the trade, minimize your risk, and prepare your mindset.
Teri’s goal for her student is to earn 1% of our capital consistently.
This is not a get-rich-quick scheme. You have to put in the hard work to reap the benefits (aka profit).
For example, some people learn better by reading and others prefer watching videos. Some people may find that they learn best by following an instructor in a live trading room.
Who is Teri Ijeoma?
How many years of trading experience does Teri have?
Teri Ijeoma has over 10 years of trading experience.
Once she left her job as an elementary school assistant principal, she took off to travel the world. Those around her started asking questions and she taught her first group of students in Thailand.
Teri enjoys enlightening people on investing strategies and is passionate about building wealth.
Combining her trading experience with her teacher background, Teri is a talented educator in the investing world.
Teri has been featured on Forbes, NBC, CBS, ABC, Black Enterprise, Yahoo Finance, Business Insider, Fox News, Comcast – just to name a few!
She thrives by teaching others how to invest, so they can afford the life of their dreams.
Teri has made significant amounts of money through trading and is motivated by helping others achieve success.
Check out Teri discussing her $1,000,000 in a day profit. Yes, one million dollars in a day!
I’m scared to lose my real money trading. Can I still take the course?
Don’t want to risk your money, but are curious?
You can practice in a simulated account before you move to real money. Then, you can make mistakes. Learn from those mistakes. Understand how the stock market moves. Make wins.
The bottom line you can make real money in the stock market. You just have to be armed with knowledge and a trading system that works.
That is why most people lose money in the stock market! They don’t understand how the stock market works. They have poor risk management strategies and tend to select the wrong companies to trade with.
In the Trade and Travel course, you will walk away with so much investment knowledge and support from other people in the course to be successful.
Afraid to trade individual stocks? Teri’s process works with ETFs too!
Is Invest with Teri Reviews Reddit? Is this a scam?
As with any popular r/personalfinance thread, this is one that comes up often…is Invest with Teri legit?
There is a lot of mixed information on the web when it comes to Invest with Teri.
Some people have had great experiences and made a lot of money, while others have had negative experiences and lost money.
Since I have been forthcoming that I am a student of her course, I would recommend active trading as a way to supplement your income.
However, you must be willing to put in the time and effort to see the results.
And honestly, that is where most people give up because you must put in the effort.
At Invest With Teri, they believe anyone can learn how to invest and generate income through investment. They offer a variety of courses on how to invest, as well as a community of support to help you get started.
Their program has helped people from all backgrounds achieve their financial goals.
Did this Trade and Travel Review Convince You?
Teri Ijeoma is a millionaire trader and coach who shares her tips and tricks for success.
Trading is a skill that can be learned, and with the right education, anyone can do it successfully.
Trading is not a get-rich-quick scheme – it takes time and effort to learn.
Don’t waste your time or money on being a self-taught trader. Take a course from an expert.
I am part of this trading community and so excited to be a trade cuz!
Start building another income stream for yourself.
Invest with Teri Ijeoma teaches you how to make a lot more money than you currently are. Very possibly, trading can help you replace your current income or even exceed it
To be successful, you need to invest in this investing course, develop a solid trading plan and stick to it.
Get one step closer to reaching your dreams and financing your life!
Be the first to know when Teri releases a coupon code for her Invest with Teri course.
Do you have an Invest with Teri Coupon?
It is VERY rare that Teri puts out a coupon code.
However, if she does, I always notify my email list who have been on the fence about enrolling.
Typically, these coupon codes are valid for a limited time only.
Trade and Travel FAQs
Obviously, you are doing your due diligence before enrolling in this course, which I completely understand. I did too! I spent a lot of time researching prior to enrolling in this course.
Here are answers to the most asked questions about Invest with Teri, Trade and Travel, VIP program, as well as Teri Ijeoma.
Is the Trade and Travel course for new investors?
Yes, the Trade and Travel course is for both new investors and experienced investors.
Honestly, you are more likely to lose money in the stock market by trading on your own rather than spending money on the best investing course available.
The course is designed for everyone, regardless of experience level.
There are different courses available within the program for more advanced students (like shorting and options).
How long does the program take to complete?
You can complete the course within a weekend if you binged watch everything.
However, it takes 8 weeks to thoroughly go through the curriculum.
The main Trade and Travel course is broken down into sections, and modules include videos, tutorials, pdf worksheets, quizzes, and more.
The course instructor, Teri Ijeoma, estimates that it will take 8 weeks to complete the online course material before you begin trading.
In addition, there are plenty of coaching calls, which are filled with gems of information that you can watch.
This investing course is much like obtaining a college degree. The more you study, the better results you will have.
What will I learn in Invest with Teri course?
You will learn how to trade stocks and options based on her Invest with Teri method.
This is a solid, effective investing strategy.
Learning how to effectively trade stocks and make 1% consistently is the goal. This is higher than the market returns on any given day.
How much does Teri ijeoma course cost?
The cost of the Trade and Travel 2.0 course is $10000.
In addition, there is a payment plan available that allows you to pay in installments which is a great option without interest or hidden fees.
Honestly, this investing course is undervalued given the amount of knowledge you will gain.
Is there a payment plan?
Yes, there is a payment plan.
This is a great way to invest in the program with an affordable payment plan based on what you can pay today.
Right now, you can start the course with Payment Plans as LOW as $208/Month.
Can I purchase the Trade and Travel course and upgrade to the VIP program later?
Yes, you can always upgrade to VIP and pay the $2,500 difference. This is something you can do at any time.
I purchased the course to learn the basics and when I made money to pay for the VIP course I upgraded. Many students have done the same.
My gem of advice… eventually, you need to upgrade to VIP to fully understand the chart analysis as well as make money on the way down.
How much money do I need to start trading?
Many students start with $500.
This question is very difficult to answer because it depends on your personal finance situation and the type of trading you want to do.
The best advice is to start small and grow your account.
Trading stocks and options come with risk as such you must recognize that it is possible to lose all of your trading money.
Personally, I recommend starting with the amount you are comfortable losing. For me, I started with $3000.
Again, you do not need a lot of money to start trading. Check out this interview with Chris Calvin (aka Trade with Coach). He started with $500 and quickly grew it to 5 figures!
What trading platform does Teri Ijeoma use?
In her Trade and Travel course, she reveals which brokerages she has used in the past.
Right now, she is known to use Tradestation.
Recently, in her 5 Day Take the Trade Live Challenge, she set up a brokerage account with TD Ameritrade.
Do I have to attend coaching calls live?
You don’t have to attend coaching calls live. Also, all of the live trainings are recorded except the weekly Trade and Travel Q&A.
By attending a live coaching call, you have the opportunity to ask questions and get help from the instructor.
You can access the class recordings at your convenience once the coaching call is uploaded.
Personally, I attend the VIP coaching calls live to get the best out of the experience.
Remember, if you miss a class, you can always watch the recording later. You will have lifetime access to the coaching call recordings.
How long do you have access to the curriculum?
LIFETIME ACCESS!
You will have lifetime access to the curriculum.
That is pretty amazing to have these resources available forever.
You can review the curriculum as many times as you like.
Personally, I have gone back and reviewed many modules and coaching calls again (and again).
Is there a Facebook group? How long do you have access?
In fact, there are two Facebook groups for students that are run by the IWT coaching staff.
One Facebook group focuses on the general IWT method and the other is specific to VIP strategies.
In addition, there is a Trade and Travel sponsored Telegram group.
These Facebook groups are a great way to connect with other students and to learn from each other.
You have access to the group for as long as you are enrolled in the course.
What’s Teri’s Instagram handle?
First of all, there are so many fake accounts for Teri Ijeoma, Invest with Teri and the Trade and Travel Course.
Teri’s real account is @teriijeoma
Beware of imposters accounts and scams.
Can I share my course log-in information with others?
No, this is not allowed.
Each person should purchase the course separately.
The only exception is you can share with your spouse.
What is the refund policy?
According to their policy, refunds are not available for any of their courses. (You can read that here).
However, they do not want unhappy students or I don’t want unhappy trading cuz.
So, if you need additional assistance, reach out to their support team at [email protected] and one of the fabulous coaches will assist you.
Honestly, this makes 100% sense as a student. There is so much knowledge and information in the course that it is not surprising.
If you truly put in the time and effort, you will see success. You have to put in the work though.
Just a reminder… trading is a risky investment if you don’t know what you are doing. You can lose money in the stock market.
Know someone else that needs this, too? Then, please share!!
Compared to banks, credit unions offer more individualized service. Plus, many of them also provide lower fees and higher rates on certain accounts. However, you must become a member of a credit union to utilize its services. In most cases, credit union membership is reserved for people who live, work, and worship in a certain area.
Some credit unions are also geared toward those in specific professions, like education or law or anyone who makes a donation or joins an organization. You’ll be pleased to learn that most credit unions have made their membership criteria more lenient and opened up their offerings to more types of people. In fact, many of them are quite easy to join.
14 Best Nationwide Credit Unions
While many credit unions are small and can only be found in select local areas, there are quite a few that are nationwide. If you travel frequently for work or pleasure, you might be in the market for nationwide credit unions.
Fortunately, most credit unions that have a nationwide presence are easy to join and offer a variety of benefits. To make your search for the best federal credit unions a bit easier, we’ve compiled this handy list.
1. Connexus Credit Union
Headquartered in Wisconsin, Connexus Credit Union is known as one of the largest credit unions in the U.S. It has over 400,000 credit union members across all 50 states. This is no surprise as it partners with well-known companies, such as Liberty Mutual Insurance, Kraft, Honeywell, and BMW.
To join, you’ll need to qualify through your employer that’s one of the credit union’s partner companies or donate at least $5 and open an account. As a credit union member, you can enjoy high APYs on checking accounts and other deposit accounts as well as low rates on mortgages, personal loans, and car loans.
The Xtraordinary Checking Account offers an APY of up to 1.75% on certain balances so you can make the most out of your hard earned money. White you don’t have to pay any fees, Connexus does require that you spend a certain amount on your debit card and sign up for eStatements to take advantage of the interest.
Furthermore, if you don’t use your checking account for more than 90 days and have a balance of $100 or less, you may have to pay an inactivity fee. Connexus has more than 5,600 shared branches and over 67,000 fee-free ATMs. Plus, the credit union offers higher rates and exclusive discounts throughout the year.
2. Navy Federal Credit Union
If you’re part of the military community, Navy Federal Credit Union should be on your radar. You can become a member if you have an active duty or reservist military member, worked for the Department of Defense, or are the immediate family member of someone eligible for membership. You’ll also be required to open a Navy Federal savings account and make a minimum deposit of $5.
The credit union has about 350 physical branches worldwide and many of them are near military bases in Maryland, Virginia, and California. There are also more than 30,000 fee-free ATMs. If you like to do your banking on your mobile device, you’ll be pleased to know that there is a highly rated app.
If you join Navy Federal Credit Union, you can enjoy no monthly fees or minimal fees on basic savings or youth savings accounts. NFCU also offers several checking accounts as well as competitive rates for share certificates, which are basically certificates of deposits (CDs).
3. Consumers Credit Union
Based in Illinois, Consumers Credit Union has 11 branches in the Chicago suburbs but opens its membership to anyone in the country. All members get access to more than 5,000 shared credit union branches and over 30,000 ATMs.
To join, simply pay $5 and fill out a short application form. Consumers offers some of the highest annual percentage yields or APYs on its rewards checking accounts. However, it requires that you make at least 12 debit card purchases per month, enroll in eDocuments, and have a monthly minimum of $500 in ACH deposits, direct deposits, and mobile check deposits.
If you prefer, you can choose from a no-frills checking account that doesn’t earn any interest. Other product offerings include four savings accounts, IRA certificates, and money market accounts.
4. Pentagon Federal Credit Union
Founded in 1935, PenFed Credit Union is known as one of the largest credit unions in the country. It serves more than 2.8 million members and has over $36.6 billion in assets. While this best credit union was originally only available to military members and their families, it eventually opened the doors to anyone. You can join as long as you deposit $5 into a savings account.
As a PenFed member, you can reap numerous benefits, including great rates on checking accounts, savings accounts, and money market certificates. In addition, you can sign up for early direct deposit and access more than 85,000 fee – free ATMs across the nation.
Even though PenFed is not part of a shared branch network, like other credit unions, it pays high rates, and has about 40 of its own branches throughout the U.S. There’s also a solid mobile app and customer phone support with evening and weekend hours.
5. SkyOne Federal Credit Union
SkyOne Federal Credit Union is one of the best credit unions and has a mission to help families become financially stable. It serves more than 40,000 members with $600 million in assets. Since its inception in 1949, SkyOne has offered a robust lineup of financial products, like interest-bearing checking accounts, money market accounts, credit cards, mortgages, and car loans.
Its share certificates come with exceptional rates that you might not find at other credit unions. SkyOne also has a free mobile banking app, a plethora of free educational tools, and a network of thousands of credit union branches for easy access.
The main downfall of this credit union is that it’s geared toward those who work in the air transportation industry so you might have a difficult time qualifying. Fortunately, membership has recently become a bit more lenient to accommodate more people.
6. Alliant Credit Union
Illinois-based Alliant Credit Union has more than 700,000 members across the country. Unlike other credit unions on this list, Alliant operates strictly online. If you like the idea of online and mobile banking, this credit union should definitely be on your radar. Its online accounts pay highly competitive interest rates that can be as much as 22X the national average.
Plus, you don’t have to worry about overdraft or ATM fees. You can also score up to $200 per month in ATM rebates. While its checking and savings accounts are the most popular products, Alliant also provides mortgages, auto loans, personal loans, and credit cards. At this time, Alliant does not offer any no-penalty or specialty CDs.
Customer service is available 24/7 and there’s also an online contact form you can use for less pressing questions or concerns. To become a member, join Foster Care to Success (FC2S). Once you do, Alliant will pay the $5 membership fee to the organization for you.
7. First Tech Federal Credit Union
First Tech Federal Credit Union made its debut in 1952 when it was first founded by employees of Hewlett-Packard and Tektronix. Today, the credit union partners with large companies, like Hewlett-Packard, Amazon, Microsoft, and Nike. You can join as long as you work at one of its partner firms or become a member of the Computer History Museum or Financial Fitness Association.
There are 33 branches, mainly in California, Washington and Oregon, but with several locations across Colorado, Georgia, Idaho, Massachusetts and Texas. As a member, you can enjoy in-person service at more than 5,600 Co-op Shared Branch locations in the U.S.and access your money at over 30,000 free ATMs.
It offers a long list of financial products, like checking accounts, savings accounts, credit cards, loans and investment accounts. Most of these offerings come with low minimum opening balance requirements and no monthly maintenance fees. First Tech Federal Credit Union is unique in that there are many business banking services that are rarely seen at other credit unions.
9. Bethpage Credit Union
While it is located in New York, Bethpage Credit Union opens its membership to anyone who makes a $5 payment, regardless of where they live. The credit union partners with hundreds of other credit unions to offer access to more than 5,000 branches and over 30,000 fee free ATMs. Virtual visits by phone and video appointment are also available.
Bethpage’s product lineup includes three checking accounts, four savings accounts, share certificates, and money market accounts. Believe it or not, even the free checking accounts pay interest. In addition to deposit accounts, the credit union provides mortgages, home equity lines of credit (HELOCs), car loans, auto refinancing, personal loans, retirement planning, health savings accounts, IRAs, and insurance.
You can access your accounts on the go with the handy mobile app, which includes convenient features, such as budgeting tools, online bill pay, and budgeting tools. Bethpage also offers access to a digital wallet and Zelle money transfers.
10. Latino Community Credit Union
Headquartered in North Carolina, Latino Community Credit Union has 15 branches in the state as well as 1,300 free ATMs through the CashPoints network. While it was originally built for the Latino community, you don’t have to be Hispanic or live in North Carolina to join. All you have to do is submit an application and pay a $10 membership fee.
Latino Community Credit Union is federally insured by the National Credit Union Administration (NCUA) and offers 24/7 customer service via phone. Compared to brick-and-mortar banks, it provides competitive interest rates and accounts with low minimum opening balance requirements.
If you’re part of the Hispanic community, you may also benefit from services in both Spanish and English as well as a financial literacy education program that’s focused on low-income Latino families and immigrants.
11. Boeing Employees’ Credit Union
If you’re a Boeing employee or live or work in Washington, Boeing Employees’ Credit Union can be a good fit. Just keep in mind that you’ll be required to open the Member Advantage Savings account, Member Share Savings account or Early Saver account.
You can enjoy nationwide access to more than 30,000 free ATMs, discounts on local events, such as sporting games and fairs and impressive rates on CDs, money markets and IRAs. Plus, there are no monthly service fees or minimum balance requirements.
Other noteworthy perks include free credit score monitoring, Zelle payments, online bill pay, and budgeting tools. You can find more than 50 physical branches in Washington as well as one location in North Charleston, South Carolina, for in-person banking.
12. Blue Federal Credit Union
Blue Federal Credit Union began as Warren Federal Credit Union and has been in business for more than 70 years. It offers more products than most credit unions, including checking accounts, savings accounts, credit cards, home loans, personal loans, and investment banking. This is great news if you’d like the diverse offerings that are widely seen at banks at lower price points.
In addition to a vast selection of financial products, Blue Federal Credit Union provides rates as high as 2x to 5x higher than the national average and access to thousands of partner credit unions across the nation. Thanks to the tiered membership rewards program, you can earn great rewards.
To join, donate to the Blue Foundation and open a Blue FCU Membership Share Savings account. Once you’re a member, you can bank online, visit branches in Colorado or Wyoming, or go to shared branches across the U.S.
13. Wings Financial Credit Union
Wings Financial Credit Union is worth exploring, even if you don’t work in the aviation industry. It has more than 26 branches in Minnesota, Michigan, Florida, Georgia, and Washington. Not only is it NCUA insured, it’s part of the Allpoint, CO-Op, and MoneyPass ATM networks that offer access to more than 80,000 free ATMs.
To become a member, you should live in work in an eligible location, work in the aviation industry, or make a $5 donation to Wings Financial Foundation, a non-profit organization that offers financial education programs and college scholarships.
The credit union pays high interest rates on many of its accounts and doesn’t charge monthly service fees. Depending on your goals, you can open the Wings Financial High-Yield Savings Account, Wings Financial Credit Union High-Yield Checking Account, Wings Financial Investment Money Market Account.
14. NASA Federal Credit Union
NASA Federal Credit Union dates back to 1949 when it first launched to serve NASA employees. Over time, the credit union has expanded and has more than 140,000 members to date. You can join even if you’re not affiliated with NASA as long as you become a member of the National Space Society.
Popular product offerings at NASA Federal Credit Union include the Premier Checking, Premier eChecking, Premier Preferred Checking, Shared and Special Savings account or Education Savings Account.
We can’t forget the Star Trek credit cards which offer 2x points for gas station purchases, and 3x points for purchases at StarTrek.com. Furthermore, if you spend $3,000 in the first 90 days, you get a bonus of 30,000 points. You may redeem your points for merchandise, gift cards, and more.
Credit Unions vs. Banks
If you’re used to banks or unfamiliar with credit unions, you might wonder how credit unions and banks compare. The truth is both types of financial institutions offers similar products, but there are several differences between them, including:
Financial Products
In general, banks offer more financial products and services than credit unions, especially large banks with a national presence. Credit unions primarily focus on checking accounts, savings accounts, and credit accounts. While loans and investment products are less common, they can still be found at some credit unions.
Rates and Fees
Banks tend to charge higher rates and fees than credit unions. However, online banks are usually more affordable and comparable to credit unions as they have lower overhead costs. It’s a good idea to shop around so you can compare rates and fees at a variety of financial institutions and hone in on the best option.
Technology
Credit unions typically are less technologically advanced than banks. The good news is more and more credit unions, especially those with a nationwide presence, are improving their technical offerings. Many of them offer mobile apps, online bill pay, and other advanced banking tools that were unheard of in the past.
Bottom Line
With this list of the best credit unions nationwide, you’re sure to find a credit union or two that checks all your boxes. Whether you’re new to credit unions or have used them for a while, these types of financial institutions can help you meet (or even exceed) your personal finance goals.
Credit Union FAQs
What is the difference between a bank and a credit union?
While a credit union is a member-owned, non-profit institution, a bank is a for-profit financial institution that is owned by shareholders or individuals. Credit unions are known for more personal service and flexibility. Whether you use a bank or credit union depends on your unique goals and priorities.
Do I have to join a credit union?
All credit unions may have certain membership requirements. Fortunately, many are lenient and let you join if you make a donation or pay a fee. Some credit unions will pay for you once you make a deposit into an account. Of course, some credit unions limit membership to people in certain geographical locations or professions.
Do credit unions have ATMs?
Yes! In many cases, credit unions partner with a large network of ATMs. This makes it easy for you to access your money regardless of where you are.
Are credit unions insured?
Reputable credit unions are insured by the National Credit Union Administration or NCUA, which is similar to the Federal Deposit Insurance Corporation or Federal Deposit Insurance Corp of traditional banks. This means if the credit union fails because of bankruptcy, for example, you’ll get your money back.
Are credit unions online?
While credit unions have a reputation for in-person branches with individualized service, online credit unions do exist. Several examples include Alliant Credit Union, Connexus Credit Union, and Quorum Federal Credit Union. If you like the idea of online banking, an online credit union might make sense.
What is the best nationwide credit union?
Not all nationwide credit unions are created equal. In fact, there are many options available with various pros and cons. To pinpoint the ideal online or local credit union for you, explore the institutions on this list and consider your priorities. Remember, you can join multiple credit unions if you’d like.