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Apache is functioning normally

August 15, 2024 by Brett Tams

Whether you’re getting your ducks in a row to buy a house, trying to secure a lower interest rate on a future auto loan, or simply monitoring your credit as a personal finance best practice (good on you!), even a small dip in your credit score can make your stomach drop.

The good news: In the big scheme of things, a credit score drop of 10 points isn’t a huge deal — or at least it doesn’t have to be. While it’s smart to keep an eye on what’s going on, a 10-point drop could be due to a new credit application or an increase in your credit utilization, both of which are often temporary and easily made up for with positive credit behavior over time.

Below, we’ll look into some of the most common reasons your credit score may have taken a quick dip.

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Why Did Your Credit Score Drop 10 Points?

Credit scores usually run from 300 to 850, so 10 points really isn’t that significant of a drop. Of course, if you happen to be just a few points shy of having “good” or “exceptional” credit, that drop could feel like a more substantial loss. Fortunately, these fluctuations are normal and usually easily made up for with on-time payments, which have the largest effect on your credit score.

Some common reasons for a 10-point credit score drop include:

Hard Credit Inquiries

If you’ve recently applied for a new loan or line of credit, the credit check the lender makes to assess your creditworthiness can affect your score. This category, known as “new credit,” accounts for 10% of your FICO score. The effect can be compounded if you apply for many new loans or lines of credit in a short amount of time.

Balance Increases

Fully 30% of your FICO score is based on the total amount you owe versus the amount of credit you have available. So if you recently made a larger purchase on credit or took out a new personal loan, you could see a ding to your score.

Account Closures

While paying off a credit card or loan could help increase your score (by lowering your total balance), closing an account can affect the age of your overall credit history. This accounts for 15% of your FICO score. In the case of a credit card closure, it could also lower your total available credit, which could actually increase your credit utilization ratio even as your total balance decreases. So if you’ve recently closed an account, again, you may see your score take a small dive.

Errors or Identity Fraud

Scary but true: An unexpected dip could point to something fishy on your credit report, be it a payment misreported to the credit bureaus as late or a brand-new account you don’t recognize.

In any case, unexpected changes to your credit score are a great reminder to take a look at your in-depth credit history at least once per year. (A credit score update typically occurs every 45 days.) There are plenty of ways to check your credit score without paying, and you can pull your full reports annually at annualcreditreport.com. From there, you can file disputes with the credit bureaus — and the reporting lenders.

Recommended: Why Did My Credit Score Drop After Dispute?

Should You Be Worried About Your Credit Score Dropping?

As unsettling as a small credit score dip can be, if you’re carefully monitoring your credit and actively working on good financial habits, it’s usually not something to worry about. (Credit score monitoring lets you keep tabs on your score and earn rewards points when it increases.)

If, however, your credit score is dropping because you’re borrowing more than you can afford to pay back, taking out too many new loans or lines of credit at once, increasing your utilization ratio, or making late payments, it could be a wake-up call to start moving back toward healthier financial habits.

And, of course, if your dropping score alerts you to fraudulent or erroneous information on your credit report, it’s well worth the effort it takes to file a dispute and clear up that misinformation — before it wreaks even more financial havoc in your life.

Reasons Your Credit Score Went Down

As mentioned above, some of the most common reasons a credit score could drop include increased credit utilization (even if only temporarily), hard inquiries on your report, account closures, and errors or fraudulent information in your credit history.

Keep in mind, too, that the younger and less robust your credit history, the more weight each individual occurrence will have in your score. For example, if you’re a young adult who got their first credit card only a year ago, and still has only that single line of credit, a hard inquiry or balance increase could affect your score more profoundly than it would for someone with 15 years of credit history, thousands of dollars in available credit, and several different types of credit lines and loans.

What Can You Do If Your Credit Score Dropped by 10 Points?

If you notice your credit score has dropped by 10 points, you’re likely already monitoring your credit — which is a great habit to be in. Depending on why exactly it dropped, you may simply need to wait the fluctuation out. (For instance, if your score dropped due to multiple hard inquiries, there’s little else to do but wait — and stop applying for new lines of credit or loans.)

If you’ve recently increased your credit utilization or made a large purchase on a credit card, focusing on paying the balance back as soon as possible may also help. As always, making on-time payments in full on every account you have is one of the most important steps toward building and maintaining a healthy credit history and credit score.

Examples of Credit Score Dropping

Here are a few scenarios where you might notice a dip in your credit score.

Say, for example, you just successfully applied for a new credit card and then decided to apply for an auto loan, too. Even if your credit score was healthy enough to handle both of those inquiries — and get you qualified for both the new card and the loan — you may see a temporary dip because of the multiple hard inquiries.

Or maybe you regularly use a credit card for everyday purchases and then pay it off in full each month to take advantage of cash-back rewards. But one day, your car breaks down, and you find yourself needing to quickly fork over $800 you weren’t expecting to spend — and you reach for your everyday credit card. Even if you pay the total off in full at the end of the month, the temporary increase in your balance could diminish your score for a while, depending on when the amount is reported to the bureaus.

How to Build Credit

If you’re paying close attention to your score because you’re figuring out how to build your credit, the good news is, you’re already on the right track. While it’s impossible to build great credit overnight, awareness of your score and the factors that contribute to it is a great first step toward excellent credit.

There are plenty of ways to build credit over time, but here are some of the most important tips:

• Make your payments in full, on time, every time. Since payment history accounts for the largest chunk of your FICO score, being consistent with payments is a key to building credit. If you can, paying off your credit cards entirely each month can help you build your credit without paying interest or carrying a revolving balance.

• Avoid taking out too many loans or lines of credit at once. Along with the negative impact of multiple hard inquiries, getting yourself into too much debt too fast can make it impossible to keep up with payments and keep your utilization ratio low.

• Don’t unnecessarily close accounts. Even if you stop using one of your credit cards, consider leaving the account open so it can help lengthen your overall credit age. (Try to remember to use the card every once in a while and then immediately pay it back. The card issuer may automatically close the account if it’s inactive for too long.)

Allow Some Time Before Checking Your Score

Rome wasn’t built in a day, and neither was your credit score. While it can be tempting to constantly check in on your score to ensure it’s trending the right direction, it can take some time for the 10-point dip you noticed to pass — or for the changes you make in your daily habits to reflect in your score.

What is worth checking every day, however, is your spending. Knowing where every dollar you earn is going can give you insight into areas where you could afford to cut back and save more. Using a money tracker app can help.

Closing a Credit Card Account Can Hurt Your Score

As discussed above, closing a credit card account can hurt your score, even if you’ve paid off the card and no longer plan to regularly use it. That’s because having the account open can increase the length of your credit history and also provide you with more available credit, which can help keep your credit utilization low. In short, think twice before you close a credit card account once you pay it off!

What Factors Impact Credit Scores?

According to Experian, these are the factors that affect your credit score and how heavily they’re weighted in the calculation:

• Payment history, which refers to your record of making on-time payments to all of your accounts: 35%

• Amounts owed, which refers to the ratio of money you owe versus your available credit (aka credit utilization): 30%

• Length of credit history, or the average age of your credit accounts: 15%

• New credit, which takes into account the number of recent hard inquiries: 10%

• Credit mix, which favors those who have different types of accounts (a mortgage, auto loan, and credit card rather than only credit cards, for example): 10%

Pros and Cons of Tracking Your Credit Score

Tracking your credit score is one of the best ways to ensure you’re fully informed about what’s going on with your report. It also gives you the biggest leg up on nipping potential fraudulent charges or errors in the bud before they can have a deeply negative impact on your file.

But there are cons, too. For instance, if you’re paying hyper-close attention to your credit score and checking every single day, small, normal fluctuations of 10 points or less could stress you out.

As with everything else in life, the key is balance. Keep track of your score, sure, but don’t obsess over it every single day. This is especially true if you’ve checked your report and ensured it’s free of errors or fraud. Just keep paying your bills on time and avoid overspending, and your score will eventually catch up with your good habits. (A spending app can help you manage budgeting and bill payment.)

How to Monitor Your Credit Score

These days, there are nearly endless ways to keep track of your credit score without having to pay for the privilege. Many credit card companies offer FICO score tracking as a free perk, and you may also be able to access your score via your online bank account.

Keep in mind, though, that your score is not the same as your report, and only viewing your full report gives you the comprehensive details about what factors are going into your score. Examples include payment history, how long your accounts have been open, and how many accounts you even have in the first place. Checking your credit report is the best way to get ahead of fraudulent or erroneous information, so make sure you give them a look at least once a year.

The Takeaway

While a credit score drop of 10 points can be unsettling, in many cases, it’s perfectly normal — and will normalize so long as you continue to maintain your good credit habits. If it’s an unexpected fluctuation, however, it’s worth looking over your credit report for errors or fraud.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

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FAQ

Why did my credit score randomly go down 10 points?

There are many reasons why a credit score might drop 10 points, including temporarily increased credit utilization, one or multiple hard inquiries on your file, or a recent account closure. To understand why your score is dropping, it’s a good idea to access your full credit report, which will help you ensure there’s no fraudulent activity or erroneously reported information in your file.

Is it normal for your credit score to fluctuate 10 points?

A credit score fluctuation of 10 points is fairly minimal and often normal, especially for those whose credit histories are younger and slimmer. If you only have a few accounts and they’re all relatively new, even small changes can have a relatively large impact on your score. However, as long as you keep making your on-time payments and avoid running up a large revolving credit card balance, these should automatically neutralize over time.

Why is my credit score going down if I pay everything on time?

Although payment history is one of the largest factors impacting credit score, it’s not the only one. Other reasons you might see your score decrease include a recent account closure, a change in your credit utilization ratio (caused by an account closure or taking out more debt), or a recent spate of hard inquiries on your file.

Photo credit: iStock/Tempura

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q324-010

Source: sofi.com

Apache is functioning normally

August 15, 2024 by Brett Tams

Known for its striking skyline, iconic bridges, and tight-knit neighborhoods, Pittsburgh is a place where history and innovation coexist. Whether you’re drawn by the thriving job market, the affordable cost of living, or the burgeoning food and cultural scenes, there’s something here for everyone. Not sure if the ‘Burgh is for you? Read on to find out what to expect if you’re considering a move to the Pittsburgh area in 2024.

You know it from: Fences, The Fish That Saved Pittsburgh, The Bridge to Nowhere

Average 1 bedroom rent: $1,425 | Pittsburgh apartments for rent, Pittsburgh houses for rent

Average home price: $265,000 | Pittsburgh homes for sale

Average cost of full-service moving services: $105/hr for 2 movers

Average cost to rent a moving truck: $19 – $39/day

Top industries: Advanced Manufacturing & Technology, Education, Life Sciences

Move here for: Affordable cost of living, Sports, Great restaurants

Be sure to bring: A snow shovel and a yellow shirt for game days

1. The weather is a rollercoaster ride

Pittsburgh’s weather is known for its unpredictability. The city experiences all four seasons in full force, but often with surprising intensity. Winters can be harsh, with temperatures plunging below freezing and snowstorms that can disrupt daily life. On the flip side, summers bring high humidity and temperatures that can soar into the 90s. Spring and fall offer brief respites, but even these seasons are peppered with unexpected temperature swings. Be prepared to experience the full spectrum of weather conditions, sometimes all in the same week.

2. The bridges are beautiful—but they might confuse you

Pittsburgh is famously known as the “City of Bridges,” with 446 bridges crossing its three rivers: the Allegheny, Monongahela, and Ohio. While the bridges add to the city’s charm, they can also be a source of confusion for newcomers. Getting used to the constant crossing of bridges and navigating the city’s winding streets can be a challenge. But once you get the hang of it, the views from the bridges, especially during sunset, are nothing short of spectacular.

3. Pittsburgh is a hub for tech and healthcare jobs

Pittsburgh has transformed from its steel industry roots into a thriving hub for technology and healthcare. Companies like Google, Uber, and Facebook have set up shop here, drawing on the talent coming out of local universities like Carnegie Mellon. UPMC (University of Pittsburgh Medical Center) is one of the top employers in the city, offering a wealth of opportunities in the healthcare sector. The job market is robust, with an unemployment rate consistently lower than the national average.

4. You’ll need to learn to navigate the “Pittsburgh Left”

The “Pittsburgh Left” is a local driving quirk where the first car waiting at a red light turns left immediately when the light turns green, often before oncoming traffic. While this maneuver is rooted in politeness, it can be startling if you’re not familiar with it. Newcomers will quickly learn to anticipate this move, whether they’re the ones making the left or just waiting for the car in front of them to go.

5. Pittsburghers take their sports seriously

Sports are more than just a pastime in Pittsburgh—they’re a way of life. The city is home to legendary teams like the Steelers (NFL), Penguins (NHL), and Pirates (MLB), and the loyalty of the fan base is unmatched. Embracing the local sports culture is almost a rite of passage for newly minted Pittsburghers.

Moving Tip: On game days, the entire city seems to rally around its teams, with everyone donning black and gold. Even if you’re not a sports fan, you’ll quickly learn that the city’s mood can be influenced by the outcome of a game.

6. The cost of living is lower than you might expect

Compared to other major cities, Pittsburgh offers a relatively low cost of living. Housing is affordable, whether you’re looking to rent or buy, with prices significantly lower than in cities like New York or even nearby Philadelphia. Groceries, healthcare, and utilities are also more affordable, making Pittsburgh an attractive option for those looking to stretch their dollars further. However, be mindful that some neighborhoods, especially those close to the city center, are becoming more expensive as demand increases.

7. Pittsburgh is a city of neighborhoods

Pittsburgh is often described as a “city of neighborhoods,” and with good reason. The city is divided into more than 90 unique neighborhoods, each with its own distinct personality and charm. From the hip, youthful vibe of Lawrenceville to the historic, tree-lined streets of Shadyside, there’s a neighborhood to suit every taste. Squirrel Hill is known for its vibrant Jewish community, while the South Side is famous for its nightlife. Exploring these neighborhoods is one of the joys of living in Pittsburgh, as each offers something different.

8. Public transportation is limited but improving

Pittsburgh’s public transportation system, managed by the Port Authority, includes buses, light rail (the “T”), and inclines, but it’s far from perfect. While the city’s bus network is extensive, it can be slow and unreliable, particularly outside peak hours. The light rail system is limited in scope, serving mainly the southern suburbs and downtown. However, recent investments and plans for expansion are gradually improving the situation. For now, owning a car is still recommended if you need to get around efficiently, especially if you live outside of the city center.

9. The housing market is competitive

The housing market in Pittsburgh is heating up, with homes and apartments being snapped up quickly. This is especially true in popular neighborhoods like Lawrenceville, East Liberty, and the North Shore, where properties often receive multiple offers above asking price. While there are still deals to be found, particularly in less trendy areas, it’s essential to act fast if you find a place you love. Working with a local real estate agent who knows the market can give you an edge in securing your dream home.

10. Pittsburgh’s food scene is underrated

Whether you’re craving pierogies or sushi, Pittsburgh delivers. The city’s food scene has exploded in recent years, earning it a spot on many “must-visit” lists for foodies. Pittsburgh offers a diverse range of dining options, from classic comfort foods like Primanti Brothers’ sandwiches (fries included) to innovative cuisine from James Beard-nominated chefs. Ethnic food is also a big part of the culinary landscape, with notable options in neighborhoods like Bloomfield (Italian), Squirrel Hill (Jewish, Chinese), and the Strip District (everything from Asian to Middle Eastern).

11. Pittsburghers love their festivals

There’s always something happening in Pittsburgh, especially when it comes to festivals. The city hosts a wide range of events throughout the year, from the Three Rivers Arts Festival to the Pittsburgh Vintage Grand Prix. These events not only provide entertainment but also offer a chance to experience the city’s community spirit. The best part? Many of these festivals are free to attend, making them accessible to everyone.

12. Winter driving can be a challenge

Driving in Pittsburgh during the winter can be daunting, especially if you’re not used to snow and ice. The city’s many hills and narrow streets can become treacherous when covered in snow. Snow removal is a priority, but the weather can change quickly, leaving roads slick and dangerous. It’s worth noting that Pittsburghers have a bit of a love-hate relationship with their snow shovels—clearing sidewalks is a must.

Moving Tip: If you’re planning to drive in the winter, invest in a good set of snow tires and take it slow on the city’s winding roads.

13. Green spaces abound

Despite being a city with a strong industrial past, Pittsburgh is surprisingly green. The city is home to numerous parks, including the sprawling Schenley Park and Frick Park, where residents can enjoy outdoor activities year-round. The Pittsburgh Parks Conservancy has done an excellent job maintaining these spaces, making them accessible for everyone. Whether you’re into hiking, biking, or just relaxing in nature, there’s a park nearby that can accommodate you.

14. The cultural scene is accessible

Pittsburgh has a thriving cultural scene with a variety of museums, theaters, and music venues. The Carnegie Museums of Art and Natural History, the Andy Warhol Museum, and the Pittsburgh Symphony Orchestra are just a few of the highlights. The city’s size means that cultural experiences are more accessible and often more affordable than in larger cities. Whether you’re an art lover, a history buff, or a music enthusiast, you’ll find plenty to keep you entertained.

Methodology: Average rent prices sourced from Rent.com August 2024. Home prices sourced from Redfin August 2024. Average moving costs sourced from MoveBuddha. Employment data sourced from Visit Pittsburgh.

Apache is functioning normally

August 15, 2024 by Brett Tams

The average square footage of a house in the United States is 2,430 square feet, according to the National Association of Home Builders. That figure varies significantly from state to state, however, with averages ranging from 1,164 square feet all the way up to 2,800 square feet.

Average home sizes tend to be larger in areas where prices are lower and smaller in more expensive locales, though other factors also come into play. Understanding the average square footage of houses in your area can help you set realistic expectations for your house hunt and determine how much house you can afford.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (844)-763-4466.

Home Square Footage Trends in the U.S.

The size of homes in the U.S. has grown significantly over the past several decades. In 1949, the average square footage of a house for one family was 909 square feet. By 2021, it had almost tripled to 2,480 square feet, according to American Home Shield’s American Home Size Index.

One of the reasons behind expanding home sizes was American migration to the suburbs following World War II. During these years, new highways were built, demand for housing grew, and homeownership rose. People moved into bigger houses with more land outside the densely packed cities.

Overcrowding decreased at the same time. In 1950, 15.7% of U.S. homes were considered overcrowded. By 2000, the proportion had dropped to 5.7%. Today, older homes tend to have smaller floor plans, while more recent constructions are more spacious.

That said, home sizes have decreased slightly in the past few years due to rising interest rates and home prices. Home size was larger during the pandemic when interest rates reached historic lows and homebuyers were often looking for a house that could be home, workplace, and school all at once. Home sizes trended downward in 2022 and 2023 as housing became less affordable. (Learn more about how to save money for a house.)

Still, the mean square footage for new single-family homes was 2,430 square feet in the third quarter of 2023, a huge increase from the 909-square foot average of 1949.

States With the Largest Average Homes

The state with the largest homes on average is Utah, with an average home size of 2,800 square feet. Following Utah are other states in the Mountain West, including Colorado, Idaho, and Wyoming. This chart shows the 10 states with the largest average home sizes in the U.S., along with their median price per square foot.

State	Average home square footage	Median price per square foot
Utah	2,800	$259.05
Colorado	2,464	$279.55
Idaho	2,311	$286.85
Wyoming	2,285	$189.87
Delaware	2,277	$223.75
Georgia	2,262	$180.61
Maryland	2,207	$234.53
Montana	2,200	$324.53
North Dakota	2,190	$139.12
Washington	2,185	$335.73

States With the Most Expensive Cost per Square Foot

In states with a high cost per square foot, homes tend to be smaller on average. The smallest homes are in Hawaii, where the median price per square foot is nearly $744. New York has the next-smallest real estate, with a median price per square foot of more than $421. (New York City, however, has a median price of $1,519.57 per square foot.)

That said, home prices and size don’t always have an inverse relationship. California has some of the most expensive real estate in the country, but its home sizes average 1,860 square feet. Along with cost per square foot, some other factors that influence average home size include income levels and age of the homes.

This chart shows states with the highest median price per square foot, along with their average house sizes. If you’re looking to buy in a less pricey locale, consult a list of the best affordable places to live in the U.S.

State	Median price per square foot	Average home square footage
Hawaii	$743.86	1,164
California	$442.70	1,860
New York	$421.49	1,490
Massachusetts	$398.77	1,800
Washington	$335.73	2,185
Montana	$324.53	2,200
Oregon	$307.86	1,946
Idaho	$286.85	2,311
Nevada	$281.85	2,060

Recommended: 12 Tips for First-Time Homebuyers

What to Consider When Buying a Larger Home

Buying a larger home might be appealing if you have a growing family and want space to spread out, but it could have downsides. These are some of the factors to consider before splurging on extra space:

More expensive maintenance costs

Not only may a larger home have a higher initial price tag, but it could also cost you more in maintenance costs. Home repair projects can easily cost thousands of dollars apiece, and prices only go up when you have more house to maintain. Before opting for a big home, consider what shape it’s in and any potential renovation costs. You could also do some research on the cost of services in your area to estimate future expenses.

More time to clean and organize

Larger homes take longer to clean and organize than smaller ones. You’ll have to purchase more furniture and spend more time on general upkeep. If you hire cleaners for your house, the cost of each visit will be higher if you have additional rooms that need cleaning.

Located farther from city center

Homes in and around a city are often smaller, while houses with more square feet and land are typically located outside of the urban center. This may not be ideal if you prefer to live near restaurants, theaters, and other urban activities. It could also be a downside if you work in the city and would have a longer and more expensive daily commute.

A bigger carbon footprint

A larger home will require more heat in the winter and air conditioning in the summer. Not only will your energy bills cost more, but your bigger house will use more resources and have a greater impact on the planet. Some newer constructions may offset this footprint with energy efficient features.

Recommended: Tips to Qualify for a Mortgage

How Much Square Footage Can You Afford?

Before starting the house hunt and the quest for a mortgage loan, it’s worth considering how much square footage you can afford. Even if you get preapproved for a mortgage of a certain amount, you might prefer a smaller loan with lower monthly costs to avoid over-burdening your budget. Many first-time homebuyers opt for a smaller starter home before eventually upsizing. One way to figure out how much house you can afford is with the 28/36 rule.

The 28/36 Rule

The 28/36 rule is a guideline that can help you estimate what price house you can afford. This rule suggests spending no more than 28% of your gross monthly income on housing costs and no more than 36% on all your debt combined, such as housing costs, car payments, and student loans.

Let’s say, for example, that your monthly gross income is $6,000. Using this guideline, you’d want to keep housing costs at $1,680 per month or lower. If you have other debts, you wouldn’t want to spend more than $2,160 on those debts and housing costs combined.

Key Reasons to Purchase a Smaller Home

Purchasing a smaller home can have several benefits, including:

• Smaller mortgage: A smaller home may have a lower cost, so you might be able to put down a lower down payment and take out a smaller mortgage.

• More affordable bills: With less square footage, you’ll have lower monthly bills when it comes to electricity, heating, and cooling. Plus, you won’t have to pay as much in property taxes.

• Easier and cheaper maintenance: Smaller homes can be easier to clean and maintain, and you won’t have to spend as much on furniture and decorations.

• Extra room in your budget for other goals: If you’re saving money on housing, you’ll have more money for other things, such as home renovation projects, travel, investing for the future, and dining out.

The Takeaway

The average home square footage in the U.S. is more than 2,000 square feet, but sizes have slightly decreased recently with rising costs and interest rates. Home sizes also vary greatly by state, with the average square footage in some states more than double that in others.

Before splurging on a big house, consider your budget carefully. Use the 28/36 rule to estimate how much house you can afford, and take your other financial goals into account when considering how much you want to spend on housing each month. With careful planning, you can find a house size that meets your needs without overstretching your budget.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Are basements included in home square foot calculations?

Basements may or may not be included in home square foot calculations, depending on the state where you live and condition of the basement. If the basement is included, it generally must meet certain criteria for living space, such as having an entrance and exit point that leads outside the home.

How much square footage does a family of four need?

While everyone’s needs are different, one guideline for determining the ideal square footage for one’s family size is 600 to 700 square feet per person. For a family of four, that would be a home with 2,400 to 2,800 square feet.

Is the average house size in the U.S. increasing or decreasing?

The average house size in the U.S. increased significantly over the past 75 years from 909 square feet in 1949 to 2,430 square feet in 2023. However, the past couple of years have seen a slight decrease in house sizes due largely to rising interest rates and worsening affordability.

Photo credit: iStock/years

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOHL-Q324-006

Source: sofi.com

Apache is functioning normally

August 14, 2024 by Brett Tams

If you’re trying to stick to a budget but still want to build your credit, you’ve likely wondered what you should use your credit card for. While you can use your credit card to pay for just about everything you buy, some purchases are more beneficial to your credit health than others. Here are eight smart purchases you can make with your card.

Key takeaways:

Many credit cards offer rewards like miles or cash back on purchases, and the more you use your card, the more you can maximize those rewards.
Only charging what you can afford to repay in full each month will help you avoid paying interest on your purchases.
Keeping your credit utilization ratio (how much of your available credit you’re using) at 30% or below could help you boost your credit score.

What Should You Buy With Your Credit Card?

While you can purchase almost anything with your credit card, doing so may not always be in your best interest. Here are a few things you should consider buying with your credit card.

1. Cash back purchases

If you have a cash back rewards card that earns a flat rate on most purchases, using that card to buy things like groceries, meals away from home, and other daily expenses may be a good choice. You’ll earn cash back on each purchase you make.

Other credit card issuers offer additional cash back rewards on certain types of purchases. The rewards categories can stay the same each month or change depending on your card but often include purchases like gas, groceries, and certain online retailers. By making purchases that fall under your rewards card’s categories, you’ll increase the amount of cash you earn.

Maximizing your cash back rewards will help you earn money that you can use to pay down your balance or cash in for certain rewards. As an added bonus, regularly using your card can help you fix your credit over time.

2. Travel expenses

If you’re planning a trip, using your credit card to pay for your travel-related expenses, like hotel stays, airfare, car rentals, and more, can be a good option, especially if you have a travel rewards credit card.

These rewards credit cards let you earn points or miles on the purchases you make, and in many cases, you’ll earn more rewards if you’re using your card to pay for travel-related purchases. Even better, most travel rewards cards offer extra benefits like travel insurance, overseas purchase protection, and access to airport lounges.

Every travel rewards card is different, so familiarize yourself with the rewards and perks you could earn with your card before making purchases.

3. Appliances and electronics

Using your credit card to buy big-ticket items like home electronics and appliances can be a great idea. Those more expensive items often mean you’ll earn more points or rewards.

You may also qualify for additional purchase protection on those big-ticket items through your credit card issuer. If anything goes wrong with the item, you may get a refund or a replacement.

Keep in mind that some electronics and appliance retailers offer their own credit cards with additional perks. You may want to consider applying for a second credit card through them if you’re planning on purchasing a new appliance or device.

4. Online purchases

Using your credit card to make purchases online can give you added peace of mind. Credit cards typically offer purchase protection and fraud protection for online purchases, while debit cards and gift cards may not. If a hacker or a would-be thief intercepts your personal information, your credit card’s fraud protection will ensure that you’re not responsible for any unauthorized charges. That said, it’s still a good idea to use a credit monitoring app to make sure your information is safe.

5. Streaming services

Using your credit card for recurring expenses like streaming service subscriptions can be a great way to build your credit while keeping your credit utilization ratio low. These services are typically inexpensive and easy to pay off in full each month. That means you’ll be better able to avoid carrying a balance on your card and won’t have to worry about paying interest on what you charge.

You may want to sign up for auto pay for the streaming services you use. This will help you maintain an on-time payment history while still earning credit card rewards.

6. Groceries

Some card providers offer additional benefits for credit card purchases made at grocery stores. These cards often let you earn more rewards for those qualifying purchases, and some offer higher rewards for shopping at certain stores. Since groceries are part of your monthly budget, it’s easy to plan to pay them off in full each month.

7. Gas

Using your credit card can also give you access to additional rewards. Some cards have rotating bonus rewards categories that include gas stations, while other issuers offer cards that always give cash back rewards for purchases made at gas stations. And since your gas use is typically predictable month to month, it’s easy to include in your monthly budget and pay off the purchases you make in full each month.

8. Car rentals

If you’re renting a car, using your credit card to pay for the rental may be a great choice. Many card providers offer rental car insurance that covers theft or damage to the vehicle in addition to any cash back rewards or travel rewards you might earn. This can save you money on the rental since you may be able to opt out of purchasing insurance through the rental company.

When Should You Avoid Using a Credit Card?

Though using a credit card for most purchases can be a great way to increase your rewards, it’s not always the best way to pay for purchases. Here are a few instances when using a credit card won’t be in your best interest and could lead to additional bad credit card habits that may derail your budget:

When a merchant charges credit card fees: Some merchants charge fees for credit card purchases. While the fees vary, they can add up and will make your purchase more expensive than it should be.
When the purchase would raise your utilization rate above 30%: Making too many purchases with your card or using your card to make several expensive purchases in a billing cycle could raise your credit utilization ratio beyond the 30% threshold recommended by experts. This could hurt your credit score in the long run.
When a purchase is too expensive to pay off before accruing interest: If you’re buying something major, like a car, and can’t pay it off in full when your monthly bill is due, you’ll start accruing interest. This can make the purchase more expensive in the end. If you can’t pay off what you’re buying by the end of the month, you may want to use a different payment method.

Using Your Credit Card Wisely to Build Credit

If you’ve been asking yourself, “What should I use my credit card for?” keep these eight categories in mind. By using your credit card for regular purchases and paying off what you charge each month, you’ll build your credit and may be able to earn rewards on the purchases you make.

As you make purchases, you’ll want to stay on top of your credit score and report to ensure you’re on the right track. Get your free Credit Report Card and see where you stand.

Source: credit.com

Apache is functioning normally

August 13, 2024 by Brett Tams

The Offer

Direct Link to offer

Best Buy credit card from Citibank is offering a signup bonus of 15% back in Rewards on your first day of purchases. Offer ends 9/3/24.

Our Verdict

Standard offer is 10% back, it’s now up to 15% (apparently unlimited earn). The card often has spend bonuses throughout the year which is another reason some people find it worth getting/keeping.

The card regularly offers 5% cash back as rewards cash to Best Buy and offers a points banking benefit. Every quarter you get to choose your 5% cash back category – travel, wholesale, utilities, home improvement, grocery, dining, gas, clothing with a $75 max.

Hat tip to reader TDD

Source: doctorofcredit.com

Apache is functioning normally

August 13, 2024 by Brett Tams

When you buy a house on or after Aug. 17, you’ll do things differently than before. Rules will change on that date, due to the settlement of an antitrust lawsuit.

Unlike before, you will decide how much your real estate agent will be paid for representing you when you buy a home. And your agent won’t be paid by the seller’s agent. Instead, you’ll probably ask the home’s seller to pay your agent — a request that will be subject to negotiation.

Here’s how the new process will work.

You’ll sign an agreement before touring homes

You’re browsing real estate websites and you’ve spotted a house that you want to visit so you can see inside — this is known as a home tour. Before a real estate agent escorts you inside, you will be required to sign an agreement that defines what the agent will do for you.

The agreement can outline a lightweight and short-term relationship with the agent or it can be a longer-term contract — whatever you negotiate.

On the lightweight end of the spectrum, you could sign a touring agreement that lasts a day or a week or gives you access to just one or two houses. Think of it as giving the agent an unpaid audition. “I give them options. Option one is we could just sign the agreement just for today,” says Danielle Rownin, real estate agent with Keller Williams Realty in Connecticut. If the agent and client aren’t a good fit, she adds, the agreement expires at midnight “and we’re free to move on.”

You’ll sign an agreement even if the agent gives you a virtual tour, which is typically done by walking around the house with a cell phone camera. But you won’t have to sign a touring agreement to visit an open house. Likewise, you won’t have to sign an agreement for the seller’s agent to give you a tour of the home, because that agent is working for the seller and not for you.

You’ll sign an agreement when the search gets serious

At some point, you’ll officially hire a buyer’s agent. You’ll sign a wordier and longer-term contract that not only describes the agent’s responsibilities, but also how much the agent will be paid. It might be called a buyer agency agreement, a buyer-broker agreement or a buyer representation agreement. These agreements aren’t new; in fact, they’ve been required in some states. But now they’ll be required just about everywhere.

This could be the first contract you sign; you don’t have to use touring agreements. Or you might build a rapport with an agent during a touring agreement and convert it into a buyer agency contract.

It’s still possible to buy a house without hiring your own agent to represent you, but it’s discouraged.

You’ll negotiate the agent’s pay

The contract will spell out how much you will pay the agent for representing you. “It could be a flat fee — small or large — or it could be a percentage of the purchase price,” says Leo Pareja, CEO of eXp Realty.

Real estate brokerages will experiment with flat fees and other pay structures such as hourly rates. But for now, most buyer’s agents will charge commissions that are a percentage of the home’s price. Experienced agents might request higher percentages, and newbie agents might ask for less. You’ll have to put on your negotiating shoes and push for a commission that works for you.

If a buyer’s agent requests a 3% commission, “You should definitely say, ‘That seems high to me. Would you be willing to lower that figure?’ That’s all you have to say,” says Stephen Brobeck, senior fellow for the Consumer Federation of America.

Some agents might respond with a lower commission. Others might hold firm, telling you that you get what you pay for. This unyielding approach might impress you if you believe it means they’ll advocate zealously for you. Just keep in mind that there are plenty of agents who will compete for your business, and some might charge less. You don’t have to sign a contract with the first agent you negotiate with.

Percentages are abstract numbers, so doing the math to calculate the cost of the commission in dollars can help you understand what you’re committing yourself to. Take a $400,000 home, for example. A 3% commission would amount to $12,000, while a 2.5% commission would cost $10,000.

You’ll deal with contract elements besides pay

The duration of the contract is another thing you’ll negotiate. The agent might want to lock you in for 90 days, explaining that we’re in a seller’s market and it might take a while to make a successful offer. However, Brobeck says 90 days is too long. “You should not accept anything more than 60, and you should ask for 30,” he says, explaining that you can renew the contract when it expires (if you’re satisfied with your agent).

Read the contract thoroughly and ask the agent to explain anything that’s unclear. If you still feel confused, seek a lawyer’s advice — it might be worth the price.

Watch out for fees on top of the commission, said Wendy Gilch, deputy director of Consumer Advocates In American Real Estate. “Admin fees, brokerage fees, transaction fees, regulatory compliance fees are junk fees and buyers should negotiate them out,” she said in an email. “They’ve become rampant, with some brokerages charging $800 to buyers on top of commission collected.”

The contract can specify the geographic area it applies to. It can be one address, one or more ZIP codes, a city, a county — whatever you negotiate. Gilch recommends against letting the agreement cover the whole state because that’s asking too much.

You can ask the seller to pay your agent’s commission

When you make an offer on a house, you can ask the seller to pay your agent in what is called a seller’s concession.

Having the seller pay your agent will be a relief if you’re already stressing about how you’re going to afford the earnest money deposit, the down payment and the closing costs. Your agent’s commission will be thousands of dollars, and many buyers don’t have that kind of money lying around.

“The seller has the ability to pay the buyer’s agent,” says Courtney Johnson Rose, president of the National Association of Real Estate Brokers, an industry group for Black agents. “That’s the seller’s prerogative.”

Here’s an example of how it can work: You offer $400,000 for the house on the condition that the seller pays your agent 2.5%, or $10,000. That means the seller nets $390,000 before paying the listing agent, taxes and closing costs.

You might find that the seller already has indicated a willingness to pay a concession of, say, up to 3% of the purchase price to pay the buyer’s agent or contribute to closing costs. In such a case, the seller won’t object to your request for money to pay your agent.

Even if the seller hasn’t signaled a willingness to pay your agent, you can still ask. It might be in the seller’s interest to pay. “Sellers who choose to offer said compensation will attract more buyers, get the best price and sell more quickly,” Rownin said in an email.

In a welcome change in policy, VA borrowers — home buyers with loans guaranteed by the Department of Veterans Affairs — will be allowed to pay their agents directly or via seller concession.

How negotiating a better deal can land you a home

Finally, a word on the value of negotiating a lower commission with your agent. Look again at the example in which you offer $400,000 and ask the seller to pass along 2.5% of it, or $10,000, to your agent.

Now imagine a competing buyer who also offers $400,000 — but asks for 3%, or $12,000, to pay their agent.

Your offer lets the seller collect $2,000 more. The difference could tip the offer in your favor because you negotiated a better deal with your agent.

Source: nerdwallet.com

Apache is functioning normally

August 12, 2024 by Brett Tams

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Learn to navigate pet insurance options, costs, and smart budgeting strategies for your pet’s health care.

Is pet insurance worth it? How can pet owners afford the rising costs of veterinary care? Hosts Sean Pyles and Ronita Choudhuri-Wade discuss the ins and outs of pet insurance and various budgeting strategies to help you manage pet care expenses effectively. They begin with a discussion of the importance of pet insurance amidst escalating vet bills, with tips and tricks on the potential financial benefits of pet insurance, the low adoption rate of pet insurance in the US, and interesting trivia like the first US pet insurance policy issued for Lassie. Then, NerdWallet pet insurance expert Sarah Schlichter joins Sean and Ronita to discuss the basics of pet insurance. They discuss the different types of pet insurance plans available, common misconceptions about pet insurance, and other critical factors to consider, such as deductibles, co-pays, and policy exclusions. Plus: potential hidden fees and the nuances of claim payouts, key features to look for when comparing providers, and alternative financial strategies such as vet subscription services.

Check out this episode on your favorite podcast platform, including:

NerdWallet stories related to this episode:

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected].

Episode transcript

This transcript was generated from podcast audio by an AI tool.

Sean Pyles:

You know you need to insure your health. You know you need to insure your car and your house. But what about your four-legged family members? Is there actual value in pet insurance?

Sarah Schlichter:

These days, there are so many advanced treatment options out there for animals to help them extend their lives, but not everyone has the budget to take advantage of those, and so pet insurance can help with that and really spare your family a heart-wrenching decision about how much treatment you can afford to try.

Sean Pyles:

Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.

Ronita Choudhuri-Wade:

And I’m Ronita Choudhuri-Wade.

Sean Pyles:

This is episode two of our nerdy deep dive into the cost of pet ownership. Last time we walked you through some of the financial considerations before deciding to buy or adopt a pet, and one of the potentially significant expenses is those trips to the vet.

Ronita Choudhuri-Wade:

Yeah. You never know when your dog is going to find something on the sidewalk and decide to eat it, and I am looking at you, Mo. Or your cat decides to jettison one of its nine lives, run up a tree, and somehow not land on its feet coming down. I don’t know. Does that happen?

Sean Pyles:

It could happen. I’m sure it does every day somewhere in the world. But even routine checkups at the vet can be pricey. Immunizations aren’t free. Then, maybe your pet pal needs some special prescription food or medication. Enter pet insurance.

Ronita Choudhuri-Wade:

Yeah, this is a big question for a lot of people. Is pet insurance worth it? And how do I know if a plan is a good one?

Sean Pyles:

I think I just heard Mo in the background.

Ronita Choudhuri-Wade:

Mo has thoughts on pet insurance as well.

Sean Pyles:

Of course. I hope it’s not as complicated as human health insurance, at least in this country.

Ronita Choudhuri-Wade:

Not quite. But there definitely are options that you’ll want to look at and consider before deciding to go with pet insurance, and we’re going to explore those today. Do you have pet insurance, Sean?

Sean Pyles:

I do not. Though, I do have a membership to a vet care service that provides essentially preventative care. I pay around $70 a month for my dog Pepper and closer to $50 for my cat Argus. The price is kind of steep, but both pets have garbage teeth and need annual cleanings, which is included in my membership. I don’t know. I guess it’s kind of worth it. But I do always wonder whether I should switch to pet insurance, especially before my pets develop some preexisting condition that insurance wouldn’t cover. What about you, Ronita? Do you have insurance for Mo?

Ronita Choudhuri-Wade:

So we do. Mo has a lot to say. He’s happy with his pet insurance. We knew we were getting a terrier, and there’s a lot of energy, there’s a lot of curiosity, so we thought we’d look into it sooner, basically as soon as we decided to get Mr. Mo. But really what helped us decide on pet insurance is that my husband’s work provided a discounted premium rate, and that, the money, and the costs, and the discounted rate essentially cinched the deal for us. But while almost 87 million households owned a pet in the U.S. in 2023, only 5.7 million pets were insured, according to the Insurance Information Institute. And those pet owners paid $3.9 billion in premiums. And dogs are insured far more than cats. It’s almost 80 to 20%. Do you want some more pet insurance trivia, Sean?

Sean Pyles:

Oh, yeah. I’m all about the pet trivia.

Ronita Choudhuri-Wade:

Okay. Fun fact, the very first pet insurance policy issued in the U.S. was back in 1982 for Lassie, the actual TV star Lassie.

Sean Pyles:

Wow. I mean, why wouldn’t you? You do have to protect the talent after all. Also, additional fun fact about Lassie, she has a star on the Hollywood Walk of Fame. All right. Well, listeners, we want you to bark and meow at us with your stories about your pets and what it takes to keep them in kibble. What are you sacrificing in your budget to have an animal? Do you have pet insurance? We want to hear any and all pet stories over the course of this series. To share them, leave us a voicemail or text the Nerd hotline at (901) 730-6373. That’s (901) 730-NERD. Or email a voice memo to [email protected]. And if you have any audio of your pets, all the better. Ronita, where do we start today?

Ronita Choudhuri-Wade:

Today we’re talking with fellow Nerd Sarah Schlichter, who is an expert in all things pet insurance.

Sean Pyles:

That’s coming up next. Stay with us.

Ronita Choudhuri-Wade:

Sarah Schlichter, welcome to the Smart Money podcast.

Sarah Schlichter:

Hi, Ronita. Thanks so much for having me.

Ronita Choudhuri-Wade:

We’re very happy to have you here. Now, first question, do you have any fur babies?

Sarah Schlichter:

Yes, I do. I have a rescue lab named Sylvie. She’s very sweet. She’s actually sleeping on the sofa behind me, and so hopefully we don’t get any deliveries and she doesn’t bark through the interview.

Ronita Choudhuri-Wade:

Oh, I love that name, Sylvie. That’s cute. We have you on because you are our NerdWallet pet insurance expert. So let’s start from the beginning. And just tell us, what is pet insurance, and how does it work?

Sarah Schlichter:

Pet insurance is a bit like human health insurance in some ways. It can help you pay your vet bills if your pet gets sick or hurt. Like human health insurance, it often has deductibles and copays. So you should know it’s not going to pay 100% of your pet’s medical expenses, but it can come in handy if something major goes wrong, like God forbid your dog gets hit by a car and needs surgery or something like that. But there are a few key differences between human health insurance and pet insurance. One nice thing about the pet version is that there’s usually no in-network or out-of-network stuff. With most plans, you can just take your pet to any licensed vet. That’s nice. But not as nice is that you’ll generally have to pay the full bill up front and then submit the receipt to your insurance company for reimbursement. There are a small handful of pet insurance companies out there that can pay your vet directly, but in most cases you’ll initially have to foot that bill.

Ronita Choudhuri-Wade:

Can you explain the different types of pet insurance plans available?

Sarah Schlichter:

Sure. The most common type of pet insurance plan in the U.S. is called accident and illness insurance, and it’s just what it sounds like. It’ll reimburse you if your pet is accidentally injured or if your pet gets sick. There is another alternative that’s cheaper and also less common, and it’s called an accident-only plan. That can cover things like a broken leg or a snake bite, but it’s not going to help you if your pet gets cancer, diabetes, allergies, basically any illness. Neither of these plans is going to pay for routine care, so they’re not going to reimburse you for your pet’s annual checkup or a rabies vaccine or even a spay or neuter surgery. Some folks think it’ll cover that, but it won’t. So if you do want those things covered, you want to look for a wellness or preventive care plan, which many companies will let you add to an accident and illness plan. These work a little bit differently. They usually have set reimbursement levels for certain services, so they might pay you up to $50 for a checkup or up to $150 toward your dental cleaning.

Ronita Choudhuri-Wade:

What are some common misconceptions people have about pet insurance?

Sarah Schlichter:

One big one is that you can wait to buy the pet insurance until something goes wrong. For example, say you discover a lump on your dog’s side. You take him to the vet, and unfortunately it’s cancerous and the vet said he needs surgery. You might think, “All right. Well, I’ll just buy pet insurance to pay for the surgery.” Unfortunately, insurance is almost never going to cover problems that your pet had before you bought the policy. These are known as pre-existing conditions. You’ll see them excluded on just about every plan. For the dog that has the cancerous lump, you can still buy pet insurance and it’ll pay for any new problems in the future, but it’s not going to pay for that surgery.

Ronita Choudhuri-Wade:

Sarah Schlichter:

Yeah, that’s right. In addition to pre-existing conditions, there are usually a lot of other exclusions in a pet insurance plan. Some companies don’t cover your exam fees. Say your cat’s throwing up, you bring her in, and the vet gives her some medicine and IV fluids. That plan would pay for the medicine and the fluids, but it wouldn’t pay for the vet’s actual examination fee. Other things that sometimes aren’t covered are prescription food and supplements. There’s also a lot of variation in the way insurance companies cover tooth issues and dental disease. I hate to say this, no one likes to hear this, but you really do need to read the policy because all the details are in there. The nice thing is that most pet insurers offer sample plans on their websites that you can read through before you buy. And if you’re confused, a lot of companies you can either call or even live chat, and they should be able to answer your questions so you don’t buy something you don’t understand.

Ronita Choudhuri-Wade:

Yeah, that’s a good tip. I remember with Mo, when he ate something… What he ate we still have no idea. But he ate something, and then we had to take him to an emergency vet. My husband and I were scrolling through the policy in this kind of high-stress moment trying to figure out what is covered and what’s not. On that point, Sarah, what are some factors that pet owners should consider when deciding if pet insurance is right for them and their pets?

Sarah Schlichter:

The first thing I would suggest is looking at your budget and being honest about whether you’d be able to handle a big emergency vet bill. If your dog needs a $2,500 surgery, could you pay for it or would you end up going in debt? If paying for something like that would be a financial hardship for you, then pet insurance might be a good safety net. Then, you also want to consider your own personal comfort level with risk. The tricky thing about deciding whether to buy insurance is that we don’t know the future. You don’t know whether your new kitten is going to be healthy for his whole life or if he’ll end up developing some expensive chronic issue that you have to keep paying for.

Ronita Choudhuri-Wade:

Right. And what if your pet is mostly healthy?

Sarah Schlichter:

Well, in that case, you could end up paying thousands of dollars for insurance and really not getting much in return. For most of us, it’s not appealing, but some people would not want to buy pet insurance because of that. You might want to just set up a savings account, a dedicated high-yield savings account specifically for pet expenses. That way the money is there if you need it, but you can spend it on other things if your pet never has any major issues. But on the other hand, for some people, having pet insurance can really give them peace of mind. You may never need the insurance, but at least you know you’re not going to have to agonize over whether you have enough money to give your pet the best possible care.

Ronita Choudhuri-Wade:

When we got pet insurance, it was really about that, just having that sense of security. Especially with Mo, because he’s a terrier, right? He is a toy fox terrier, but he’s a terrier, so he jumps and is very active. We just knew that there’s a high chance he might knock into something, eat something, do something with himself, and so that’s why we decided to get pet insurance. On that topic, how could age, breed, and health condition of a pet influence the decision?

Sarah Schlichter:

Well, if you’ve got a young healthy pet, that’s when you’re going to find the most affordable rates. It’s going to be cheaper then. Also, your pet probably isn’t going to have any pre-existing conditions yet, and so that can also make pet insurance more appealing because most things should be covered. For someone with an older pet, especially one who already has a chronic condition, I don’t know, kidney disease, or arthritis, or whatever it might be, insurance is not going to help with whatever they already have. Then, the other problem is for older pets, the monthly cost of insurance can be quite steep. You may decide that it’s just not worth it to you at that point. You’ll just go ahead and keep paying the bills yourself. Then besides age, the type of animal that you have, kind of like what you just said, that can affect how much you pay for insurance and even whether you want insurance. As a general rule, cats are usually cheaper to insure than dogs are. Bigger dogs usually cost a little bit more than smaller ones. But there are certain breeds that tend to have higher rates. One example is a French bulldog. They’re kind of famous for their breathing problems, and that can get kind of expensive. And just in general, the more expensive animals to insure tend to be the ones more likely to need medical care. And that makes sense, right? That’s why insurance companies charge more because they’re higher risk. You’ll just want to weigh that when you’re deciding whether to buy insurance. You may decide, “Insurance for my Frenchie, it’s too expensive. But I know she’s got higher risks, so I’m going to set aside more in savings to self-fund just in case she runs into these problems that the breed is known to have.”

Ronita Choudhuri-Wade:

What are some scenarios where pet insurance would be especially beneficial?

Sarah Schlichter:

One terrible thing I’ve heard about from the vets that I’ve talked to is economic euthanasia. That’s when people have to have their pets put down, even though treatment is available, but they can’t afford it. That’s probably the biggest thing that pet insurance could help prevent. I mean, these days there are so many advanced treatment options out there for animals to help them extend their lives, but not everyone has the budget to take advantage of those. Pet insurance can help with that and really spare your family a heart-wrenching decision about how much treatment you can afford to try. Then, the other scenario really is an emergency, like you were talking about earlier. I mean, most of us don’t plan for our dog to swallow a sock or tear a ligament or whatever, but it happens, sometimes at the worst possible time for you financially. So, insurance can just reduce that unexpected financial hit.

Ronita Choudhuri-Wade:

I see. All right. Let’s get to brass tacks here. What are some typical costs associated with pet insurance?

Sarah Schlichter:

The average cost of accident and illness insurance in the U.S. is about $56 a month for dogs and $32 a month for cats. That’s data from an industry organization called the North American Pet Health Insurance Association. If you want just the accident-only coverage, it’s much cheaper. It averages about $17 a month for dogs and $10 a month for cats. But obviously there’s a ton of variation. For example, our dog is older and we pay about a hundred dollars a month for her. In general, like I said before, you can really expect rates to go up as your pet gets older. Then on top of the premium, you’ll have to pay your deductible before you start getting reimbursed. Then, even once you’ve met the deductible, you’ll usually still have to pay a percentage of your vet bills. That might be 10, or 20, or 30%.

Ronita Choudhuri-Wade:

Could you break down what factors influence the premium costs?

Sarah Schlichter:

Sure. So aside from what I already mentioned, like the breed and the age of the animal, where you live also makes a difference. If you’re in an area where the cost of living is high, you’re probably going to pay more for pet insurance because vet expenses are probably also high in that area. Then beyond that, your cost is really going to depend on how you customize your plan. So if you want a plan that pays 90% of your vet bills rather than 70%, you’re going to pay more for that plan. But on the other hand, if you choose a higher deductible or a lower annual coverage limit, that’ll make the plan cheaper. One last thing to keep in mind is that, as I kind of said earlier, insurers don’t all cover the same things. So a plan from one company might look cheaper at first until you realize, “Oh, it’s going to cost me extra if I want to add exam fees, or physical therapy, or these other types of coverages.” And another plan that might cost more because it includes more of those coverages, and so that might be worth it to you.

Ronita Choudhuri-Wade:

Would you say there are any hidden costs or fees that pet owners should be aware of?

Sarah Schlichter:

There can be, yeah. Sometimes there’s a small fee if you want to pay your premiums monthly instead of paying the full year upfront. Occasionally you’ll see an account setup fee, usually a one-time fee when you first buy the plan. Then, you might also see little things on your vet bill that aren’t reimbursed, like taxes or waste disposal fees, stuff like that. Then, there’s one thing that’s a little bit complicated to explain, but it has to do with the way the insurance company calculates your claim payout. If an insurance company subtracts your deductible from your vet bill before they apply your copay, they’ll actually end up reimbursing you more than they would if they applied the copay first and then subtracted the deductible. It’s complicated. I’m not going to go into all the math, but this can make a difference over time, and it’s something I would recommend checking for when you’re reading that sample policy. Again, you want to see whether the copay is applied first or the deductible, and what you want is for the deductible to be applied first. That’s something we’ve actually been adding to our pet insurance reviews on NerdWallet just so people understand what to look for. We give some examples of the math, how much of a monetary difference it might make.

Ronita Choudhuri-Wade:

That’s really important to look into and could save you some money. Okay, so we’re familiar, unfortunately, with deductibles, copays, and coverage limits in human healthcare. How do those things impact the overall cost and value of a pet insurance plan?

Sarah Schlichter:

Well, adjusting all of those parts of your plan can help you control how much you pay for the insurance. You can usually make your plan cheaper by choosing a higher deductible, less reimbursement, or a lower coverage limit. But if you choose any of those things, the plan is not going to help you as much with your vet bills, so it’s really about how much of your pet’s care you’re willing and able to pay for yourself. I do want to just caution people about the deductible in particular. Don’t choose a thousand dollar deductible if you’d have a hard time paying that much in an emergency. Choose something smaller. But on the other hand, if you’ve got the money in your savings account and you just want the insurance in case of something really catastrophic happening, then a high deductible might make a little more sense for you.

Ronita Choudhuri-Wade:

What should pet owners look for when comparing different pet insurance providers? We know there’s a couple out there, and we see the ads for them all the time. Are there any specific features or services that can make one pet insurance plan, say, better than the other?

Sarah Schlichter:

The biggest thing, really, is what’s included and what’s not included in each company’s plan. There are certain things that one company might include, another will charge extra for, and company B over there is not going to cover at all. Things I would look for include exam fees, dental diseases, alternative treatments, like acupuncture, prescription food and supplements, and behavioral treatments. For example, say your dog is being really aggressive and you bring her to the vet for that. Will the plan cover it? Some will, some won’t.

Ronita Choudhuri-Wade:

I’m kind of blown away at the fact that there’s dog acupuncture. I didn’t know that was a thing.

Sarah Schlichter:

Yeah, I mean hydrotherapy and homeopathy, and chiropractic. There’s all these different things now for pets. And again, some of these depend on where you live, whether they’re going to be available to you. But yeah, some pet insurance plans will include coverage for all of those things.

Ronita Choudhuri-Wade:

Are there waiting periods for some of the plans?

Sarah Schlichter:

Just about every pet insurance plan will have some version of a waiting period. Usually when you buy a pet insurance plan, you can’t make a claim immediately. You may have to wait maybe three days for an accident claim, 14 days for an illness claim. So if I buy a plan on the first day of the month and my cat breaks his leg on the second day, the plan most likely is not going to pay for his treatment. Plus, the condition would be considered pre-existing because it happened before the coverage was effective. So if my cat needs follow-up treatment for that injury, even after the waiting period is over, I’m out of luck because it’s a pre-existing condition. Obviously, with that in mind, shorter waiting periods are better. I would also keep an eye out for companies that have extended waiting periods for things like knee injuries or hip dysplasia. You could have to wait six months or even a year for coverage for some of these things with certain companies. And then finally, you might also want to check how quickly companies process claims. The fastest companies will promise to get most claims turned around within a few days. Other insurers might take a month to pay your money back. Obviously, that could make a big difference if you’re on a tight budget. If you’ve got some big vet bill on your credit card and you need the reimbursement to pay it off, you probably don’t want to wait 30 days. So that’s another thing to check.

Ronita Choudhuri-Wade:

What advice would you give to someone who is on the fence about pet insurance?

Sarah Schlichter:

It’s a tough decision. It’s very personal. As I said earlier, it’s impossible to know in advance whether you’re going to get your money’s worth out of this plan or not because you don’t know how healthy or lucky your pet will be. Personally, my husband and I decided to get pet insurance for our dog for a couple of reasons. First, I would rather pay for the insurance, even if we don’t use it, than not have it if she got really sick. The peace of mind, it really was worth it to me. Then secondly, I guess I could say marital harmony. We didn’t want to have arguments over how much to spend if our dog ever got sick. I actually had a coworker once who spent $20,000 trying to save her sick cat. Unfortunately, the cat died anyway, which was terrible. But my husband didn’t understand how anyone could spend so much on a pet. And I agreed, yeah, that is a ton of money. But if you really love your pet, could you live with yourself if you didn’t do whatever it took to save them? Because we have insurance, we don’t have to have that argument.

Ronita Choudhuri-Wade:

Yeah, and I hear you on that. When we got Mo, we hadn’t really… We knew about pet insurance, but we didn’t know enough. Only when it was offered at a discounted rate through my husband’s work did we actually look into it. We felt similar to you where it’s like, “Okay.” The peace of mind, the security that we have. It makes sense. But there are alternatives to pet insurance, right?

Sarah Schlichter:

Probably the best strategy, other than pet insurance, is to set up a separate savings account for pet expenses. You could even put the money you would’ve spent on insurance premiums into that account instead. That way you’re paying yourself instead of the insurer. And if you have the self-discipline to save that money on a regular basis, it could be a better option. But otherwise, if you don’t have cash on hand, you could end up going into debt, like my coworker did, unfortunately, or having to create a crowdfunding account to help you pay an emergency vet bill. Some vets will work with you on setting up payment plans if you’ve got a really big bill, but it’s not something you can always count on.

Ronita Choudhuri-Wade:

What about subscription services that are offered by some vet companies? Can you explain what those are and how to evaluate whether that’s a better option than insurance?

Sarah Schlichter:

Sure. You’ll sometimes see these offered by bigger chains of vet hospitals, like Banfield or VCA. The plans do vary. But in general, what I’ve seen is that these are more similar to wellness plans than to standard pet insurance. They’re typically going to pay for things like your checkups, vaccines, and preventive screening tests rather than help you with an emergency surgery, something like that. In some ways, they could be a nice complement to an accident and illness policy. The pet insurance will cover you if something goes wrong, whereas the subscription plan can handle the routine stuff that you have to pay for every year. What I’d advise people is, number one, compare the vet subscription service to the wellness coverage you can add to an accident and illness plan. See which one seems like the better value to you. Then second, make sure either of those plans is actually cheaper than just paying for routine care yourself. It’s actually relatively easy to budget for your pet’s annual checkups and shots. It’s not like unexpected injury or something like that. The only real reason to get a wellness plan is if it saves you money. If a vet subscription plan includes services that your pet doesn’t actually need or that you’re not going to use, you’re probably better off just paying for the routine stuff yourself.

Ronita Choudhuri-Wade:

So just to review, what would you say are, say, the top three things listeners should know when deciding on pet insurance?

Sarah Schlichter:

Number one, just know it’s not going to pay for everything. Make sure you understand what is and isn’t covered before you buy the plan, and choose limits and deductibles that you feel comfortable with. Number two, keep in mind that the cheapest plan isn’t necessarily the best value. You may want to spend a little more on a more inclusive policy or a higher coverage limit if that’s in your budget. And finally, I would make your decision with the idea that this might be a policy you have for your pet’s entire life. I mean, with other types of insurance, like your auto or your homeowner’s policy, you might shop around every year or two. And if you see a better deal, it’s pretty easy to switch companies. But with pet insurance, because it doesn’t cover pre-existing conditions, you might end up realistically not being able to switch to another insurer if your pet has already developed a chronic issue. So if you switch, the new company isn’t going to cover that condition. I just really advise you to make sure you feel comfortable with the company and the plan you choose for the long term.

Ronita Choudhuri-Wade:

Sarah, this was so helpful and got us thinking about things that maybe we wouldn’t have considered before, and we know what to look for when looking at a pet insurance policy. Thank you so much for helping us out today.

Sarah Schlichter:

It was my pleasure. Thanks for having me.

Sean Pyles:

Ronita, what I’m thinking about after your conversation with Sarah is just one word, uncertainty, uncertainty about whether your pet will have some injury that would make pet insurance worth it, uncertainty about whether my wellness care membership is a good idea over the long run or if I should switch to pet insurance. The hard part, as ever, is that it’s impossible to predict the future. You just don’t know what’s going to happen with your pet and what your break-even point might be with your insurance.

Ronita Choudhuri-Wade:

There is a lot to consider when looking at pet insurance, and it seems like timing does play a part. Sometimes the idea of getting pet insurance may only pop into mind when something happens. But the fact you usually have to wait until it kicks in makes getting it early a good idea.

Sean Pyles:

Well, I suppose, just like so many other things, you have to weigh the risks of not having insurance and what that means if you end up with thousands of dollars in vet bills. I think on my end I’m going to crunch the numbers and see if I might be better off sticking with my current wellness membership and setting aside some cash into a savings account for future veterinary emergencies or maybe making the jump to pet insurance.

Ronita Choudhuri-Wade:

Yeah, that’s a tough decision, and it’s a good idea to make that call sooner than later. Pet care costs can start to skyrocket as they get older, and then the really hard decisions come in. Are you going to make pet care decisions purely based on cost? And sometimes you just have to. We’re going to talk about that in our next episode. Here’s a preview.

Angela Beal:

A pet owner could expect to pay a minimum $2,000, probably more, for an emergency situation. I think setting aside maybe $50 to $100 per month in a savings account and letting that account grow would be a good idea.

Ronita Choudhuri-Wade:

For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at (901) 730-6373. That’s (901) 730-NERD. You can also email us at [email protected]. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

Sean Pyles:

This episode was produced by Tess Vigeland. I helped with editing. Kim Lowe helped with fact-checking. Sara Brink mixed our audio. And a big thank you to NerdWallet’s editors for all their help.

Ronita Choudhuri-Wade:

And here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Sean Pyles:

And with that said, until next time, turn to the Nerds.

Source: nerdwallet.com

Apache is functioning normally

August 12, 2024 by Brett Tams

The share of respondents who said it’s a good time to buy a home decreased from 19% to 17%, while the percentage who said it’s a bad time to buy increased from 81% to 82%. Meanwhile, the net share of those who say it’s a good time to sell a home decreased 2% month over … [Read more…]

Apache is functioning normally

August 11, 2024 by Brett Tams

Best Buy Rewards can now be redeemed for gift cards. Best Buy cardholders earn Best Buy Rewards on their purchases. Points value:

500 points = $10 Best Buy certificate
500 points = $10 Best Buy gift card
500 points = $5 third party gift card for places like Amazon, Airbnb, Apple, Starbucks, Target, Home Depot, Walmart, etc.

And so it’s now possible to redeem points at the same value for non-expiring Best Buy gift card instead of an expiring Best Buy rewards certificate. (Note: some people prefer the certificates since it reduces the base cost and saves sales tax.)

Anyone enrolled in the Best Buy Rewards program can earn Best Buy Rewards on their purchases. Best Buy Cardholders can earn more on Best Buy purchases and also can sometimes earn on purchases elsewhere.

Source: doctorofcredit.com

Apache is functioning normally

August 10, 2024 by Brett Tams

With its beautiful beaches and a tourism-driven economy that supports a robust rental market, Panama City has become an attractive destination for investors and homebuyers alike.

Add to that a growing luxury market — particularly for new developments and high-end condos that offer modern amenities and beach access — and more moderate prices than other Florida coastal cities like Miami or Naples, and you’ve got a clear winner.

So what does your money buy you in this slice of the Florida Panhandle?

Well, we’ve just gotten word of a newly listed, 5-bedroom mansion with 100 feet of waterfront that just came to market for $2,150,000.

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