OCMBC president Serene Vernon commented on the acquisition: “We are thrilled to welcome Wes Hunt and the entire HomeStar Financial team to the OCMBC family. Their extensive experience in servicing and their commitment to providing outstanding customer service align perfectly with our values at OCMBC. We look forward to achieving remarkable things together.” “HomeStar is … [Read more…]
If you own a small business that frequently issues invoices to customers and vendors, you may have encountered times when an invoice is late or goes unpaid. It can be frustrating and worrisome when expected income is unavailable, leaving your business short on cash flow for necessary expenses.
There are options like business lines of credit or short-term business loans to provide cash flow. But in this case, you might also consider invoice factoring to quickly access cash for your immediate needs. This type of financing allows you to leverage your unpaid invoices without applying for an actual loan.
Let’s walk through what invoice factoring is, how it works, and what business cases are a good fit for this type of funding.
What Is Invoice Factoring?
Invoice factoring, also known as accounts receivable factoring, is a form of small business financing in which you sell your unpaid invoices to a factoring company. The factoring company gives you a percentage of the invoice up front and pays you the rest of the invoice once it’s paid by the customer (minus fees charged by the factoring company).
With this type of financing, you no longer own the invoices — the factoring company does. As a result, it’s important to choose a reputable company that you can trust to treat your customers with respect.
What Is a Factoring Company?
A factoring company is a financial institution that purchases a business’s outstanding invoices at a discount to provide immediate cash flow. The factoring company then takes on the responsibility of collecting payments from the business’s customers.
Factoring companies can be independent firms or divisions within larger financial institutions such as banks or credit unions. They specialize in providing working capital to businesses with long receivables cycles or that need quick cash for operational expenses. By selling your invoices to a factoring company, you can receive up to 90% of the invoice value up front. The company pays you the remaining balance, minus a factoring fee, once the customer settles the invoice.
Factoring companies typically cater to industries with extended payment terms, such as manufacturing, trucking, and staffing agencies. These lenders evaluate the creditworthiness of the business’s customers rather than the business itself, making this an accessible funding option for businesses that have poor or limited credit.
How Does Invoice Factoring Work?
Invoice factoring involves selling your unpaid invoices to a factoring company, which then takes ownership of the invoices. Invoice factoring is technically not a business loan, as you are selling your invoices to the lender.
Factoring companies will pay you a percentage of the invoice amount up front, which reflects the advance rate. Advance rates are typically based on how risky the invoice factoring is for the factoring company.
Some industries, such as the medical industry, may be seen as higher risk, thus offering lower advance rates — often ranging from 60% to 80%. Other types of businesses, such as staffing agencies, may receive advance rates from 80% to 90%.
Once the factoring company receives full payment from your customers, they provide you with the remaining invoice amount minus a factoring fee.
Here’s a quick look at the steps involved in factoring invoices:
1. Choose a factoring company: It’s a good idea to shop around and pick a reputable company to work with.
2. Submit invoices: To apply for factoring, you’ll need to provide invoices for approval.
3. Receive advance: If approved, you’ll get an upfront payment (typically 60%–90% of invoice value).
4. Company collects payments: The factoring company collects payments from your customers.
5. Receive balance: After full payment is collected, you receive the remaining amount minus fees.
Recommended: Getting a Cash Flow Loan for Your Small Business
Recourse vs. Non-Recourse Factoring
You might be wondering: What happens if customers don’t pay their invoices?
With recourse factoring, the business is liable for paying the factoring company for any invoices that are left unpaid. This type of invoice factoring is most common because it’s less risky for the factoring companies.
With non-recourse factoring, the factoring company takes on most of the risk associated with unpaid invoices. Since the invoice factoring company is assuming more risk with non-recourse factoring, they may tack on a higher factoring rate. Carefully consider whether the higher rate is worth the cash advance amount and compare factoring companies to see what terms they offer.
Example of Invoice Factoring
To give you a better understanding of how invoice factoring works, let’s imagine you own a clothing store that sells large quantities of T-shirts to other companies.
1. Complete sale and issue invoice: You sell $100,000 worth of t-shirts and invoice your customer with a due date in 60 days. If you wait 60 days for repayment, your business could be left with a cash flow shortage, threatening the well-being of your operation. So, you decide to look into options to help manage cash flow.
2. Explore your options: You could use an online business loan or a credit card to get cash quickly. But your customers are reliable and pay invoices in a timely manner, so invoice factoring is a suitable option.
3. Sell to a factoring company: You sell the $100,000 invoice to a factoring company and agree to pay a flat factoring fee (sometimes called a factoring rate) of 5% of the invoice value per month. Within 24 hours, the factoring company provides you with 80% of the invoice amount. You now have $80,000 to supplement cash flow and regular business operations.
80% of $100,000 = $80,000
4. Collection of funds: The customer pays the factoring company within 30 days. Once it receives full repayment, the factoring company pays you for the remaining invoice amount ($20,000) minus the factoring fee of 5%.
$20,000 – $5,000 (5% of $100,000) = $15,000 back to you
Keep in mind that this hypothetical is an example to illustrate how invoice factoring may work in a practical situation. Different invoice factoring services may offer various terms and conditions, which can affect how much money you receive up front and the final payment amount.
Invoice Factoring Rates and Fees
Invoice factoring companies generally make money through the factoring rates and fees they charge. Typically, you will see invoice factoring structured with one of the following:
• Flat rate/fee: You pay a fixed percentage of the invoice to the factoring company. The rate doesn’t usually change — even if the customer pays late. Flat rates are generally less common than tiered or variable rates.
• Tiered or variable rate/fee: A percentage of the invoice amount is regularly charged until the factoring company receives full repayment. The longer invoices go unpaid, the more you’ll owe in factoring fees. For example, a factoring company may charge a factoring fee of 1% every 10 days until the invoice is paid; if it takes your customer 60 days to pay, the factoring company would keep roughly 6% of the invoice amount. Some factoring companies may increase the variable rate the longer repayment takes.
Factoring rates and fees can be affected by:
• The industry your business is in
• Your customers’ ability to pay their invoices
• The number and amounts of the invoices
• Your business’ stability and creditworthiness
Additional Fees
Some factoring companies may also charge additional fees, including:
• Application fees. These are charges for processing your application and setting up the account.
• Invoice processing fees. These fees help cover the cost of things like credit checks and record keeping.
• Service fees. These are charged in intervals to cover costs related to maintaining a current account with your factoring company.
• Automated Clearing House (ACH) or bank wire fees. When funds are transferred between banks, there may be fees passed on to you from the factoring company.
• Early termination fees. Some invoice factoring companies may charge a fee if you cancel your contract before the termination date.
• Due diligence fees. This covers the cost of verifying the creditworthiness of the customers paying the invoices.
Invoice Factoring vs. Invoice Financing
While they sound similar, invoice factoring and invoice financing are two different financial products.
With invoice financing, your invoices are used as collateral to receive a cash advance rather than sold to a factoring company. You receive access to a percentage of the invoice amount either in the form of a line of credit or loan. Like other types of business loans, you pay interest on the amount you borrow.
Another key difference between invoice factoring and invoice financing: With invoice financing, you and your business are still responsible for collecting payment from your customers. As a result, invoice financing allows you to retain control over your invoices and the collections processes, which may be more favorable if you prefer to deal with your customers directly.
Pros and Cons of Small Business Invoice Factoring
Invoice factoring can be a useful tool for business owners in certain situations. However, it’s important to carefully consider the pros and cons of factoring invoices to avoid unnecessary expenses or added stress for your business.
Pros of Invoice Factoring
• No collateral: With invoice factoring, your invoices serve as collateral. In most cases, you do not have to offer additional forms of collateral to be approved.
• Maintain healthy cash flow: You can receive immediate cash to cover expenses and maintain healthy cash flow between invoice payments.
• An option for those with lower credit scores: Even if you don’t have good enough credit to get a business loan, invoice factoring may still be an option. Invoice factoring companies generally focus more on the value of the invoices and the credit scores of the businesses that owe those invoices than on the credit score of your business.
• Outsource invoice collection: FFor some businesses, it may be helpful to pass the responsibility of collecting invoices to a factoring company so they can focus on other responsibilities.
• Spend on what you need: Unlike other types of small business loans (e.g., equipment financing), you aren’t restricted to spending the funds you receive on specific business expenses.
Cons of Invoice Factoring
• Factoring companies have control: After you sell invoices to a factoring company, they may interact with your customers directly. You’ll want to make sure that the company is reputable and behaves ethically in their dealings with customers.
• It’s typically expensive: With various fees and relatively high rates, invoice factoring can be costly — especially if customers delay payment.
• Recourse if unpaid: Since there’s no guarantee that an invoice factoring company will be able to collect on unpaid invoices, they may expect you to pay for or replace the invoice, possibly with additional fees.
• Approval may depend on customers: Invoice factoring companies want to ensure they will receive payment on the invoices they purchase from you. If your customers have a less-than-perfect repayment history, you may have a more difficult time getting approved.
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How Do Businesses Qualify for Invoice Factoring?
Factoring companies evaluate a few different things to determine if a business is eligible for this type of financing.
• Invoices: Businesses must have outstanding invoices to sell to a factoring company, and the invoices should be from reputable clients with a history of timely payments.
• Client creditworthiness: Factoring companies focus on the likelihood of timely payments from your clients rather than the credit history of your business. Therefore, clients that consistently pay their invoices on time are a must.
• Business bank account: An established business bank account is essential to qualify for invoice factoring. Your business bank account will be used for the factoring company to deposit the advance and the remaining balance once the invoice is paid.
• Accounts receivable reports: Detailed and accurate accounts receivable reports are necessary to demonstrate your business’s invoicing practices and the payment behavior of your clients. These reports help factoring companies assess the risk involved.
While the primary focus is on the creditworthiness of clients, factoring companies also look for signs of business stability. They consider factors like time in business, industry, and overall financial health. It’s also important for businesses to ensure there are no existing liens on their receivables. Factoring companies need a clear right to collect on the invoices, so any existing liens or claims can disqualify the business.
You can improve your chances of qualifying by maintaining good relationships with your clients, ensuring they are creditworthy and have good payment histories. Keeping financial records organized and accurate is also important, as it makes the evaluation process smoother and faster.
Alternatives to Invoice Factoring
Invoice factoring is one of many options that can help businesses maintain cash flow and address funding needs. Here’s a look at some alternatives.
• Inventory financing: This type of financing is used to pay for products that will be sold at some time in the future. The inventory acts as collateral for the loan.
• Equipment financing: This is a type of loan used specifically to purchase machinery, vehicles, or other business-related equipment.
• SBA loans: These are small business loans backed by the U.S. Small Business Administration (SBA) and offered by banks and approved SBA lenders.
• Personal loans: An unsecured personal loan is based on your personal credit history (not business credit). Some, though not all, lenders will allow you to use funds from a personal loan for business expenses.
• Commercial real estate loans: This type of business loan is specifically designed for purchasing real estate for business use, such as an office space, warehouse, or storefront.
• Business line of credit: With this flexible form of business financing, you have access to a maximum amount of funding, or credit. You can borrow what you need (up to your credit limit) as you need it, and only pay interest on what you borrow.
• Online business loans: Online lenders offer loan options similar to those traditional banks offer but typically have a faster approval process and may have more options for people with lower credit scores.
• Merchant cash advance: This type of funding allows small businesses (“merchants”) to get a cash advance for business expenses in return for a portion of their future sales or receivables.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.
FAQ
What are the disadvantages of invoice factoring?
The disadvantages of invoice factoring include high fees, potential impact on customer relationships, loss of control over accounts receivable, and the requirement of having creditworthy clients.
What is the average rate for invoice factoring?
The average rate for invoice factoring ranges from 1% to 5% of the invoice value per month.
Who can use invoice factoring?
Generally, any business with outstanding invoices and creditworthy clients can use invoice factoring. However, this type of financing tends to be more common in industries like manufacturing, trucking, and staffing.
Photo credit: iStock/Jirapong
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Charlotte, North Carolina, is a city where Southern charm meets modern sophistication. Often referred to as the “Queen City,” Charlotte has emerged as a vibrant hub for finance, culture, and innovation. Whether you’re considering renting a house or an apartment in Charlotte, NC, buying a home in the area, or just in the beginning phases of imagining life here, we’ll explore just a glimpse of what Charlotte has in store for you in this Rent. guide. Here’s a closer look at what makes Charlotte so well-known and beloved.
What Charlotte is known for: A blend of Southern charm and modern flair
1. Financial powerhouse
Charlotte is the second-largest banking center in the United States, trailing only behind New York City. It’s home to major financial institutions like Bank of America and the East Coast headquarters of Wells Fargo. The city’s financial district, Uptown Charlotte, buzzes with skyscrapers, upscale dining, and cultural landmarks.
2. NASCAR capital
Charlotte is synonymous with NASCAR. The city is home to the NASCAR Hall of Fame, a must-visit for any racing enthusiast. Additionally, Charlotte hosts several major races throughout the year at the Charlotte Motor Speedway, drawing fans from all over the country. Many NASCAR teams and drivers are based in the Charlotte area, cementing the city’s reputation as the heart of motorsports.
3. Culinary scene
Charlotte’s food scene is an eclectic mix of Southern comfort and contemporary innovation. “Charlotte is a city that is full of culture,” Christa Sagmoe with The Avid Pen explains. “You can spend a Friday night gallery hopping from Southend to Myers Park or spend a Saturday morning walking through the gardens of the Duke Mansion or Winghaven. If you’re a foodie at heart, you can enjoy delicious French pastries from Cafe Marie or Copain or, if you prefer Italian fare, Mano Bella recently opened across from the SouthPark Mall where everything is made fresh in-house with products either imported from Italy or sourced from local farms. There’s no doubt when it comes to things to see and do, Charlotte’s got a lot.”
Charlotte is also a craft beer destination, with over 30 breweries in the area.
4. Arts and culture
Charlotte is a cultural melting pot, offering a wide range of experiences for art lovers. “Charlotte’s vibrant street art scene is a hidden gem that captures the city’s creative pulse. From the colorful murals in NoDa to the intricate designs tucked away in South End alleys, the city’s walls tell stories of its past, present, and future,” explains Victor Bubuioc with Overtop Media Digital Marketing. “These artworks aren’t just eye-catching; they reflect Charlotte’s diverse culture and the voices of its local artists. Our Instagram account @overtopmedia features some of these local greats, offering a unique and authentic glimpse into the heart of the Queen City.”
The city is also home to the Levine Center for the Arts, which includes the Mint Museum, the Bechtler Museum of Modern Art, and the Harvey B. Gantt Center for African-American Arts + Culture. Music and theater thrive in Charlotte, with venues like the Blumenthal Performing Arts Center hosting Broadway shows, concerts, and dance performances year-round.
5. Sports enthusiasm
Beyond motorsports, Charlotte has a deep passion for professional and collegiate sports. The city is home to the NFL’s Carolina Panthers and the NBA’s Charlotte Hornets, providing sports fans with action-packed events year-round. College football also has a strong presence, with the Duke’s Mayo Bowl and ACC Football Championship held at Bank of America Stadium.
6. Indoor and outdoor activities
Despite its urban growth, Charlotte maintains a love for the outdoors. The city offers numerous parks, greenways, and nature preserves like Freedom Park and the U.S. National Whitewater Center. The latter is a unique destination that offers whitewater rafting, kayaking, rock climbing, and zip-lining, appealing to adventure seekers and nature lovers alike.
There are plenty of indoor activities to match the plethora of outdoor activities. “Charlotte is known for being a melting pot, with an amazing social scene and welcoming atmosphere for all newcomers,” explains Karen Mikami marketing director of SportsLink, Bottoms Up Events, and Charlotte Nightlife. “Join one of the many adult sports leagues organized by SportsLink, hit up a weekend festival, or check out the bustling nightlife. Regardless of what you’re looking for, Charlotte is a fantastic place to forge new friendships and experience something new and exciting.”
7. Southern hospitality
At its core, Charlotte is known for its warm, welcoming atmosphere. The city’s blend of Southern hospitality and modern appeal creates a unique sense of community. Neighborhoods like Dilworth, Plaza Midwood, and Myers Park offer a charming mix of historic homes, tree-lined streets, and friendly locals, making Charlotte a place where people feel at home.
8. Growing tech scene
While Charlotte is often celebrated for its financial prowess, it is also becoming a hub for tech and innovation. The city is attracting startups and tech companies, particularly in fintech, with a growing number of incubators and co-working spaces. This trend is positioning Charlotte as a rising star in the tech landscape.
9. Education and research
Charlotte is known for its educational institutions, including the University of North Carolina at Charlotte (UNC Charlotte), which is a key player in research and innovation. The city’s focus on education shines through its museums and science centers, such as Discovery Place Science, which fosters a love of learning in people of all ages.
10. Historical significance
Charlotte holds an important place in American history. Its name is in honor of Queen Charlotte of Mecklenburg-Strelitz, wife of King George III. It played a role in the American Revolution, with local leaders declaring independence from Great Britain in the Mecklenburg Declaration of 1775, a year before the Declaration of Independence.
The Queen City: Where tradition meets tomorrow
“Charlotte is known for growth, and they are accomplishing this by respecting the past while creating a better future,” Steve Lonnen with SL Home Group concludes. “Charlotte today attracts over a hundred people daily with its incredible location, access to beach and mountains, four seasons, cost-of-living, dynamic job market, professional and collegiate sports, top 10 international airport, arts, and music festivals, local attractions, hundreds of parks and greenways, a fun/vibrant nightlife, and exploding culinary scene.
Today Charlotte offers all the options of a big city while maintaining the southern charm and warm welcome of a small town. This is why Charlotte consistently ranks as a the top five growing cities, and one of the most desired cities to live in in the entire country,” Lonnen shares.
Charlotte is a city that beautifully balances its rich history with a forward-thinking mindset. Whether it’s the allure of its financial sector, the excitement of its sports culture, or the warmth of its community, Charlotte has something special that draws people in and keeps them coming back.
Wesley Masters works on Redfin’s stellar Content Marketing team as a content writing specialist. She has been with Rent. since 2023 and her previous experiences include non-profit communications, graphic design, and content creation. Wesley lives in Atlanta, GA, and loves outdoor walks, hanging out with her loved ones, and finding new recipes to try on Pinterest. Her ideal home is a brownstone with contemporary interiors.
You probably like your home to be clean, but when it comes down to breaking out the mop and bucket, the vacuum cleaner, the wood polish, sponges, and bleach, do you really have the time or inclination to dive in?
If you feel like groaning just reading about tidying up, it could be worthwhile to hire a cleaning person or service.
There are many factors to consider when thinking about hiring out this task, and that’s where this guide will come in handy. Read on to learn:
• What’s the difference between a cleaning person and a cleaning service?
• How much does hiring a cleaning person or service cost?
• What are the pros and cons of hiring a cleaning person vs. a cleaning service?
• What are the alternatives to hiring a cleaning person or cleaning service for your home?
What Does a Cleaning Person or Service Do?
A cleaning person or service takes care of basic tasks such as dusting, vacuuming, sweeping, mopping, disinfecting the toilets, cleaning the sinks and bathtub/shower, and taking out the garbage.
There are typically add-on services available: laundry, changing the sheets, and doing the dishes for starters. Some of these could be included in the cost depending on the cleaning person or service.
“But, I can (or should) do all that myself!” you may be thinking. In which case, you are likely wondering: Is hiring a cleaning person worth it?
If a spic-and-span home is high on your checklist for maintaining a house, a little research can help determine if a cleaning person or service is right for you. Read on for more detail which can assist you as you make your decision.
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How Much Does a House Cleaner Cost?
The cost for hiring a cleaning person (or independent contractor) will depend on where you live, the size of your home, and how often they will come, but individual cleaners typically charge between $50 and $100 an hour.
Going with an individual generally costs less than hiring a cleaning service. However, they may not offer as many guarantees as a large company.
How Much Do Cleaning Services Cost?
Full-service cleaning companies can charge between $175 and $300 per visit. You can typically get a customized quote based on the size of your home and services you want before you hire a cleaning service. Some companies may have a minimum fee per visit. Generally the more frequently a service comes, the lower the cost per cleaning.
You can also hire a service for specialized, one-time cleaning services, such as after an event or before moving out or moving into a home.
Things to Consider When Hiring a Cleaning Person or Service
When deciding if hiring a house cleaner or cleaning service is worth it, you’ll benefit from addressing a few questions about your monetary situation, schedule, and level of desired cleanliness.
Your Budget
The first step in determining if you can afford a cleaning person or service is to set up a basic budget if you don’t already have one up and running.
If you’re wondering how to make a budget, consider using the 50/30/20 rule. This means putting 50% of the household income toward necessities or musts (which typically includes housing, utilities, food, and debt); 30% towards wants (like dining out and entertainment); and 20% on saving (including retirement) and debt payments beyond the minimum.
Once you see how much cash you have coming in and going out, you’ll be better able to assess if you can afford to pay for cleaning from that 30% that covers “wants.”
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How Valuable Is Your Time?
A good way to decide whether hiring a house cleaner is worth it is to remember this saying: Time is money. If paying a professional $50 an hour frees you up to make $65 an hour while working, the cost might be worth it, since you’ll come out ahead financially.
Schedules (How Often Are You Home?)
If you work long hours at an office or other workplace, outsourcing your house cleaning will allow you to enjoy your time at home without having to clean. And if the cleaning person or team comes while you’re at work, you won’t have to worry about staying out of their way.
However, if you are someone who works from home, or you or your spouse are a stay-at-home parent, a cleaning person or service can potentially be disruptive.
How Often You Need Your House Cleaned
Frequency of cleaning will matter. While a service may charge less per cleaning if they come weekly vs biweekly or monthly, you’ll still likely save money by having your home cleaned less frequently.
Worth noting: Do you sometimes list your house for renters? If you rent out on Airbnb, you’ll be asked to adhere to Airbnb’s cleaning protocol standards. A cleaning crew is helpful for a quick turnaround between renters.
Cleaning Requirements
The price of a house cleaner or cleaning service can go up depending on what is required of them:
• Level of mess. Do you entertain frequently or have small children? It may take longer to clean up the aftermath. Or maybe you haven’t done a deep-clean in ages. That too may make cleaning take longer.
• Area of mess. Does the whole house always have to be cleaned? You can save money by only having the common areas and bathrooms tidied up.
• Pets. Vacuuming dog and cat hair can add many minutes to a cleaner’s timesheet.
• Are you a neat freak? A deep-clean or super detailed job will cost more than basic dusting, vacuuming, and mopping.
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How Good You Are At Cleaning
If you are a disciplined and effective cleaner who loves getting your place spotless, there may be no need to hire someone. That said, there might be times you get too busy to clean or want some help tidying up before the holidays or a houseguest’s arrival.
If you’re the kind of person who ignores dust bunnies or the sight of a broom stresses you out, perhaps you should outsource household tasks and enjoy some time elsewhere.
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Cleaning Services vs Individual Cleaners: What’s the Difference?
An individual cleaning person typically costs less than a cleaning service. A cleaning person often works alone, while a cleaning service can be a crew of two, three, or more who clean simultaneously.
An independent cleaner generally keeps 100% of the earnings, while a portion of the money for a cleaning crew goes to the service provider.
There are other key differences between individual cleaners and cleaning services:
Pros of Hiring a House Cleaning Person
Here are some of the perks that can make a cleaning person worth it:
• Lower costs. An independent contractor can be less expensive than a cleaning service. Fewer workers can mean cheaper rates.
• Price flexibility. You may be able to negotiate cleaning add-ons more easily (and affordably) with an individual.
• Familiarity. The same person comes to your home every time. This can provide a sense of comfort and trust for you and your family.
• Personal recommendations. You can get referrals from someone you trust — a friend or a neighbor.
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Pros of Hiring a Cleaning Service
If you’re considering getting help tidying up around the house, a cleaning service can be worth it. They come with several benefits:
• Vetted employees. Full-service cleaning companies typically check their employees’ backgrounds, so you don’t have to.
• Set standards. Many companies train their employees to uphold a certain level of cleaning criteria.
• Faster service. Since cleaning services are composed of crews, a team of workers can get the job done faster than an individual house cleaner.
• Customer service. If a job isn’t up to snuff, professional companies will deal with any complaints you may have.
Cons of Hiring a House Cleaning Person
• You’ll do the vetting. The responsibility of getting references and background checks on the cleaning candidate will fall to you.
• Longer cleaning time. Since a house cleaner usually works solo, they might not be as fast as a cleaning service with multiple workers.
• Unpleasant boss duties. If your cleaning person is not meeting your expectations, it will be up to you to address the problem and, possibly, terminate the arrangement.
• Inflexible schedule. If the contractor has a lot of clients, there could be fewer timeslot options available.
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Cons of Hiring a Cleaning Service
• Higher prices. A cleaning service generally costs more than an independent maid.
• Lack of familiarity. The company could send different people every time.
• Add-ons can be costly. Since the company sets the prices, you could spend a lot for a deep-clean of the fridge. A cleaning person, on the other hand, might not charge extra if they can get the job done within their hourly time frame.
Alternatives to House Cleaners or Cleaning Services
House cleaners and cleaning services are generally the route people take when hiring help, but there are a few other options:
• Gig-based workers. Apps and online services such as Taskrabbit and Fiverr feature a variety of folks willing to do odd jobs, including house cleaning. Whether they pursue this full-time or as a side hustle, you may well find affordable options.
• College students. If you live near a campus, check the online or physical job boards. Students are generally eager to make extra dough.
• Your kids. Shelling out for an allowance can be a lot cheaper than a cleaning service.
Tips for Saving Money on Cleaning Services
There are a few things you can do to potentially reduce the cost of a cleaning person or service:
• Shop around. It’s a good idea to interview more than one house cleaner or get estimates from multiple cleaning services.
• Make the terms clear. You’ll want to clarify exactly what tasks need to be done, so you won’t get charged for any unexpected add-ons.
• Consider a trial run. It can be a good idea to try out a house cleaner or cleaning service for a month or so before committing to a long-term agreement.
• Inquire about fees. It’s a good idea to ask about any potential extra fees so you don’t hit with any surprises. Some cleaning services may tack on a processing fee if you pay with a credit card vs. direct deposit.
• Look for promotional deals. Cleaning services will occasionally run specials. They may also offer package deals and referral bonuses.
• Tidy up before they come. Keeping your house orderly in between appointments allows the hired cleaner to perform more efficiently.
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The Takeaway
If your messy home is stressing you out, a cleaning person or service can take some of the weight off your shoulders. As long as you can justify the extra expense, hiring a professional can make your home look great and improve your mood, plus leave you with more free time to enjoy your favorite pursuits.
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FAQ
Are individual house cleaners better than cleaning services?
Both are good options if you need help cleaning your house. Typically, a cleaning person can be cheaper and is someone you see regularly and can build a relationship with. A cleaning service, on the other hand, may be able to get the job done faster and may have more professional training and customer service.
Is it safe to hire a cleaning person or service?
To feel secure, it’s a good idea to get recommendations and references (and check them) for an individual cleaning person. Cleaning service companies generally vet their employees for you.
Should you hire a house cleaner if your house is not very dirty?
Whether to hire a cleaning person or not depends on how clean you want to keep your home, and how much time you are willing to personally spend on it. Even if you’re a regular duster, a house cleaner can help with larger tasks like cleaning the fridge and oven, heavy-duty vacuuming, and/or window washing.
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SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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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.
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Earning an MBA, or a Masters of Business Administration, degree can increase your salary, teach you specialized skills, and provide you with new career opportunities. But getting your MBA is expensive, with an average cost of $62,600 for a two-year program vs. $59,684 for a master’s degree in general. A degree from a top-tier school can be considerably more, with tuition and living expenses totaling $200,000 for the program.
Just how big of an MBA pay increase you’ll get in return depends on a number of factors, including the school you attend, the field you’re in, and your previous work experience. Here’s what to know about an MBA salary increase and how much you might expect to receive.
Value of an MBA Degree
An MBA degree can make you more marketable to employers, which can in turn help you land a better job and a higher salary, research shows. And while earning your degree can come with a hefty price tag, taking out MBA loans is one option to help you pay for it.
The median starting salary of recent MBA graduates in the U.S. is $120,000, according to the 2024 Corporate Recruiters Survey from the Graduate Management Admission Council (GMAC). That’s significantly more than the $69,320 starting salary of grads with a bachelor’s degree. Knowing how much you might earn could help you determine if an MBA is worth it.
An MBA can also help you advance in your career. The majority of employers in the GMAC survey said that MBA grads typically perform better and move up the ladder faster than other employees. That places them in high demand in the workplace. One-third of employers from across the globe reported that they plan to hire more MBA graduates in 2024 than they did in 2023.
Average Salary Increase with an MBA
Overall, MBA grads reported a median salary increase of 33% after earning their degree, according to the GMAC’s most recent Enrolled Students Report. Full-time MBA students had a 42% increase in salary, while those who worked and studied for their MBA at the same time said their salary increased by 29%.
However, the amount your salary might increase once you have an MBA depends on the field you’re in. Here’s a closer look.
Salary By Industry and Job Function
The following industries tend to pay well for those who have earned an MBA, making them some of the best jobs for MBA graduates.
Finance
Many MBA grads pursue a career in finance, and it can be lucrative. The average salary for an individual with an MBA in finance is $145,257, but the amount can be as much as $195,000, and that’s not counting possible commissions and bonuses.
Technology
Another hot field for those with an MBA is technology, especially as AI becomes more prevalent. The average salary for MBA grads in tech is about $118,000 a year. However, your MBA salary increase could run higher still and may even include a signing bonus.
Consulting
Those who work as consultants and have their MBA average about $83,797 annually, but the base pay can be as much as $117,000. A consultant’s salary may go up dramatically within a few years, especially if they work at a big firm.
Healthcare
Healthcare management is a popular job for MBA graduates. The average earnings are $88,000 per year, although it’s not uncommon for those in healthcare management to bring home a six-figure salary.
Marketing
After graduating with an MBA in marketing, your annual earnings will be approximately $130,721 on average, and they could be as much as $165,000. That’s well above the average marketing salary for those without a degree, which is $81,330.
Business
The salary for a business analyst with an MBA is $104,629 a year, although it can be as much as $128,000.
Accounting
If you earn an MBA in accounting, you could earn an average starting salary of $126,598. Your pay could even be as high as $166,000.
Factors Influencing MBA Salary Potential
In addition to the field you choose to work in, how much you’ll earn after getting your degree is influenced by such things as the MBA program you choose and your previous work history and salary.
These are the three major factors that can affect MBA salary potential.
School Reputation and Rankings
Although it’s likely to be pricier, going to a top-rated school to get your MBA can pay off in multiple ways. These schools tend to have robust networking programs and employer recruitment opportunities. Some colleges may help prospective graduates find internships and jobs. Also, grads from top 10 schools tend to earn more than those who attend other programs.
Before applying to an MBA program, do your research to see where recent alumni have ended up and which companies have recruitment relationships with the school. For instance, certain coveted employers might always attend a particular school’s job fairs. If a university has connections to companies you might be interested in working at, you may want to apply to their MBA program.
Specialization and Concentration
Every MBA program offers different classes, internships, and hands-on opportunities, and it’s important to look for ones tailored to your goals and career path. Choose a program with specialized concentrations in the field you’re most interested in. For instance, some MBA programs specialize in healthcare while others focus on finance.
If you’re currently in a field that you want to pivot out of — moving from marketing to consulting, say — an MBA could help with career change without going back to an entry-level job.
Work Experience and Performance
The more work experience you have, the more likely you are to score a higher salary once you get an MBA. This is especially true if that experience is relevant to the area of study you’re pursuing. Most people going for their MBA have about five years of experience on the job. And some MBA programs require students to have a certain number of years of work experience before they apply.
Your work performance is also a key factor in what you might earn after you obtain your degree. As mentioned above, employers in the GMAC survey found that MBA grads tended to be better performers on the job. High achievers are more likely to command a higher salary.
Maximizing Your MBA Salary Prospects
In addition to choosing the right MBA program, there are other steps you can take to land a good job and a higher salary when you graduate. Here are a few strategies that can help you get ahead.
• Take advantage of networking opportunities. Get to know your fellow classmates and connect with teachers and faculty members. Go to school gatherings, job fairs, and networking events. Find people who are in the field you’re in, and get to know them.Then make a point to stay in touch with the contacts you make. These people can be valuable resources over the course of your career.
• Apply for internships. Many MBA schools offer internship programs, and they typically expect students to take advantage of them if possible. An internship can give you real-world experience and also connect you to key contacts who may be able to help you find a job when the time comes.
• Seek out alumni. Make a list of the companies you’re interested in working for, and then search out any alumni of your school who work there. Ask to meet with them for coffee or an informational interview. Solicit their career advice. If you make a solid connection, they may keep you in mind for future job openings.
Choosing the Right MBA Program
It’s important to find an MBA program that fits your interests and goals. Look for programs that offer concentrations in the areas and fields you want to pursue. Then review the curriculum and the courses offered to make sure they appeal to you.
In addition, learn where graduates of the MBA program have ended up. What companies do they work for and what kinds of jobs do they have? You might even reach out to ask how they felt about the program and if they would recommend it.
Location
Where the school is located is also a prime consideration. If you’re working and going to school at the same time, you’ll need to find a program in your area. You could also explore top online MBA programs if you want to take advantage of a particular school’s offerings when you’re unable to attend it in person. These programs tend to cost $10,000 less than in-person ones, but you may miss out on networking opportunities.
If you’re a full-time student and you have the opportunity to move to attend school, you could choose an MBA program near the area where you hope to work. For instance, if you’d like to be employed in Silicon Valley, a school nearby might be a good choice for you. It may be easier to get an internship there as well as a job after graduation.
Cost
Of course, the cost of an MBA program is likely to be one of the most important factors in your decision. Beyond the tuition, find out the true cost of getting an MBA at any school you’re interested in. This includes living expenses, books, transportation, and so on.
How to Pay for Your MBA
There are a number of ways to pay for your MBA, such as scholarships, grants, and student loans. You may want to consider both federal and private student loans. Federal loans include Federal Direct PLUS loans for graduate students from the Department of Education. The maximum amount you can borrow with these loans is the cost of attendance, which is determined by the school minus any other financial aid you may have, and the loan’s interest rate is fixed.
Private student loans may have fixed or variable rates, and the MBA loan rates you might qualify for depend on your credit history, among other factors. These loans are offered by banks, credit unions, and online lenders. Be aware, though, that with private student loans, you will not have access to the same federal protections and programs you would with federal loans, including income-driven repayment plans. Also, if you refinance federal student loans with a private loan, you could pay more interest over the life of the loan, depending on its rate and term length.
Recommended: Scholarship Search Tool
The Takeaway
Earning an MBA may help you fulfill your career dreams and earn a higher salary. Research shows that the degree can increase your salary by about 33%, depending on such variables as the school you attend and the field you work in. But getting an MBA can be costly, averaging more than $60,000 for a two-year program, up to $200,000 for top-tier schools. So you’ll want to weigh the pros and cons.
If you decide that earning an MBA makes sense for you, there are ways to help cover the costs and develop a solid budget. You can explore all options, including scholarships, grants, and federal and private student loans, as well as refinancing your existing loans.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
What is the average starting salary with an MBA?
The median starting salary with an MBA is $120,000, according to the Graduate Management Admission Council’s 2024 Corporate Recruiters Survey. That’s far higher than the $69,320 starting salary of graduates with a bachelor’s degree.
Is an online MBA worth the investment?
Whether an online MBA program is worth the investment depends on the program you choose and what you hope to get out of it. Online programs offer greater flexibility and are typically less expensive than in-school programs. According to one estimate, online MBA programs tend to cost about $10,000 less. However, with an online program, you may not have access to all possible networking opportunities or the opportunity to speak with professors face to face. You may also feel less connected to the school and the overall experience.
How long does it take to recoup MBA program costs?
How long it takes to recoup MBA program costs is different for everyone, depending on the price of the program and the salary increase they enjoy after earning their degree. According to the Graduate Management Admission Council, it takes grads of two-year full-time MBA programs about three and a half years of working to recoup the cost. Those who enroll in online MBA programs recoup the cost in about two and a half years of work.
Photo credit: iStock/Xavier Lorenzo
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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.
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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.
Chase just sweetened the pot for the Ink Business Unlimited® Credit Card. Starting Sept. 5, new cardholders can earn a $900 sign-up bonus when they spend at least $6,000 in the first three months. That’s $150 more than the previous bonus, but with the same spending requirement.
You won’t find a better, or more attainable, bonus from a cash-back business card — especially one with no annual fee.
Chase
Ink Business Unlimited® Credit Card
NerdWallet Rating
Bonus Amount
$900
How you’ll get your bonus
While the Ink Business Unlimited is a cash-back card, rewards are delivered as Chase Ultimate Rewards® points. You can redeem your points as cash via a statement credit or deposit it into a checking or savings account.
Ultimate Rewards points can also be redeemed for travel, gift cards, shopping or dining. The value of your points will depend on how you use them.
Cash back: 100 points = $1.
Chase Travel: 100 points = $1.
Pay with Points (Amazon.com and PayPal): 100 points = $0.80.
Shop Apple (via Chase): 100 points = $1.
Gift cards: Redemption value varies.
You can also transfer Chase Ultimate Rewards® points — to another Chase card or an external travel partner — to squeeze even more value out of each point.
Transfer your new Ink Business Unlimited welcome bonus to your Chase Sapphire Preferred® Card, for example, and that $900 bonus becomes a $1,125 bonus when redeemed via Chase Travel.
Should you get the Ink Business Unlimited?
The Ink Business Unlimited® Credit Card is hands down one of the best business credit cards. Its combination of simplicity and value makes this uncomplicated card an excellent choice for new businesses and established companies, alike. Cardholders get unlimited 1.5% cash back, pay no interest on purchases for 12 months (then ongoing APR of 18.49%-24.49% Variable APR), and can net one of the best bonuses out there.
Few other business cards can match it. The Wells Fargo Signify Business Cash℠ Card comes close, with a 12-month intro APR period and unlimited 2% cash back. But its sign-up bonus is $400 less than the new Ink Business Unlimited offer.
If simplicity isn’t your top priority, the U.S. Bank Business Triple Cash Rewards World Elite Mastercard® is also worth a look — especially if you count gas, office supplies, cell phone service and restaurants among your top expenses. The Triple Cash earns 3% back in those categories and matches the intro APR offers from Chase and Wells Fargo. You also get a $100 annual credit for recurring software subscriptions and an excellent welcome offer: Earn $750 in cash back. Just spend $6000 on the Account Owner’s card in the first 180 days of opening your account.
The information related to the Wells Fargo Signify Business Cash℠ Card has been collected by NerdWallet and has not been reviewed or provided by the issuer or provider of this product or service.
Are you looking for the best side hustles for moms? Being a mom is a full-time job, but that doesn’t mean you can’t make extra money on the side if you need to. Balancing work and family life can be tough, but finding a side hustle that fits your schedule can make it easier. Whether…
Are you looking for the best side hustles for moms?
Being a mom is a full-time job, but that doesn’t mean you can’t make extra money on the side if you need to. Balancing work and family life can be tough, but finding a side hustle that fits your schedule can make it easier.
Whether you need to make money to pay the bills, if you’re looking to save for a vacation, or if you simply want to save more money, there are many side hustles that may fit what you’re looking for.
I am a mom and I have done many of the side jobs listed below. Some can be part-time, others full-time, so there is probably something on the list below that can work for you.
Best Side Hustles for Moms
Below are the best side hustles for moms.
1. Blogging
Blogging is a great way for moms to make money from home. It is what I personally do so that I can work from home and spend more time with my daughter.
For me, blogging lets me travel whenever I want, work on my own schedule, make good money, write about topics I enjoy, and I really love having a blogging business.
I started Making Sense of Cents in 2011, and since then, I’ve made over $5,000,000 from my blog. When I began, I had no idea it would turn out to be one of the best jobs for stay-at-home moms. Now, I am extremely grateful for this – and it all started as a side hustle!
One way to earn money with a blog (and this is my favorite way) is through affiliate marketing. This means you recommend products and get paid when someone buys through your link. It’s like earning a commission for sharing products you use and enjoy.
Another way to make money is by placing ads on your blog. As your blog gets more visitors, you can earn money from the ads.
Writing sponsored posts is another option. Companies pay you to write about their products or services (it’s a good idea to choose products that you believe in and that fit your blog’s theme).
Blogging takes time and effort, but it can be very rewarding. You get to be creative, connect with others, and make money doing something you love.
You can learn more about how to begin in my free How To Start a Blog Course here.
2. Sell printables
Selling printables on Etsy can be a great side hustle for moms. You can make extra money by creating and selling digital items like planners, calendars, and worksheets.
All you need is a computer and some design software, and you can work on it at your own pace and from the comfort of your home.
You don’t have to spend any money to start selling printables either.
This is a great way to make money from home because you only need to create one digital file for each product, and you can sell it as many times as you want. You don’t have to print or ship anything. Instead, you create the digital file, and the customer downloads it and handles the rest after buying it from you.
You can learn more at How I Make Money Selling Printables On Etsy.
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
3. Proofreading
Proofreading is a great way to make some extra money from home. If you have an eye for detail, you can get paid to spot errors in text.
You don’t need a special degree to start proofreading. Many online companies hire beginners and this means you can get started without lots of experience. Plus, you can build up your skills and portfolio as you go.
The pay can vary. Some proofreaders earn $1,000 a month, while others make six-figure incomes. It depends on how much you work and your experience level. You can do this full-time or just as a part-time gig.
I know several proofreaders (who are moms) who started proofreading as a side hustle, and now it’s their full-time job. So, you can spend as little or as much time as you want growing this job.
You can learn more at 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year).
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This free training teaches you how to start a proofreading side hustle (and how to earn $1,000+ per month!), even if you are brand new and don’t have any previous proofreading experience.
4. Bookkeeping
Bookkeeping is a great side hustle for moms. It’s flexible and can be done from home.
Bookkeepers keep track of financial records for businesses. This includes recording transactions and balancing accounts.
Before you pass this by because you think you’re not qualified, you might be surprised to know that you don’t need to be an accountant or have any experience. Becoming a virtual bookkeeper is something you can learn from home.
You can learn more at How To Find Online Bookkeeping Jobs.
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This free training will show you how to start a profitable bookkeeping side-hustle in the next 30 days—even if you have no prior experience!
5. Print-on-demand
Print-on-demand is a great side hustle for moms.
You can create your own designs and sell them on items like T-shirts, coffee mugs, and tote bags. Websites like Etsy make it easy to set up your own shop.
There’s no need to buy supplies or handle shipping. The print-on-demand company (like Printify) takes care of that for you. This means you can focus on being creative and taking care of your family.
Many moms find this side hustle to be simple and rewarding. You can work on it during nap times or after the kids go to bed. If you love designing, this can be a perfect fit for you.
You can learn more at How I Make $1,500 Monthly With My Print-On-Demand Business.
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This freebie will teach you about print-on-demand as well as give you a list of 17 hot-selling products you can sell via print on demand.
6. Run a dog treat bakery
Starting a dog treat bakery can be a fun and profitable side hustle. You can begin this business right from your kitchen so it’s perfect for moms looking to make some extra money.
This side job can be very flexible. You can choose to keep it small and earn $500 to $1,000 a month. Or, if you have more time, you can scale it up and make even more.
You can learn more at How I Earned Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).
Plus, you can sign up for this free training workshop that teaches you the small business plan for starting your own pet bakery.
7. Online survey taker
If you’re a mom looking to make some extra money from home, taking online surveys could be a side hustle.
Companies pay for your opinions on their products or services, which helps them improve and stay competitive. This side hustle is flexible, allowing you to fit it around your busy schedule, whether during nap times or after the kids go to bed.
No, you will not get rich taking surveys (this is not a lucrative side hustle, but it is very flexible!), but you may be able to earn around $50 to $100 per month by answering several surveys each week.
Surveys are almost always done online, and you’ll usually be answering multiple-choice questions or typing in quick answers about your daily life, like where you last shopped. To get started, you can sign up for several survey sites.
Some popular survey sites include:
American Consumer Opinion
Survey Junkie
Swagbucks
InboxDollars
Branded Surveys
Prime Opinion
Five Surveys
PrizeRebel
IncomeFindr
User Interviews
While some surveys pay just a few cents, others can pay up to $20 or more, depending on how detailed and complex they are. This makes it a convenient way for moms to earn a little extra income in their spare time.
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Swagbucks is a site where you can earn points for surveys, shopping online, watching videos, using coupons, and more. You can use your points for gift cards and cash.
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Once you complete five surveys, you’ve earned $5, which you can cash out using the payout options offered by the site (such as PayPal cash and free Amazon gift cards).
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Prime Opinion is a survey website that helps people to earn extra money by sharing their opinions at home. It’s a simple survey site to use: you share your thoughts, and they pay you for them.
8. Virtual assistant
A virtual assistant (VA) can do many tasks from home and this is a popular side hustle idea for moms. They may manage emails, set up appointments, create social media posts, handle customer service, and more. Many small businesses need help with these jobs.
Becoming a VA doesn’t require a lot of training. You just need good organizational skills and a reliable internet connection.
A big advantage of being a VA is flexibility. You can set your own hours and work when it’s best for you, so this makes it a perfect side hustle for busy moms.
You can learn more at Best Ways To Find Virtual Assistant Jobs.
9. Social media manager
Being a social media manager is a great side hustle for moms.
Many businesses need help with their social media accounts because they don’t have the time to keep up with posting and replying to messages, or they simply don’t have the expertise.
Tasks might include creating posts, scheduling them, and interacting with followers. Social media managers might also run ads and analyze their performance.
It’s a flexible job you can do from home, making it perfect for busy moms.
10. Affiliate marketing
Affiliate marketing is a great way for moms to make extra money.
With this side hustle, you promote products or services online. When someone buys through your link, you earn a commission.
You can get started by choosing products you like and trust. This makes it easier to talk about them. People will feel your enthusiasm and trust your recommendations.
Many moms start with their own blogs. You can write about things you know and enjoy. Topics like parenting, cooking, or fashion are good choices. You can add affiliate links in your blog posts where they fit naturally.
Social media is another place to use affiliate marketing. Sharing links on Instagram, Facebook, or Pinterest can reach a lot of people.
Affiliate marketing is flexible. You can do it at your own pace and schedule, so this is perfect if you have kids and need to work around their needs.
For me, I love affiliate marketing and I think it’s one of the best ways to make money online. I especially like how I can do work up front and make money years down the line from older blog posts. So, it is kind of like a form of semi-passive income.
If you want to learn more about affiliate marketing, I recommend signing up for Affiliate Marketing Tips For Bloggers – Free eBook.
11. Online tutoring
Online tutoring is a great side hustle for moms. You can teach different subjects from your own home and this flexible job allows you to set your own hours.
If you love math, science, or another subject, there are students looking for help. You don’t need to be a certified teacher, but having a good grasp of the subject is important.
Online tutoring also pays well. Average rates can range from $10 to $30 per hour, depending on the subject and your experience.
12. Pet sitting and dog walking
If you love animals, pet sitting and dog walking could be the perfect side hustle for you.
Pet sitting is when you look after a pet while the owner is away. This could mean feeding, playing with, and sometimes even staying overnight with the pet.
Dog walking is a bit different. You take dogs for walks, making sure they get exercise and fresh air.
Both of these jobs are flexible. You can take on as many or as few clients as you want. This makes it easy to balance with other responsibilities.
My husband’s mother is a dog walker and pet sitter on Rover (the popular dog walking app), and it always seems like she loves this side hustle. She really likes dogs, so it looks like fun to me.
You can learn more at 7 Best Dog Walking Apps To Make Extra Money.
13. Sell handmade crafts
Selling handmade crafts is a fun and creative way to make money as a mom. You can use your skills to create unique items that people love.
There are many types of crafts you can sell. Items like handmade jewelry, painted mason jars, or knit blankets can be very popular. If you’re good at sewing, you can make and sell upcycled clothing or custom pieces.
Selling classes or workshops is another option. If you’re skilled at a particular craft (like knitting), teaching others can be a rewarding side hustle.
You can learn more at 16 Best Things To Sell On Etsy To Make Money.
14. Transcribing
Transcribing is a great side hustle for moms working from home. This is where you transcribe audio files into text for clients.
To start, you only need a computer and good listening skills. Some companies hire beginners, so you don’t need experience.
The pay can vary. Some jobs pay per audio minute, while others pay per audio hour. Usually, though, you can make around $10 to $20 per hour.
Platforms like Rev, Scribie, and CrowdSurfWork are good places to begin.
Transcribing can be done at any time of day, making it flexible for moms. This makes it easy to fit around your family’s schedule.
You can learn more at 18 Best Online Transcription Jobs For Beginners To Make $2,000 Monthly.
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In this free training, you will learn what transcription is, why it’s a highly in-demand skill, who hires transcriptionists, how to become a transcriptionist, and more.
15. Photography
Photography can be a great side hustle for moms, and I personally know a few photographers who have very successful photography careers and are also mothers!
This is something you can learn, such as by shadowing another photographer or by taking classes in person or online. As you get better, you can sell your services to others. Portrait photography is a popular choice, such as with taking photos of families, kids, or even pets.
Event photography is another option. Birthdays, weddings, and parties usually need a photographer.
You can also sell your photos online. Websites like Shutterstock or Etsy allow you to earn money from your images. This way, you can work from home and on your own time.
You can learn more at 18 Ways To Get Paid To Take Pictures.
16. Clean homes
Cleaning homes can be a good side hustle if you enjoy tidying up. Many people need help keeping their houses clean but don’t have the time to do it themselves.
You can set your own hours, making it easy to fit into your daily schedule. You can start by selling your cleaning services to friends and family. Once you get some experience, you can expand your client base.
You don’t need much to start. Basic cleaning supplies and a positive attitude can go a long way. You can also charge by the hour or by the job, whichever works best for you and your clients.
I know several mothers who clean homes in their free time, and they like how they can find homes to clean that fit into their schedule (so, it can be flexible!).
17. Baby equipment rental
Renting out baby equipment can be a great way for moms to make extra cash. Many mothers likely already have a bunch of different baby items at home, so they can make money with them when they are not being used.
Platforms like BabyQuip help connect you with families who need baby gear when they travel. You can rent out items such as strollers, cribs, car seats, and even toys.
You earn money based on how often your items are rented. The more popular the equipment and the busier the travel season, the more you could earn.
Some top providers make over $10,000 a month by renting out baby gear (at this level, they are definitely buying things with the sole purpose of renting them out, though, and not just renting out things they have just laying around their homes).
18. Book author
As a mom, becoming a book author can be a great side hustle. You get to share your stories or knowledge while working from home.
You can write about anything that interests you. Whether it’s a children’s book, a novel, or a guide on something you know a lot about, there’s a place for your work. You could even write romance novels!
Income from book sales can vary. New authors might see $0 to $500 a month, while experienced authors can make between $1,000 and $10,000 per month.
Writing a book does take time and effort. You might need to write during nap times, after the kids go to bed, or when they are in school.
19. Real estate agent
Becoming a real estate agent can be a great side gig for moms. You get to help people buy, sell, or rent properties. You can set your own hours, which is perfect for balancing work and family time. Plus, the more properties you sell, the more money you can make.
You can start part-time and grow your business as you gain experience. Real estate agents usually earn commissions, so your income can vary. It’s possible to earn a lot if you work hard and build good relationships with your clients.
20. Travel agent
Being a travel agent from home is a great side hustle for moms. You help people plan their trips, find the best deals, and book their vacations.
It’s ideal for moms who love to travel and know how to find great deals. If you have experience planning trips, this can be a rewarding way to earn money.
21. Freelance writing
Freelance writing is a great side hustle for moms, and I think it’s one of the most realistic jobs for stay-at-home moms. It lets you work from home on your own schedule, so if you love to write, this could be a perfect fit.
You can write many things like blog posts, articles, or website content. The pay can start from around $50 per article but can go up to over $1,000. As you gain more experience, you might earn even more.
One big advantage of becoming a freelance writer is the flexibility. You can work when your kids are napping or busy with activities. This makes freelance writing great for busy moms.
You don’t need a lot to start either, which is nice. A computer and internet connection are enough.
I have been a freelance writer for years, and I think it’s a great way to make money as a mom.
You can learn more at 14 Places To Find Freelance Writing Jobs – (Start With No Experience!).
Time Management Tips for Moms
As you may have noticed above, there are a lot of different side hustles for moms.
But, how can you fit them into your already busy schedule?
I get it. Being a mom is hard work, and you may feel scattered already.
Managing time can be tough for moms who have a lot to handle. Here are some simple tips to help you stay organized and use your time wisely.
Creating a schedule
I recommend that you start by creating a weekly schedule. Write down everything you need to do, like work, family time, and personal tasks. You may want to use a planner or a digital app to keep it all organized.
Then, allocate specific times for your side hustle. It could be during your child’s nap time or after they’ve gone to bed. Consistency helps in sticking to your plan.
Don’t forget to schedule some “me time.” Whether it’s reading a book or going for a walk, taking breaks can help you recharge.
Review your schedule at the end of each week. Adjust what didn’t work and keep improving. This way, you’ll find a rhythm that suits you best.
Balancing work and family
Balancing work and family is important. I recommend that you set clear boundaries between work time and family time. Let your family know when you’ll be working on your side hustle so they can respect that time.
You may want to find activities for your children that don’t need constant supervision. This can give you pockets of time to focus on your tasks.
Another way is to prioritize tasks based on importance. Use to-do lists to keep track of what needs to get done. Tasks with tight deadlines should come first. For me, I have a constant to-do list on my phone, and I find that helps me remember everything as well as prioritize everything that I have going on.
To balance work and family, you will want to remember to have family activities. Movie nights or game days can strengthen family bonds and make up for the time you are working. Quality time with family is just as important as work.
Time management is about finding balance and being flexible. What works for one mom might not work for another, so keep adjusting until you find what works best for you.
Frequently Asked Questions
Below are answers to common questions about side hustles for moms.
How can moms make money on the side?
There are many ways for moms to make money on the side, such as starting a blog, selling handmade crafts, selling printables on Etsy, proofreading, bookkeeping, freelance writing, tutoring, dog walking, photography, and more.
What are some flexible ways for moms to earn money at home?
There are many ways for moms to earn money from home. They could start a bookkeeping business, sell online courses, start a blog, transcribe, or even work with print-on-demand services to sell custom-designed items.
Can you list creative side jobs for stay-at-home moms?
Some creative side jobs for moms include blogging, making and selling printables, baking (and selling) dog treats, graphic design, voice-over work, and starting a YouTube channel.
How do working moms find time for side jobs?
Working moms can find time for side jobs by finding small pockets of time during the day, like when the kids are napping or after they go to bed. Using a planner can help organize your time and set achievable goals to keep on track.
What’s the easiest side hustle for moms with no previous experience?
Taking online surveys or becoming a virtual assistant are great options for moms with no prior experience. These jobs are easy to start and require little to no training.
How can a stay-at-home mom make $2,000 a month?
To make $2,000 a month, a mom could sell multiple services like bookkeeping, proofreading, or selling a range of products such as printables and crafts. Combining several side hustles can help you reach this goal. Or, you could focus on a single side job and spend more time on it.
How can a SAHM be financially independent?
A mom can definitely become financially independent. This is possible by diversifying their income streams. They can sell products online, sell freelance services (like writing or bookkeeping), or even invest some time into building a successful blog or YouTube channel.
How To Find Side Hustles for Moms – Summary
I hope you enjoyed this article on the best side hustles for moms.
Finding the right side hustle can make a big difference for moms who want to earn extra money while still focusing on their families.
Many of the side hustles for moms above have a lot of flexibility, the chance to work from home, and the opportunity to do what you love.
Whether you start a blog, sell handmade crafts, or become a virtual assistant, there’s a side hustle that can fit into your busy life.
What do you think are the best side hustles for moms?
Setting up your first credit card is a major money milestone: You’re embarking on the freedom to purchase goods and services pretty much whenever, wherever you like. You’re also starting on an important credit-building journey as well.
As you move ahead in this process, you’ll need to understand the ins and outs of setting up a credit card to ensure you choose the right card for your needs and then use it responsibly. To help you navigate this, we’ll share the basics on credit cards, what you need to get one, how to apply, and then the smart way to purchase with that plastic once you’ve been approved. Let’s get going.
What is a Credit Card?
A credit card is a physical card (typically a plastic one, rectangular in shape) that allows you to use your credit card account. By physically presenting the card to a vendor or keying in its numerical information online, you can use your credit card to make purchases, donate funds, and withdraw cash up to your credit card limits. A word about credit limits: The average credit limit in the U.S. now is just over $30,000, but the amount you’ll be given will vary based on such factors as payment and account histories, how much debt you are carrying, and your income. A higher credit limit isn’t necessarily better (we’ll tell you more about why below) as it can allow you to rack up more debt than might be financially healthy for you. Also, note that if you are new to credit, your limit may start low and rise as you show you can responsibly pay it back on time.
Now, back to credit cards themselves. In effect, a credit card is a revolving form of a short-term loan. You then make payments to the credit card issuer. There are various types of credit cards (including all kinds of points to be earned and other rewards) to consider. And depending on your particular situation, there’s also the personal loan vs. credit card difference to ponder.
As you mull over your options, let’s be clear: Credit cards aren’t giving you this purchase power for free. You may pay an annual fee to own a credit card, and you are charged a typically high rate of interest on the balance you carry on your card. (The latest figures say that offers of new credit card accounts have an average interest rate of 19.6%, which is about 5% higher than the prevailing interest rate on existing accounts. Neither is cheap!) In addition, if you miss a payment’s due date, you will probably be assessed late fees as well. Paying careful attention to keeping your credit card account in good shape is an important responsibility.
The latest Fed intel shows that Americans carry a staggering $856 billion in credit card debt. How does that break down? The average citizen has $5,668 due on their account. From those numbers, you may well realize that owning a credit card is a serious undertaking and can lead to debt.
Why You Might Need a Credit Card
Let’s look on the bright side of why so many of us have and reply upon credit cards. They definitely make our lives easier. If you’d like to make purchases or pay bills online, then a credit card can be ideal. Plus, it’s a convenient way to make in-person transactions without needing to carry around cash. If cash is lost or stolen, it may be gone forever. With a credit card, though, you can report yours as lost or stolen and the issuer can cancel your old account and provide you with a new number and card.
When you’re short of cash, a credit card can help you to make necessary purchases. Let’s say your washer/dryer breaks and you’d need about six months to save up for a new one. A credit card lets you get the appliance right now (and clean your laundry) while paying over time. Or maybe you get hit with a major car repair or dental bill. A credit card gives you the power to pay upfront and then gradually whittle that balance down.
Another reason you probably need a credit card: Many lodging facilities and car rental companies, as just two examples, may ask for a credit card number to hold your reservation.
Basic Requirements to Get a Credit Card
Credit card issuers may differ somewhat in the specifics of their requirements to get a card. In general, though, the financial institutions look for good credit scores and the financial ability to make credit card payments. Before you apply for a credit card, you can get copies of your credit reports from the three major credit bureaus for free at AnnualCreditReport.com. If there are any errors, dispute the data, and provide correct information, sending it to each of the credit bureaus that list incorrect details. Credit scores use this information in their algorithm so, the better your credit reports look, the higher your scores should be. This makes you a better candidate for loans and lines of credit.
As a credit score benchmark, credit bureau Experian noted that the average FICO credit score increased to 714 in 2021, a four-point increase from the previous year—and the fourth year that FICO scores went up. What’s most important, though, is your FICO score and how well it aligns with the requirements of the credit card issuer where you’ve applied.
A credit card issuer will also use financial criteria to help ensure that you’re able to make the payments. This can include your income and employment stability. In fact, the CARD Act of 2009 requires credit card issuers to consider a consumer’s ability to make required payments — at least the monthly minimum based on the outstanding balance. Note that, although issuers must consider your income, there is not a minimum that they must require.
Other requirements include being the age of 18 with a Social Security number.
How to Apply For a Credit Card
Next up: how to open a credit card. It basically requires filling out an application and then submitting the application for approval.
You can apply for your credit card in multiple ways:
• in person at a financial institution
• by mail
• by phone
• online.
After checking your credit scores, you may want to compare offers (including interest rates and APRs). As we’ve noted, interest rates can be high, so do research; there are plenty of online tools and sites that allow you to scan various offers.
Some cards may be no-interest credit cards during a promotional period. Benefits can be obvious (not paying interest) but also check the length of the promotional period, what happens when it ends, and what fees may be involved.
Then apply for the card of choice that you believe you can qualify to receive. Many people opt to apply for a credit card online these days because it is quite quick and simple. You fill in basic information about yourself, and agree to a “hard inquiry” credit check (which may briefly lower your score when it shows up that you are applying for credit). Typically, there is no application fee involved to seek out a credit card.
How to Use a Credit Card Once You Have It
Once you’re approved and receive your card, it’s important to understand and follow the credit card rules. What’s most important: using a credit card responsibly. Strategies for doing that include the following:
• Don’t make too many impulse buys.”Too many,” of course, will depend upon your budget and how much your impulse purchases cost. But the truth is, when you are not pulling out cash to pay for an item, it may feel almost like it didn’t happen, unlike when you use cash or a debit card connected to your checking account. In this way, some people can wind up overspending.
• Use the appropriate credit card. If you have more than one card, consider which one is best to use; for example, will you earn rewards on a certain card?
• Take advantage of perks. If your card comes with a reward or cash-back program, take advantage of the benefits.
• Either sign up for automatic payments or for reminders. That way, you can make payments on time, which helps with credit scores.If you fall behind, this can lower your credit scores and make it more challenging to get good interest rates going forward.
• Check your monthly statements for errors. This is how you can catch identity theft and other credit card fraud. Let the issuer know ASAP when you spot something that’s not right — and report a lost or stolen card as soon as possible.
After you make purchases on your card, you’ll receive monthly statements, typically with a minimum payment (perhaps 1% to 3% of the balance or a fixed amount) and the outstanding balance. Credit card companies usually give you a grace period in which you can pay off the balance in full to avoid owing interest.
A common mistake new credit card holders make is thinking that the minimum payment due is the “right” amount to pay and somehow improves their credit. Wrong! The minimum payment is just what it says: the minimum to avoid certain fees. But it can be too easy to get into the habit of only paying the minimum payment, which means that you’ll be paying interest on the balance—and then interest on the interest. It can be hard to get out of credit card debt if you only pay the minimum and keep swiping or tapping that card. It is actually preferable to keep your balance low or non-existent (meaning pay the entire amount owed each month). What’s best for your credit score and financial health is often using only 10% or less of the credit limit on your card.
If your credit card allows you to take cash advances, carefully consider if you should use this option (and check to see what your cash advance limit is; it’s often less than the total credit card limit). Interest rates for cash advances are often higher than what you’d pay on purchases, and it isn’t unusual for a financial institution to charge a cash advance fee. If you take the money from an ATM or a bank, there will likely be additional fees. Plus, it’s standard that interest accrues from the date of withdrawal with no grace period. In other words, this can be a very costly way to get your hands on some cash.
The Takeaway
Getting a credit card is a major rite of passage as well as a big responsibility. As you’ve learned, it can be simple to apply and get approved for a card, but staying on top of your debt can take some attention and effort. Given how many Americans have at times unwieldy credit card debt and how high the rates are, use credit carefully, and you’ll enjoy its convenience and credit-building powers for years to come.
How about another way to savor convenience and cash-smart benefits? We’re talking about SoFi Checking and Savings. When you sign up for an account with qualifying direct deposits, you can get up to $300 when your direct deposit arrives into your account, and you can have access to your paycheck up to two days early. Plus you’ll earn 4.50% APY with no monthly, minimum balance, or overdraft fees.
Explore banking with SoFi today.
FAQ
What are the benefits of having a credit card?
You can use credit cards to make purchases in person and online, and then make payments over time (although interest will accrue if you don’t pay the balance in full each month). You can reserve hotel rooms, car rentals, and more; get cash advances; quickly and easily cancel a lost or stolen card and then get a replacement with a new account number; and use rewards, among other benefits.
What are the requirements for opening up a credit card?
Although credit card issuers can have different requirements, they typically want to see a good credit score and must check to see if an applicant appears to have the financial ability to make payments on the card. Additional requirements:The applicant must be 18 years old with a valid Social Security number.
How should you use your credit card?
There are a wide range of ways to responsibly use your credit card. In fact, one of its key benefits is its flexibility. So, as long as you follow the credit card rules and manage the balance responsibility, how you use it is really up to you.
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Your credit score is unlikely to drop for no reason, but it might drop for reasons you do not expect. Simply applying for a new credit card, closing out an old one, or being late with a payment can affect your score. A drop in your credit score of 80 points may be enough to reduce your credit score from “good” to “fair,” which can mean you will pay significantly more to borrow money.
Here’s a look at the reasons your credit score might drop, how to monitor your score, and what to do if your credit score drops suddenly.
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Why Did My Credit Score Drop 80 Points?
Your credit score is based on factors related to how you manage your debt. Specifically, whether you pay your bills on time, how much you owe creditors versus how much credit you have available, the length of your credit history, the types of debt you have, and how often you apply for a new loan or credit card. Bankruptcy and foreclosures are additional threats to your credit score.
Any one or a combination of these factors could cause your credit score to drop.
Should You Be Worried About Your Credit Score Dropping?
Credit score changes are fairly common and not always a cause for concern. However, an 80-point drop is worth looking into, as it could impact whether you get approved and receive favorable terms for a loan or line of credit.
For instance, if your score drops from 700 to 620, it’s no longer considered “good.” That means that you will not qualify for the best mortgage or credit card rates because a lender will consider you a riskier borrower and could charge you more for financing.
It’s important to first understand why the drop happened so you can correct any issues and begin getting your credit back on track. Monitoring your credit score can be a good place to start, as it allows you to track changes to your score and get insights into your financial health.
Reasons Your Credit Score Went Down
There are a few reasons why your credit score might go down. But bear in mind that it can take over a month for your credit score to update and reflect any changes in your credit situation.
You Applied for a New Loan or Credit Card
If you apply for a new loan or a credit card, your credit score may go down because card issuers will perform a “hard pull,” or hard credit inquiry, when they look at your credit information. According to FICO™, a hard pull typically takes five points or less off your FICO Score. However, if you apply for several credit cards within a short period of time, it could have a greater impact on your score.
Your Credit Card Balance Went Up
If you carry a balance on your credit card, you won’t just rack up interest charges — your credit score might drop, too. Thirty percent of your FICO Score is based on the amount of money you owe. A significant balance on a credit card could cause your score to fall and your credit utilization rate — or how much of your credit limit you’re using on your revolving credit accounts — to rise.
You Missed Payments
Around 35% of your FICO credit score is based on your payment history. Therefore, if you fail to make your monthly payments — or are late making a payment — your score could fall.2 Tools like a money tracker app can help you identify upcoming bills, create a budget, and more.
You Closed a Credit Card Account
When you close a credit card account, especially one you’ve had for a long time, the average age of your accounts falls. That, in turn, could cause your credit score to dip, as the length of your credit history accounts for 15% of your FICO Score.
What Can You Do If Your Credit Score Dropped by 80 Points?
If your credit score drops by 80 points, there are some steps you can take to find out why and to rebuild your credit score.
Ensure Your Payment History Is Correct
Creditors can make mistakes and report inaccurate information to the credit bureaus. Fraudsters can steal your identity and use your accounts. So it’s worthwhile to check your credit report, including your payment history, and dispute any inaccurate information.
You can check your credit report for free from each credit bureau on AnnualCreditReport.com. You can also check your credit report for free with Experian and sign up for monthly updates.
Don’t Miss Payments
A payment that’s over 30 days past due may be reported to the three major credit bureaus. If you fail to make a payment for 90 days, your creditor may refer your account to a collection agency. These records will remain on your account for seven years.
Keep Your Credit Utilization Rate Low
As you use more of your available credit, your credit utilization rate will increase. The higher your credit utilization rate, the more of a risk you are to a lender, and the more your credit score may decrease. Aim for a rate below 30%. For example, if your credit card has a credit limit of $12,000, don’t use more than $3,600, and ideally use $1,200 or less.
Hold Off on Applying for a Credit Card, Loan, or Mortgage
If you apply for a new loan or credit card, the lender will conduct a hard inquiry to check your credit score. As we mentioned, this type of check will only temporarily lower your score by a few points. But many hard inquiries over a short period can have a compounding effect on your credit score. This might occur if you apply for several credit cards at once. The impact of a hard inquiry will typically last a few months to a year.
Avoid Bankruptcy or Foreclosure
Declaring bankruptcy and experiencing foreclosure on a property both cause a significant drop in your credit score. And both stay on your credit report for a long time: seven years for Chapter 13 bankruptcy, 10 years for Chapter 7 bankruptcy, and seven years for a foreclosure.
How to Build Your Credit Score
Building your credit score comes down to sensible fiscal management over time.
Whether your credit score dropped or not, there are steps you can take to help boost your numbers. Examples include:
• Paying bills on time
• Checking your credit report regularly for errors
• Lowering your credit utilization rate
• Keep spending in check — a spending app can help
Scenarios Where Your Credit Score Might Drop
Here are some scenarios where you might be surprised to find that your credit score has dropped.
You Pay Off Credit Cards
Let’s say you have three credit cards: one with $5,000 in available credit, one with $8,000 in available credit, and one with $500 in available credit. That’s $13,250 of total available credit.
You have a total balance of $3,975 over all three cards, which gives you a credit utilization ratio of 30%.
Let’s also say you take out a debt consolidation loan to pay off all debt except for $250 on the card with a $500 limit. You then close out the two cards with no debt — taking with it $13,000 in available credit. You’ve kept open the card that has a $500 credit limit and a $250 balance.
This might seem like a good move because you’ve paid off over $3,000 in debt and eliminated two credit cards. However, you now have a 50% credit utilization rate, significantly higher than the recommended 30%. This may increase your credit score.
You Close an Old Credit Card Account That You Don’t Use
Another reason to think twice before closing credit card accounts? It could impact the length of your credit history, which accounts for 15% of your credit score. If you close old accounts, it could lower the average age of your credit history, and your score could take a dip as a result.
You Took Out New Loans to Pay Off Debt
Every time you apply for a loan or a credit card, the lender performs a hard pull. If you apply for multiple new loans or credit cards within a short stretch of time, it could temporarily lower your credit score.
Allow Some Time Before Checking Your Score
Credit scores continually fluctuate as information on your credit report gets updated. According to Equifax, your credit score can take 30 days or more to reflect payments you’ve made.
What Factors Impact Credit Scores?
As we discussed, your credit score is calculated based on the following, according to the FICO scoring model:
• 35% of your score is based on your payment history.
• 30% is based on the amount you owe creditors and your credit utilization rate. Ideally, your rate should be around 10% and not higher than 30%.
• 15% is based on the length of your credit history.
• 10% is based on the types of debt you have. A mix of installment debt (such as student loans, mortgage, car loan, personal loan) and credit card debt (or lines of credit) is preferable.
• 10% is based on new credit.
Pros and Cons of Tracking Your Credit Score
There are no drawbacks to tracking your credit score, except for the time it takes to obtain your report.
On the other hand, there are plenty of pros to monitoring your credit score. You’ll know where you stand regarding future loans and what potential lenders will see on your credit report. You’ll also be able to spot inaccurate or incomplete information that you can have removed, which can help boost your credit score.
How to Monitor Your Credit Score
Federal law allows you to view a free copy of your credit report from each of the three national credit bureaus (Experian, TransUnion, and Equifax) at AnnualCreditReport.com. Check the reports carefully, and if you find something you don’t agree with, file a dispute to try to have the information removed.
You can also enroll in a credit score monitoring service. These automated services notify you of changes to your credit report that might occur if you qualify for a new credit card or loan, or fall behind on loan payments.
The Takeaway
Your credit score might fluctuate without you realizing it. But a drop of 80 points may be worth investigating, as it could mean you pay significantly more to borrow money. You might be surprised to learn that if you apply for a new credit card, pay off the balance on a card, or close an old account, your credit score could be adversely affected.
It’s a good idea to obtain a copy of your credit report — it’s free — and check that the information given to the credit agencies is accurate. You can also help maintain a good credit score by not missing credit card and loan payments and by keeping your credit utilization ratio below 30%.
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.
See exactly how your money comes and goes at a glance.
FAQ
Why did my credit score go down 80 points?
Your credit score is based on factors related to how you manage your debt. Bankruptcy or foreclosure will have an obvious effect on your score, but if you have not paid your bills on time, your credit utilization rate is higher than 30%, or you close old credit card accounts and reduce your credit history, you may see a dip. Also, your credit score may be affected if you apply for a number of credit cards or loans in a short space of time.
Why is my credit score going down if I pay everything on time?
Your payment history accounts for only 35% of your credit score. Other factors include your credit utilization rate, the length of your credit history, and the types of debt you have.
Why has my credit score gone down when nothing has changed?
Even if nothing has changed for you fiscally, you may still see fluctuations in your credit score. There are various reasons why, such as a higher-than-normal credit utilization ratio, inaccurate information in your credit report, or identity theft.
Photo credit: iStock/katleho Seisa
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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