Advertiser Disclosure: Credit.com has partnered with CardRatings for our coverage of credit card products. Credit.com and CardRatings may receive a commission from card issuers.
Editorial Disclosure:Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
Snapshot: No annual fee and fantastic cash back opportunities as high as 10% on select purchases. Great rewards card option if you frequently spend on dining, travel or groceries.
Basic Features
Ongoing APR: reg_apr,reg_apr_type depending on creditworthiness
Annual fee: annual_fees
Credit needed: Scores in the credit_score_needed range
Additional Details
10% cash back on Uber and Uber Eats purchases
8% cash back on purchases through Capital One Entertainment
5% cash back on select travel reservations booked with Capital One Travel
3% cash back at approved grocery stores
1% cash back on everything else
Full Review of Capital One SavorOne Cash Rewards Card
What You’ll like About It
The Drawbacks
Is It Worth It?
FAQ
Full Review of Capital One SavorOne Cash Rewards Card
In general, this is a great card if you have experience with cash back rewards cards and you like to hunt down a good deal. Maximizing your rewards will require some attention to detail – for example, booking travel reservations through Capital One Travel to earn that 5% cash back or knowing what grocery stores qualify for the rewards points.
But, this card does offer 1% cash back on “everything else,” so even if you’re not paying attention, you’re still earning something. Heads up, this card does have a relatively high APR of reg_apr,reg_apr_type. You’ll need to pay off your card consistently to avoid that interest rate and profit off those rewards.
Like what you’re reading? Learn more about applying for the Capital One SavorOne Cash Rewards Card
What You’ll Like About It
Easy Cash Back for Food Purchases
If you’re the kind of person who loves eating out (or ordering in), this is the card for you. The Capital One SavorOne Cash Rewards card offers a variety of different rewards categories for entertainment, travel and general purchases, but your best opportunity for earning cash back rewards is with food purchases. This card offers 10% cash back on Uber Eats purchases for those splurge nights when you don’t want to leave the house.
Even if you’re not eating out, this card allows you to earn 3% cash back on grocery store purchases. (Excluding some stores like Walmart and Target. creditworthiness, income and existing debt.
How Soon Can I Increase My Credit Limit After Being Approved for a Capital One SavorOne Cash Rewards Card?
Typically, most credit card issuers require at least 6 months of on-time payments before considering you for a credit limit increase. You can improve your chances of getting an increase by paying your bills on time and managing your credit well.
How Good is a Capital One SavorOne Cash Rewards Card for Building Credit?
Like most credit cards, Capital One will report on-time payments to the credit bureaus, which could help you build up good credit over time. However, if you have a low credit score and are looking to build your credit back up with on-time credit card payments, this may not be the best option. If you’re concerned about whether or not your credit is strong enough to be approved for this card, it may be better to start out with a secured credit card that will help you upgrade to another “unsecured” credit card.
Learn more about how to sign up for a Capital One SavorOne Cash Rewards Card
Advertiser Disclosure: Credit.com has partnered with CardRatings for our coverage of credit card products. Credit.com and CardRatings may receive a commission from card issuers.
American Express has added family language to the Personal gold card. Last month family language was added to Delta cards and then earlier this month was added to the blue cash cards. The personal gold card now reads:
You may not be eligible to receive a welcome offer if you have or have had this Card, the Premier Rewards Gold Card, the Platinum Card®, the Platinum Card® from American Express Exclusively for Charles Schwab, the Platinum Card® from American Express Exclusively for Morgan Stanley or previous versions of these Cards. You also may not be eligible to receive a welcome offer based on various factors, such as your history with credit card balance transfers, your history as an American Express Card Member, the number of credit cards that you have opened and closed and other factors. If you are not eligible for a welcome offer, we will notify you prior to processing your application so you have the option to withdraw your application.
Many people love showing their holiday spirit with Christmas lights, whether just a strand of twinkle lights around a window or going all-out like the Griswolds.
While these lights are festive, it’s worth noting that they aren’t free. In fact, the cost of running holiday lights rose 13% last year, costing the average household $15.48 vs. $13.41 the prior year.
In this economy, every dollar can count, so if you want to learn how much it costs to run Christmas lights for a month and how to reduce that expense, read on.
Here, you’ll learn more about:
• How much do Christmas lights cost to run?
• How much does it cost to run Christmas lights for a month?
• How can you save money on your holiday light electric bill?
Factors Affecting the Cost of Running Christmas Lights
Running Christmas lights uses energy, which can translate to higher utility bills. How much of an increase you see in your electric bill can depend on a number of factors, including:
• How many strands of lights you use
• The type of bulbs used in each strand
• The number of hours you run your lights each day
• How many days you run Christmas lights for
• Where you live and what you pay per kilowatt hour for electricity.
All of these things can influence how large your Christmas lights electric bill turns out be once January rolls around. Understanding what you could wind up paying can help if affordably celebrating the holidays is your goal.
Keep in mind that other costs can drive up electric bills during the holidays, apart from Christmas lights. If you’re using the oven more often to prepare holiday meals, for example, that can result in a higher electric bill. You may also see a bigger bill if colder weather means the heat is kicking on more often or your kids are home all day using electronics more while school is out. Lowering your energy bill may require a multifaceted approach.
How Much Electricity Do Christmas Lights Use?
The amount of energy used by Christmas lights can depend on the type of bulb and the number of bulbs per strand. The most popular options for Christmas lights include incandescent mini lights, mini LED lights, and ceramic C7 lights.
So which type of bulb uses the most energy?
The simplest answer is to look at the wattage of Christmas lights, based on bulb size and number of bulbs per strand. For example:
• With C7 lights, for instance, you’re typically getting 25 lights per strand.
• With mini LED lights, you’ll normally have 50 bulbs for a 14-foot strand and 100 bulbs per 32-foot strand.
• With mini icicle lights, you often have 300 bulbs for a 26-foot strand.
Here’s how the average wattage for each one compares, though note that incandescent bulbs stopped being manufactured and sold in August 2023 (some people may still own and use strands of these, however):
• C7 lights: 5 watts
• C9 incandescent lights (2-¼” long): 7 watts
• Mini incandescent lights: 0.4 watts
• Mini LED lights: 0.07 watts
Between those three options, mini LED lights draw the least amount of energy per strand while C7 lights draw the most.
LEDs possibly lowering energy costs by up to 90% vs. the other options. Switching to LEDs could be a way to save money daily during the holidays.
Also note that you’d need four strands of C7 lights to equal the same number of bulbs in just one strand of incandescent or LED mini lights. This is important to understand because it can affect the number of kilowatt hours used and your overall energy costs.
Recommended: 23 Tips on Saving Money Daily
Cost of Running Christmas Lights
So how much do Christmas lights cost to run for a month? Or longer? Calculating your estimated cost of running Christmas lights matters when trying to lower your electric bill during the winter months. Again, what you’ll pay can depend on a variety of factors, including where you live and how much electricity costs.
The average household pays $0.17 cents per kilowatt hour for electricity, according to the U.S. Department of Energy, but prices may be significantly higher or lower in different parts of the country due to cost of living differences.
If you live in Connecticut, for example, you might pay an average of $0.21 cents per kilowatt hour. People living in Florida, however, might pay an average of $0.11 cents per kilowatt hour. Residents of Hawaii typically pay the most, currently spending $0.32 cents per kilowatt hour.
Here’s how to figure out how much you’ll pay for Christmas lighting:
• Multiply the wattage of the lights by the hours per day the lights will be on, then divide by 1,000 to find kilowatt hours per day
• Multiply kilowatt hours per day by your cost of electric usage to get the cost per day
• Multiply the cost per day by the number of days your lights will be on
Calculating the Cost of Christmas Lights
Now, for how much does it cost to run Christmas lights? Here’s a look at what it would cost to run C7 lights, C9, and mini incandescent lights, and mini LED lights for six hours a day for 30 days, using a price of $0.14 cents per kilowatt hour. Here’s what you’d pay for each one:
Bulb Type
Hourly Cost
Daily Cost
Monthly Cost
C7 (25 bulbs, 5 watts per bulb)
$0.0175
$0.105
$3.15
C9 (25 bulbs, 7 watts per bulb)
$0.025
$0.15
$4.50
Incandescent Mini Lights (100 bulbs, 0.45 watts per bulb)
$0.0063
$0.0378
$1.13
Mini LED Lights (100 bulbs, 0.07 watts per bulb)
$0.0042
$0.0252
$0.76
Keep in mind that these costs are for just one strand of lights, as noted. If you string together several strands on your tree, frame your windows with lights, and then drape your shrubs or street-facing windows outdoors with more, your costs will of course go up.
Also, in terms of what the average person spends on Christmas lights, it can vary by a state’s cost of living, as well as by what kind of bulbs are used. Louisiana residents who run LED lights, for example, would likely spend the least, since they are paying just over nine cents per kilowatt hour (currently the lowest rate in the US) and they would be using energy-saving bulbs. Meanwhile, Hawaiians who opt for incandescent bulbs would probably spend the most, since their bulbs use a considerable amount of power and they currently pay the highest national rate for energy of almost 33 cents per kilowatt hour.
💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.
Tips to Save on Your Christmas Lighting Bill
If you’re looking for ways to lower your energy bill when you start plugging in your holiday lights, follow this advice.
Embracing Energy-Efficient LEDs
As mentioned, the wattage of Christmas lights plays an important part in determining how much you pay for electric bills over the holidays. Between C7 lights, incandescent lights and LED lights, LED lights are highly energy-efficient. According to the Department of Energy, residential LEDs that are ENERGY STAR rated use up to 75% less energy and last 25 times longer than incandescent lights.
People who use LED Christmas lights tend to pay far less than those using incandescent bulbs or C7 lights. So it follows that an easy way to save money on your electric bill and reduce energy usage would be to use mini LED lights as often as possible. Aside from that, LED bulbs emit less light and are less likely to overload sockets, making them a potentially safer option for Christmas lighting compared to other types of bulbs.
So if you still have some incandescent bulbs in your box of Christmas decorations, you may want to think about swapping them out for LEDs. (You won’t find incandescents made or sold in the US anymore either.)
Benefits of Solar-Powered Outdoor Lights
You might consider using solar-powered outdoor lights on your house over the holidays. These strands depend upon energy collected by small panels that gather and hold energy from the sun during the day.
These strands don’t plug in and draw no electrical power. So they can be especially easy and economical to use over the holidays.
Battery-Operated Lights for Smaller Displays
If you like to create smaller displays, you might consider battery-powered strands of lights. There is a wide range of how long these lights will stay illuminated, but this can be a good unplugged option to try for small-scale displays. While you do have to pay for the batteries, it can be cheaper than plugging in lights for weeks on end.
Recommended: 18 Common Misconceptions About Money
The Takeaway
A higher-than-usual electric bill can put a damper on your holiday celebrations. Estimating your potential costs beforehand can help you manage utility expenses. And you can decide whether it’s worth it to invest a little money in upgrading your current Christmas lights to energy-efficient options.
Having the right banking partner, such as one with budgeting tools, can also help make tackling high utility bills after the holidays easier.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with up to 4.50% APY on SoFi Checking and Savings.
FAQ
Do LED Christmas lights use a lot of electricity?
Compared to C7 lights or incandescent mini lights, LED Christmas lights use the least amount of energy. Specifically, they can use up to 90% less energy while lasting longer. LED Christmas lights also emit less heat and can be easier to install than other types of holiday lighting.
Do Christmas lights raise your light bill?
Holiday lights can raise your electric bill during the winter months. How much it costs to run Christmas lights can depend on several things, including the type of bulbs used, how many light strands you’re running, how long you turn the lights on for, and the average cost of energy per kilowatt hour in your area. Using timers and switching to energy-efficient bulbs can be helpful for reducing your Christmas lights electric bill.
Do Christmas trees use a lot of electricity?
Christmas trees can use a lot of electricity, depending on the type of lights you use, the number of strands on the tree, and how long you leave your tree plugged in each day. Using mini LED lights can reduce electric costs for Christmas tree lighting, while using C7 bulbs to light your tree could result in a higher energy bill.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
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 deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government 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, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
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 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 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
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.
Why Your Checking Account Should Contain as Little Money as Possible
By: Natasha Etzel |
Updated
Oct. 4, 2023 – First published on Oct. 4, 2023
A bank account is an excellent place to keep your money so it’s organized and readily available when needed. Many people keep their cash in a checking account. But, while you want to stash enough money in your checking account to cover your bills and everyday expenses, you want to avoid keeping all of your cash there. I’ll explain why here, and suggest a better place to stash your extra savings.Don’t miss out on interestThe average checking account doesn’t accrue interest. That means you won’t get rewarded for keeping money in your bank account. Instead of keeping all your cash in your checking account, you should only keep enough to cover your monthly expenses. You may want to keep a bit more than just enough to cover your bills. That way, you’ll be covered if you have an unexpected charge or a more costly bill than anticipated. How much extra should you have? It depends. For some people, a couple hundred extra dollars may be ideal. But for others, it may be a good idea to include a few hundred or up to an extra $1,000 in their checking accounts for extra wiggle room.But don’t keep every last dollar you have in your checking account. If you do, you’ll miss out on interest. Instead, move your extra savings into a bank account that accrues interest. With an interest-earning bank account, you’ll get rewarded as your cash sits in the bank. You could earn money with a savings accountMany people keep extra cash in a savings account. Review the bank’s annual percentage yield (APY) when considering a new savings account. This rate is the amount of money or interest you’ll earn over a year. The higher the APY, the more money you can make. You can take advantage of an attractive interest rate by opening a high-yield savings account. At the time of writing, the bank accounts on our best high-yield savings accounts list offer APYs ranging from 4.30% to 5.26%. If you have a significant amount of extra cash and keep it in an account like this, you can earn money without doing extra work. $5,000 in savings accumulates this much interest To determine how much interest you can earn by moving your extra cash to a savings account, multiply your initial deposit by the APY your bank account offers. This will show you how much interest you can earn by keeping your money in the bank for a year. Let’s imagine you have $5,000 extra sitting in your checking account right now. If you instead move that money to a high-yield savings account with an APY of 5% and you keep it in the bank for an entire year (and your APY doesn’t change; note that banks can raise or lower APYs at any time), you’ll earn $250. That’s much better than making $0 by keeping your savings in a checking account that doesn’t accrue interest. Now you can see why it pays to avoid keeping all your money in a checking account. You can earn extra money from interest by keeping your spare cash in a savings account that offers interest. For additional tips like this, check out our free personal finance resources.
3 Reasons I Don’t Like Aldi as Much as I Used To
By: Maurie Backman |
Updated
Sept. 13, 2023 – First published on Sept. 13, 2023
At some point in 2022, I discovered Aldi and began shopping there weekly. I found that I was able to save money on my grocery bill by purchasing certain produce items there. And since I happen to have an Aldi adjacent to my local Costco, it wasn’t particularly out of my way.But over the past few months, I’ve become less enamored with Aldi. Here’s why.1. The selection is just too limitedAldi — at least near me — is a minimally stocked grocery store. The shelves aren’t loaded the way they are at my nearby ShopRite and Stop & Shop.To be fair, this was the case when I first started shopping there. But because there’s just not a lot of selection, I’m generally limited to only buying a few items when I pop into Aldi.Not so long ago, I was running into Aldi for some fruit, which I usually buy there, and I needed to grab shredded cheddar cheese. Normally, I get that at Costco, but I didn’t want to run next door to Costco and wait in a line for cheese alone. Unfortunately, though, Aldi didn’t have the cheese I needed, so I had to make an extra stop anyway.2. The inventory is too inconsistentNot only is there a limited selection of food items I can buy at Aldi, but sometimes, I can’t even find the five or six things I’m looking for. Aldi was once my go-to source for avocados, since it’s an expensive purchase and Aldi tends to sell them for less than Costco (at least in my area). But the last few times I stopped at Aldi, avocados weren’t in stock.And that’s happened to me with other things, too. Over the past several months, I’ve struggled to find everything from cucumbers to strawberries at Aldi as well.3. What the store saves me on groceries, I lose via lost working hoursShopping at Aldi still has the potential to save me a little money on groceries. At a time when supermarket prices are up 3.6% on an annual basis, that helps.The problem, however, is that even though Aldi is right near Costco in my neighborhood, thereby allowing me to combine those trips, it still takes time to visit an extra supermarket. I have to find parking, wait in a checkout line, and spend time searching the shelves.While it’s nice to save $2 here and $3 there, the reality is that a stop at Aldi might cost me 20 or more minutes of work — especially when I don’t manage to find the things I need. And losing out on that work time often means forgoing more than $2 or $3 of income. So from a time perspective, it’s just not worth it.Shopping at Aldi could make sense for a lot of people. If you’re someone with flexibility in your schedule and grocery list, and you’re not so picky about the brands you bring home, then it could pay to spend the time visiting Aldi, even if you don’t always manage to find all the things you need. But I’ve reached the point where shopping at Aldi makes less and less sense for me, so I’ll most likely stop going there unless it’s a one-off basis.
7 Little-Known Gift Cards You Should Always Buy at Costco
By: Steven Porrello |
Updated
Sept. 29, 2023 – First published on Sept. 29, 2023
Costco gift cards are one of the warehouse’s best deals. Costco often will add 10% to 30% of value when you buy its gift cards in a bundle. It would be one thing if the gift cards were for places you’d never shop, like Bed, Bath, and Beyond (R.I.P.). But Costco gift cards are surprisingly varied and include many restaurants and retailers you’re probably already spending money with.So if you, like me, pinch pennies for your finances, here are seven gift cards you should always buy at Costco.1. Jiffy LubeCostco will add 25% of value when you buy a set of two $50 Jiffy Lube eGift cards for $74.99. While Jiffy Lube doesn’t offer the cheapest oil change on the market (Walmart will likely take the gold for that), its technicians do go through rigorous training via the Jiffy Lube University to ensure no accidental damage is done to your vehicle. If quality trumps price for your vehicle, this deal will save you $25 off your next oil change (limit of five per membership).2. Alaska AirlinesPacific Northwesterners will appreciate this deal — Costco will give you a $500 eCertificate to Alaska Airlines for $449.99. That comes to 10% off your next Alaska Airlines flight (limit of four per membership).3. Southwest AirlinesIf that was the first time you’d heard of Alaska Airlines, here’s a gift card package with a more familiar airline: Southwest. Costco will add 10% of value when you buy $500 of Southwest Airlines gift cards for only $449.99.4. Cinemark TheatresIn a great deal for moviegoers, you can buy a $50 Cinemark Theatres eGift card for only $39.99 at Costco. That’s an extra 20% of value that you can use for movie tickets, food, drinks, or merchandise (limit of 10 per membership).5. Miller PaintPainting your house ain’t cheap. Interior paint jobs will cost about $2 to $6 per square foot, according to the home improvement site HomeAdvisor, while exterior paint jobs can cost about $1.50 to $4 per square foot. To ease those costs, Costco will sell you $100 of Miller Paint gift cards for $69.99 — a whopping 30% of extra value.6. SpafinderIf you thought the cost of painting your house was bad, imagine how your back will feel after hours of painting walls. To ease that pain, Costco has an irresistible gift card deal: two $50 eGift cards for $79.99 to be used at thousands of spas and salons across the country. You can also use them at participating yoga and fitness studios (limit of 10 per membership).7. Synergy RestaurantsOne of the more interesting gift card packages I’ve come across, this extremely lucrative deal — two $50 eGift cards for a sticker price of $69.99 — will help you foot the bill at hundreds of local restaurants in numerous cities across Arizona, California, Colorado, Nevada, New Mexico, and Texas. This is perhaps one of the best deals I’ve seen and can be perfect for locals in those states and travelers who are visiting them.Most members don’t realize how many gift cards Costco actually sells. In fact, these seven packages only scratch the surface. Next time you’re at your local Costco warehouse, be on the lookout for gift card packages, which are often found at the ends of aisles. You might find a deal you can’t get anywhere else.
5 Amazing Costco Buys for Less Than $10
Costco is a favorite among bargain hunters. But because it’s a place where you typically buy in bulk, it’s often not great when you only want to spend a few bucks. Believe it or not, though, there are some deals at Costco for $10 or less. Here are five amazing Costco finds that will set you back no more than $10.1. Rotisserie chickenNot surprisingly, the $4.99 rotisserie chicken tops this list. Costco debuted its famed bird for $4.99 way back in 1994. It briefly raised the price by $1 during the Great Recession in 2008, then knocked it back down to $4.99 one year later. Had Costco raised its prices to keep up with inflation since 1994, that chicken would cost $10.48 today.Costco’s rotisserie chicken will always be a fan favorite for those looking for an effortless dinner. Just be aware: Costco keeps the prices low because its rotisserie chicken is what’s called a loss leader. The warehouse giant is willing to lose money selling them because it knows it can get customers into stores, where they’ll probably buy more than just a chicken.2. Hot dog and soda comboCostco has raised the prices of many of its food court items in recent years, but the price of one perennial favorite shows no signs of budging: the hot dog and soda combo, which has cost $1.50 since it debuted in 1985. Adjusted for inflation, the hot dog and soda combo should cost $4.28. Last year, during a quarterly earnings call, Costco chief financial officer Richard Galanti said the warehouse giant could keep the $1.50 price point “forever.”3. Kirkland Signature Creamy Almond ButterYou can use almond butter as a salad dressing ingredient, slather it on toast, put it in baked goods, or just eat it straight from the jar. If you’re the type who likes to devour almond butter by the spoonful, you don’t want to pass up a 27-ounce jar of Kirkland Signature Creamy Almond Butter, available for just $7.99. That works out to less than $0.30 per ounce. By comparison, a 16-ounce jar of Trader Joe’s Creamy Almond Butter Salted costs $6.99.4. Olde Thompson Kosher Sea Salt, 5 lbsSea salt has plenty of uses that go beyond cooking. You can use it for cleaning, as an exfoliant for your skin, and sprinkle it around your garden to keep unwanted bugs away. For just $5.99, you can score a 5-pound jar of Olde Thompson Kosher Sea Salt and keep it handy for all your household and kitchen needs.5. Bisquick Pancake & Baking Mix, 96 OuncesBisquick is another one of those things that’s handy to keep in your pantry. You can use it to whip up a quick batch of pancakes or waffles for breakfast or keep it on hand for a variety of baked good recipes. A 96-ounce box of Bisquick is available at Costco for $8.89. It’s normally priced at $10.99, but there’s a $2.10 manufacturer’s discount that’s good through Oct. 8, 2023.What are the best deals at Costco?Since Costco tends to sell large quantities, you’ll typically find that a lot of the best deals cost well above $10. Regardless of the exact price, it usually makes sense to buy products at Costco that have a long shelf life. For example, even if you find great deals on fresh produce and milk, you probably don’t want to load up on these items unless you’re feeding a large crowd, as they’ll go bad quickly.Also, make sure you look beyond the grocery department for savings. For example, getting your prescriptions from Costco Pharmacy or using Costco to fill up your gas tank could also save you money.If you want to maximize the benefits of your membership, try shopping with a Visa credit card that offers rewards. (Costco only accepts Visa credit cards.) That way you can earn travel rewards or cash back when you load up on groceries and other necessities.
5 Ways to Turn $100 Into Passive Income
By: Chris Neiger |
Updated
Oct. 1, 2023 – First published on Oct. 1, 2023
Creating passive income is one of the best ways to build wealth and protect your personal finances from an emergency, like losing a job or having your salary cut. According to U.S. Census Bureau data, about 20% of Americans have some level of passive income, with the average amount earned from passive income being $4,200 annually.Passive income strategies aren’t get-rich-quick schemes, and many initially require a significant time investment. The good news is that many can be started with $100 or less. Here are a few inexpensive ways you can start generating passive income.1. Buy stocksSome people think that owning stocks is only for rich people. It’s not. In fact, 61% of Americans own stocks, according to Gallup. And while you won’t get rich investing $100, you do have the potential to easily make money.You can open an online brokerage account for free and typically buy stocks for either little or no fees these days. The hard part is figuring out what company you think will do well over the long term so that you get the largest return.Let’s look at one popular company that many people own stock in: Apple. Let’s say you invested $100 annually over the past 10 years to buy Apple’s stock and reinvested any dividends you received to buy more shares. Thanks to Apple’s phenomenal growth over the past decade, your stock would be worth $4,848 — a 385% return on your investment.Of course, picking stocks can be difficult. If you want to potentially earn passive income in the market without picking specific stocks, you may want to buy shares of an exchange-traded fund (ETF). These funds follow market indices and can be purchased for as little as $1, thanks to online platforms that allow you to purchase fractional shares.2. Rent out an extra roomThis one is super easy and might cost you $0 if you already have the extra space. The latest Census Bureau data shows that 27.6% of Americans live alone. This means that many Americans may have a spare room in their home that could be transformed into a passive income stream.While it’s not for everyone, renting out a room in your home could be one of the easiest ways to generate passive income because you’re already in the space — either renting or as a homeowner — so all you need to do is find a roommate and collect their rent payments.This could be a very lucrative way to boost your income, considering that rent prices have skyrocketed over the past few years.3. Rent out your carWith 13% of full-time Americans working from home right now and 28% on hybrid schedules, many cars are sitting unused throughout the work week. With some planning and effort, your vehicle could quickly begin generating income through car-sharing websites like Turo.You can list your vehicle on the site for free and pay Turo a fee when you’ve rented out the vehicle. Turo says the average annual income for one car on its site is $10,516. Of course, some work is required to keep the vehicle clean and coordinate pick-up and drop-off. Still, renting out your vehicle could be a low-cost way to earn semi-passive income.4. Create an online courseMany people have accumulated many skills through jobs and even hobbies. You likely know how to get certain things done that someone else would find very useful — and pay for.There are many online platforms — including Udemy, Skillshare, and Thinkific — where you can create your own professional course and then sell it to an established online audience.You’ll need to do a fair amount of work upfront creating your course — including planning the sessions, recording videos, and making other content — but once you have it up and running, you can earn passive income from your hard work.Some course-creating platforms charge a monthly fee, while others may take a percentage of each sale you make. But while this option isn’t free, it’s certainly inexpensive.5. Start a dropshipping businessThere are many different businesses that fall under the dropshipping category, including selling T-shirts online or print-on-demand content like notebooks and journals.The startup cost for dropshipping businesses is low because you don’t buy any inventory and don’t have to rent an office or retail space. Instead, you’ll spend money setting up a website and potentially selling ads to market your products. You can even become a seller on Amazon and sell products without investing in your own online shop.You’ll have to invest significant time on the front end to build your business. Still, once you’ve found a niche and have established the relevant products, dropshipping allows you to spend minimal time keeping up the business while still making online sales.Keep these things in mindWhile all of these ideas will cost you little money and have the potential to generate passive income, you’ll still need to invest time and mental energy in setting them up. For example, you may need to do a lot of research before setting up a dropshipping business or launching an online course.Like anything worthwhile, be patient and take small steps to get started. You likely won’t be an overnight success, but making any progress toward generating passive income will move you further toward your personal financial goals.
I have owned rental properties for many years and recently we started using a company that allows us to accept credit cards for rent payments. There are pros and cons to accepting credit cards but our tenants love it and they can pay online with many different sources besides credit cards. It can be quite complicated to set up credit card payments on your own but there are companies that will do this service for you greatly reducing the headaches.
Should you accept credit cards for rent payments?
One of the first things many landlords may ask themselves is should you accept credit cards for rent. There are some ethical concerns with helping tenants get further in debt. Credit cards can get people in trouble and in a bind they may not be able to get out of. However, you have to ask yourself if it is your job to decide how your tenants spend their money and how they pay rent as well.
While some tenants may get themselves in trouble paying with a card some may be responsible enough to handle it. Some tenants may earn points that help them get cash back or travel rewards. Even tenants who can’t use cards responsibly may be in a position to pay rent with a credit card or not pay rent at all. Personally, I don’t think it is the landlord’s job to decide these things. We rent to adults who make their own decisions.
How to get started investing in rental properties.
What are the advantages of accepting credit cards for rent?
Many of my tenants like to pay rent in cash or with a money order. They do not like checks which can make our jobs difficult because someone needs to be available to collect the money. Many of those tenants are willing to pay with a credit card or some other online form of payment. It cuts down on the time it takes to collect rent and the risk of having a lot of cash lying around the office if we accept cards.
If tenants do not have the cash or funds to pay rent, they may have room on their credit card which means landlords may have fewer issues with late rent. This could also be an advantage for tenants as well since they can avoid late rent fees.
What are the most landlord-friendly states?
How can landlords accept credit cards for rent payments?
There are many ways to accept credit cards for payments. I also own a liquor store and mini-mart and we have POS systems to accept credit cards for our customers. I also have some online coaching programs that accept cards through Teachable and I have used Stripe in the past as well. This would be a bit overboard for collecting rent and luckily there are companies that can collect online payments for you and even offer other property management services.
I have been using DoorLoop for a few months and love it. We have set numerous tenants up on auto pay and online payments for rent which they love and makes our lives easier as well. I get notifications when payments are made which is a welcome alert! Many other property management companies will offer this service as well, both local and online. If you are thinking of accepting online payments it may not be as difficult as you think!
Should you use a property manager?
Another thing to consider if you are collecting rent yourself is if it is worth your time. I have a real estate brokerage and people who help me manage the properties and collect rent. There is no way it would be worthwhile for me to do all the tasks involved with property management.
If you are thinking of collecting rent with credit cards you may also consider handing over all of the property management duties as well.
If you are looking for the best online jobs for teens, then you have come to the right place. Here are the best online jobs for teenagers, even if you have no experience. There are many ways to make money online, and as a teenager, you may be interested in learning how you can as…
If you are looking for the best online jobs for teens, then you have come to the right place. Here are the best online jobs for teenagers, even if you have no experience.
There are many ways to make money online, and as a teenager, you may be interested in learning how you can as well.
Whether you are 13 years old or 19 years old, there are many different legitimate online jobs for teens that you may be interested in learning more about.
Related content:
Online Jobs For Teens
There are many online jobs for teens listed below. If you want to skip the list, here are some virtual jobs for teens that you may want to start learning more about first:
Start a website
While I was around 21 years old when I started my blog, I know of a few people who started theirs as teenagers.
A blog can be a great online job to start when you’re young, as you can decide how to build your blog, how you earn an income, and the schedule you put toward it.
Blogging has allowed me to travel full-time, work from home, have a flexible schedule, earn a high income, and love what I do.
You can easily learn how to start a blog with my free How To Create a Blog Course.
Here’s a quick outline of what you will learn:
Day 1: Why you should start a blog today
Day 2: What topic to blog about
Day 3: Tutorial on how to start a blog on WordPress
Day 4: How to make money with your blog
Day 5: How to make passive income on your blog
Day 6: How to get pageviews to your blog
Day 7: Tips to see success with your blog
Out of all of these online jobs for teens, blogging is by far my favorite. It does take a little more time to start making money, but it’s very flexible and fits with any kind of schedule.
Create a TikTok account
You have most likely heard of TikTok.
There are over 1.5 billion users on TikTok, and many people are able to earn an income on this social media platform doing many different things.
From personal finance tips to comedy, day in the life to travel, and more, there are many different topics you can cover on your own TikTok account through making social media content.
If you want to learn how to make money online for teens, this is a fun one.
You can learn more at How I Make Money On TikTok – How I Grew To 350,000 Followers and Made $60,000 In 6 Weeks.
Begin a YouTube channel
Everyone has heard of YouTube, and pretty much everyone has watched at least one YouTube video in their life.
In fact, according to YouTube, there are over 2 billion people who watch at least one video on YouTube each month.
Many people have goals of starting a YouTube channel and making money, but not many people ever actually start.
You can learn more at How I Grew From 0 Subscribers To Over $100,000 On YouTube In Less Than One Year.
Resell items online
If you are looking for a flexible job as a teenager, one to look into may be reselling items online, such as on Craigslist, eBay, or Facebook Marketplace. There are many other online marketplaces as well.
Plus, it’s something that anyone can start because many of us own things that we could probably sell.
And, there are always things that you can buy for a low price and possibly resell for a profit. Or, you may even be able to find free things that people are throwing away and sell that as well.
This is such a profitable idea that my friend was able to make $133,000 in one year through buy-and-sell flipping and with working only 10-20 hours per week.
Since then, they have turned this into an even bigger and more profitable business!
Some of the best items that they’ve resold include:
Something they bought for $10 and flipped for $200 just 6 minutes later
A security tower they bought for $6,200 and flipped for $25,000 just one month later
A prosthetic leg that they bought for $30 at a flea market and sold for $1,000 on eBay the very next day
A lift that they found in the trash (and asked the owner for permission to take) that they sold online for $7,500
You can learn more at How I Made $40,000 In One Year Flipping Items.
They also have a helpful free webinar, Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business In As Little As 14 Days. I recommend checking it out.
Sell printables on Etsy
If you are looking for a way to make money at home and be your own boss, then creating printables may be for you.
A printable is a digital product that can be downloaded and printed at home. You make them once and then sell them on a website such as Etsy for people to buy. You wouldn’t have to print anything, instead, you are simply selling the download.
Items such as grocery shopping checklists, weekly meal plans that someone puts on their fridge, gift tags, and quotes to be framed are all printables.
This can be a great way to make money at home as a teenager because you create one digital file download per product, and you can then sell them an unlimited amount of times.
You can sign up for this free ebook that helps you figure out where to start when it comes to selling printables on Etsy.
I recommend reading about this further at How I Make Money Selling Printables On Etsy to learn more about one of the best jobs for stay-at-home moms.
Note: Etsy account owners must be at least 18 years of age to sell on Etsy. If you are between the ages of 13 and 17, you can sell on Etsy if you have the appropriate permission and direct supervision of your parent or legal guardian. Your Etsy account must be registered with the parent or legal guardian’s information.
Create and sell stickers
Another fun way to make money online as a teenager is to sell stickers.
My friend started with no graphic design skills and didn’t even know how to create stickers when she first started. It’s something she learned as she went, and she now earns over $100,000 each year with her sticker business.
I interviewed her here on Making Sense of Cents and she answered questions such as:
Do I need to be a graphic designer to make and sell stickers?
Why do people buy stickers online?
Do stickers sell well online?
How much money can I make selling stickers as a small business idea?
You can head over to How To Make $1,000+ A Month Selling Stickers Online to read more.
Make Canva templates
Canva is an online graphic design website. On Canva, you can sell premade designs to other Canva users so that they can edit and customize them.
Some examples of Canva templates include ebooks, workbooks, Pinterest pins, and more.
Creating Canva templates can be a great way to make extra money because you just need to create them once, and you can sell them an unlimited amount of times.
People all around the world use Canva to help with the graphic design side of their business, and templates make their lives so much easier.
Working just a few hours a week, I know someone who is able to earn $2,000 each month from selling Canva templates from home.
Do you have questions such as:
What is a Canva template and what is Canva?
Why would someone buy Canva templates? What is the benefit?
I have no tech skills, can I still create and sell Canva templates?
You can head to this article to learn more at How I Make $2,000+ Monthly Selling Canva Templates.
Voice over acting
Voice-over actors are of all ages, and you probably hear them all the time!
A voice-over actor is the person you hear but usually do not see on radio ads, YouTube videos, documentaries, e-learning courses, audiobooks, TV commercials, video games, movies, and cartoons.
This job doesn’t require previous experience or special skills – you just need to have the voice the company is looking for.
You can learn more about how to become a voice-over actor at How To Become A Voice Over Actor.
Answer online surveys
Not too long ago, one of the ways I made extra money to pay off my student loan debt was by answering paid online surveys.
You will not get rich from taking surveys, but it can help you to earn a little bit of extra money in some of the spare minutes that you may have throughout the day. Plus, you may get free items occasionally to review as well.
Companies will pay you to take surveys because they want to see what people think of their product and their company. They seek out real opinions from real people.
Here are some of the survey companies that are open to teenagers (along with their minimum age requirements):
American Consumer Opinion – Age minimum – 14 years old
Survey Junkie – Age minimum – 12 years old
MyPoints – Age minimum – 13 years old
Branded Surveys – Age minimum – 16 years old
Swagbucks – Age minimum – 13 years old
InboxDollars – Age minimum – 12 years old
Pinecone Research – Age minimum – 18 years old
User Interviews – Age minimum – 16 years old
Some of the above will even pay you to review music, play video games, or test mobile apps as a part of their research.
Sell items on Amazon
We have all heard of Amazon.
It is a website full of items sold by people like you and me.
In the first year that my friend Jessica’s family ran their Amazon FBA business together, working less than 20 hours a week total, they made over $100,000 profit!
You can learn more by reading How To Make Money From Home Selling On Amazon, such as answers to questions like:
How Jessica started selling on Amazon FBA
What exactly Amazon FBA is
How to choose what to buy and sell
How much a person can expect to earn
The positives of selling on Amazon, and more
Customer service support
If you are looking for a more traditional style of online job, such as working for someone else, then finding a customer service representative job may be something to look into. This way, you can start earning money right away, right after you get hired, instead of attempting to build a business.
There are many companies that hire for customer service support at home, even if you are young. Most will want you to be at least 16 years old or 18 years old to start.
As a customer service representative, you may be responsible for tasks such as:
Answering questions from customers about a product
Troubleshooting and helping with issues that a customer may have with a product
Processing orders
Assisting with returns
Handling feedback and customer complaints
And so much more.
Virtual assistant
As a virtual assistant, you would be helping a person or small business owner with administrative and business tasks. You would be their assistant but working in your own home instead.
I have been a virtual assistant in the past, and I now have virtual assistants of my own. They are lifesavers!
You do not need to have previous experience in order to start as a virtual assistant, instead, you need to be willing to learn so that you can help a business run more smoothly.
Many, many people and companies are looking for virtual assistants, as they play such an important role.
As a virtual assistant, you may be able to start at around $15-$20 an hour, or even much more. This will depend on the type of work you are providing, the experience that you have, the field you will be working in, and more. As a full-time virtual assistant, you may be able to earn over $10,000 a month once you gain experience.
As a virtual assistant, you may be doing tasks such as:
Managing a company’s social media accounts, such as by being their social media manager
Managing a person or company’s calendar
Scheduling appointments or travel
Creating or assisting with slideshows or presentations
Email management
Communicating with clients or customers
And so much more.
Different companies and employers will need different work to be done – it simply depends on who you will be working for and what they need to be completed.
You can learn more at How I Earn $10,000 Per Month From Home as a Virtual Assistant.
Start an online store
I feel like so many young adults are starting online stores, and it completely makes sense.
It’s something you can do from home, and there are ways to do it that don’t involve storing inventory or taking up a large amount of your valuable time.
Plus, you can make extra cash or even a full-time income.
And, there are so many different things that you can sell online.
From pet items, skincare, fitness products, subscription boxes, and accessories, to clothing, crafts, and more, the list is endless.
You can learn more about this topic at How I Make Over $10,000 Monthly With My Online Store In Less Than 10 Hours Per Week.
Write an ebook
Yes, you may be able to make extra money as a teenager by writing an ebook, and you can do it all from your home.
Anyone can write an ebook, no matter how young you may be.
There are many different genres that you can choose from, such as fantasy, fiction, nonfiction, mystery, and more.
If this is one of the online jobs for teens you’d like to learn more about, read How I Make $200 Each Day In Book Sales.
Find online tutoring jobs
Are you looking for a flexible side hustle as an online tutor?
If there is a subject that you are knowledgeable in, such as math, English, science, etc., then you may want to see if you can find students that you can tutor.
To become an online tutor, you can simply create a tutor profile on a tutoring platform, create a listing on Fiverr, reach out to people that you know, and more.
Learn more at The Best Online Tutoring Jobs – A Flexible Way To Make More Money.
Freelance write
Becoming a freelance writer can be a great online job for teens because there is a growing number of jobs out there for freelance writers, and many people start with no previous experience.
A freelance writer is someone who writes for a number of different clients, such as a website, blog, magazine, and more.
You can learn more in the article How To Become A Freelance Writer.
Proofread
If you have a passion for reading and often find mistakes in written content, then you may want to learn how to become a proofreader.
Freelance proofreading is a flexible and detail-oriented job that only requires a laptop or tablet, an internet connection, grammar skills, and a good eye for finding mistakes.
Proofreaders look for punctuation mistakes, grammar, misspelled words, lack of consistency, and formatting errors.
If you want to find online proofreading jobs, I recommend watching this free 76-minute workshop all about how to get started proofreading.
Recommended reading: 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year).
Tips for online jobs for teens
Below, I want to share some tips for you on how to manage an online job for high schoolers. Having an online job as a teenager means that you may have some questions, such as how to avoid scams, how to balance school and work, how to open a PayPal account when you are underage, and more.
How to avoid online job scams
While there are many, many legitimate online jobs for teens, there are scams as well. Due to that, I want to share my best tips so that you can avoid scams but still find an online gig.
Some of my tips to avoid scams:
Research the company and the position to make sure they are real and a company that you would like to work for.
Search on the Better Business Bureau to learn more about the company and read their reviews.
Research the company online to see if there are any mentions of it being a scam. I like to type in “Company name + Scam” into a search engine and see what pops up.
Always be careful if the company asks you to pay money.
Before you give out any personal information, such as your social security number, you should make sure it is a real job that they are offering you.
Search the Federal Trade Commission and see if they have any press releases or articles about work-from-home job scams that they may have found.
Never click on any links or download anything in a suspicious email.
And, always trust your instincts! If something seems fishy, then trust yourself. There are always other jobs out there – do not feel like you have to take one that you are unsure about.
Simply move on and look for another opportunity that fits you.
Frequently Asked Questions About Online Jobs for teenagers
Below are common questions about online jobs for high schoolers.
How can a student work from home?
If you are a teenager, then you may still be in school. If you are trying to manage school and find a way to make money, then I do want to share some of my best tips.
After all, I have been in your shoes!
Working and going to school can be tough to manage.
Below is my advice for balancing both:
Realize what your motivation is for balancing both school and having a job. This is important because at times it will be hard to manage both, and thinking about why you are making yourself so busy can help to keep you motivated. You may even want to create a vision board so that you can look at it whenever things are tough so that you can easily remember what you are working towards.
Carefully plan out your school and work schedule. To balance school and work, then I recommend creating a carefully planned out schedule. This mainly only applies if you are in college or if you have control over the hours in your school day. This may include researching when the classes you need are offered and start trying to eliminate any gaps that may fall between your classes. Having an hour or two break between each class can quickly add up.
Bulk up your class days. If you think you can do it without overtiring yourself, then you may want to have as many classes together as possible in one day so that you are not constantly having to drive back and forth between school, work, and home.
Have a to-do list. I live and breathe by my to-do list. It helps me to not forget anything and to quickly realize that I have something to do (so I should stop procrastinating!).
Please head to 9 Ways To Successfully Balance School And Work to learn more.
How to open a PayPal account when you are a teenager?
If you are under the age of 18, then you will need a parent or a legal guardian to open a PayPal account. They would be the primary account holder, and you would simply be doing transactions through their account.
So, this means that you want to choose someone that you trust as they will have full access to the money that you are earning and is being transferred to your PayPal account.
How old do you have to be to work an online job? Can I work from home at 15? How can I make money at 17 without a job?
The age will vary depending on the job that you are looking to get.
How do you get paid with an online job for teens?
The way that you will get paid will depend on what you are doing.
If you are taking paid online surveys, for example, then you may get paid in rewards, a gift card, or even PayPal or check.
For more traditional jobs and gigs, you may be getting a paycheck every two weeks. If you are working for yourself, then you may be getting paid directly to your bank account.
How can I make money online as a teenager?
There are many ways to make money as a teenager, as you learned above. These include:
Blogging
TikTok creator
YouTuber
Reseller
Printables creator
Sticker maker
Canva templates designer
Voice-over actor
Survey taker
Amazon seller
Customer service representative
Virtual assistant
Online store owner
Author
Tutor
Freelance writer
Proofreader
And the list goes on and on!
Whether you are looking to make extra cash or if you are looking for a full-time job, there are many ways for you to earn money as a teenager.
Lastly, my final piece of advice is to make sure that your parents are informed of what you are doing. For your safety, I highly recommend telling your parents about your online job and keeping them updated about what is going on and if there are any changes.
Are you looking for the best online jobs for teens?
If you’re like many cardholders, you will likely want to take advantage of any opportunities to streamline your finances. A commonly used credit card feature that can make life more convenient is automated credit card payments, or credit card autopay. It’s a way to have your bill paid seamlessly on time so you don’t have to wonder, “Is my credit card payment due around now? Have I already paid it for this month?”
Understanding what autopay is and how it works can help you decide if enrolling in automatic payments is right for you. There are definite benefits to setting up autopay, but there are downsides to take into account as well. You’ll also need to consider how you’d like to configure credit card autopay, as there are a few different options.
In this guide, you’ll learn about all this topic and gain the insight you need to decide if autopay for your credit card is a good fit for you.
What Is an Automated Credit Card Payment and How Does It Work?
An automated credit card payment, or autopay, is a recurring payment that’s scheduled for the same day each month. The automatic payment is typically made on a date that’s either before or on the statement due date.
Autopay allows cardholders the convenience of making credit card payments on a periodic basis without having to manually set up payments. This also helps with avoiding late or missed payments.
When you enroll in automated credit card payments through your credit card issuer, you’re authorizing the issuer to request a certain payment amount on a specific date from your banking institution. When the autopay date arrives, your card issuer’s bank will send your bank an electronic request for the payment amount you’ve set up.
Your bank then will fulfill the payment request and send it to the merchant’s bank (i.e., your card issuer). 💡 Quick Tip: A credit card provides access to a line of credit. It’s essentially a short-term loan that you repay each month.
Credit Card Autopay Options
There are a few ways to approach automatic bill payments through your card issuer. Each has its benefits and caveats, so assess your own financial situation before choosing an autopay strategy for your credit card.
Paying the Minimum
One option is establishing automated credit card payments for the minimum amount that’s due on your billing statement. The minimum payment is the smaller amount due that’s shown on your statement or online account, and the amount varies based on your total charges at the close of your card’s billing cycle.
Selecting to pay the minimum can be useful if you don’t have enough money to repay the entire statement in one fell swoop. By paying the minimum, you’ll fulfill the issuer’s minimum requested payment and keep your account in good standing — which, in turn, helps keep your credit score in good standing.
However, this means you’ll roll over the remaining statement balance into the next billing period, which will lead to incurring interest charges. That’s one aspect of how credit cards work.
Recommended: What is a Charge Card?
Paying the Full Balance
You also can choose to pay the full balance as shown on the billing statement for each recurring payment. Paying the full balance is beneficial, because it allows you to avoid rolling a balance into the next billing cycle. This, in turn, means you can avoid interest on a credit card.
However, since your balance will likely vary month to month, you need to be sure you have enough cash in your bank account to cover it. Otherwise, you could wind up overdrafting.
Paying a Fixed Amount
Another option is to set up automated credit card payments for a specific, fixed amount. For example, if you exclusively use your card to pay your fixed monthly cell phone bill of $50, you can establish an autopay for $50 toward your account on a recurring schedule. You can also use this option if you’d like to make extra credit card payments throughout the month.
Benefits of Automatic Credit Card Payments
Choosing a credit card that allows autopay can be helpful for various reasons. These are a few of the major upsides to enrolling in automated credit card payments:
• You won’t risk forgetting about a credit card payment due date.
• You’ll avoid penalty fees and penalty annual percentage rates (APRs) for making a late payment.
• Your positive payment history is maintained.
Drawbacks of Automatic Credit Card Payments
There are also some caveats to consider before you set up autopay. This includes the following:
• You might face other fees if you have insufficient funds when using autopay.
• You might slack on reviewing your monthly credit card statement for red flags.
• You might inadvertently overspend on your card because you feel as if you’ve got the payment covered.
Factors to Consider Before Setting up Automatic Credit Card Payments
Before setting up automated credit card payments, honestly assess your finances and habits. Verify that you have sufficient deposits into your checking or savings account to cover the autopay amount you’ve set up.
And if you do set up automatic credit card payments, make sure you continue to check your monthly billing statements. Confirm that all transactions are yours and are accurate, and that your total spending is still manageable.
Setting up Automatic Credit Card Payments
The exact process for how to set up automatic credit card payments can vary somewhat from issuer to issuer, but in general, it’s pretty easy to do.
• You will need to first log on to your credit card account either online or through the mobile app. It’s also possible to call the number listed on the back of your card to have someone talk you through it.
• Pull up the section labeled payments, and you should then be able to find an option to manage or set up autopay. You’ll need to connect a bank account where the payments will get pulled from and select the date and frequency at which you’d like the payment to occur.
• You should also be able to select which payment option you’d like (minimum due, the full balance, or another amount).
💡 Quick Tip: When using your credit card, make sure you’re spending within your means. Ideally, you won’t charge more to your card in any given month than you can afford to pay off that month.
Tips for Stopping Automatic Payments on Credit Card
What if you have credit card autopay activated on your account but need to halt automated payments moving forward? Federal law protects your right to rescind authorization for automatic payments. Here are a few ways to go about it:
• Turn off autopay through your card issuer. Many credit card issuers give cardholders the ability to turn autopay on or off through the app or via their online account’s payment settings. Just make sure you do so before the next automated payment is processed.
• Revoke authorization from your card issuer. Call your credit card issuer to revoke authorization for autopay. Then follow up the call with a written letter revoking authorization, and requesting a stop to automatic payments on your account.
• Request a stop payment order from your bank. You can also contact your bank to place a stop payment order on any automated payment transactions requested by the card issuer.
Regardless of how you stop automated payments from occurring, continue reviewing your monthly statement and account activity to ensure that the autopay has ceased.
What Happens if You Overpay Your Credit Card Balance?
Let’s say you inadvertently set up autopay to higher than the balance — what could you do then? Typically, credit card overpayments are processed as a negative balance. A credit for the overpaid amount should be reflected on the next billing statement, assuming your new transactions bring your account above a zero balance.
However, you do have the right to request a refund from the card issuer, instead of having it applied as a credit. The Federal Deposit Insurance Corporation (FDIC) has in place regulatory credit card rules for card issuers when it comes to an overpayment on your card account. It states that upon receipt of a consumer’s written refund request for an overpayment, an issuer must provide the refund within seven business days.
Recommended: Can You Buy Crypto With a Credit Card?
The Takeaway
Automated credit card payments are a convenient option and can mean one less thing to remember. In addition to helping you keep your card account in good standing, autopay can provide peace of mind. By automating payments, you’ll more easily avoid credit card late payments, penalty fees, and penalty APRs for late payments.
Looking for a new credit card? Consider a rewards card that can make your money work for you. With the SoFi Credit Card, you earn cash-back rewards on all eligible purchases. You can then use those rewards for travel or to invest, save, or pay down eligible SoFi debt.
The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1
Take advantage of this offer by applying for a SoFi credit card today.
FAQ
Is it a good idea to automate monthly credit card payments?
Whether enrolling in automated credit card payments is a good idea depends on your current financial situation. You must reliably have the payment amount in your checking or savings account each month and not be at risk of overdrawing or having insufficient funds. Also consider your other financial responsibilities and personal money management habits to decide if automated payments are right for you.
Do automatic payments affect your credit score?
Thirty-five percent of your FICO® credit score calculation is based on your payment history. Automatic payments can help you make on-time payments for at least the minimum balance due so your payment history builds or remains positive. As long as the deposit account that automatic payment is drawn from has adequate funds, the credit card autopay transaction can be advantageous to your credit profile.
Do banks charge for automated credit card payments?
No, banks and credit card issuers don’t typically charge an additional fee to make automated credit card payments. Autopay is intended as a payment convenience for cardholders. But ultimately, it helps card issuers and banks better secure repayment from customers, thereby lessening the risk of a late payment or delinquent account.
Photo credit: iStock/PeopleImages
1Members earn 2 rewards points for every dollar spent on eligible purchases. If you elect to redeem points for cash deposited into your SoFi Checking or Savings account, SoFi Money® account, or fractional shares in your SoFi Active Invest account, or as a payment to your SoFi Personal, Private Student, or Student Loan Refinance, your points will redeem at a rate of 1 cent per every point. If you elect to redeem points as a statement credit to your SoFi Credit Card account, your points will redeem at a rate of 0.5 cents per every point. For more details please visit SoFi.com/card/rewards. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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 .
Flights depart and land at all hours, and no matter how much you try to plan a perfect trip, some things are out of your control. If your flight lands early in the morning or departs late at night, you might wonder what to do with your bags outside hotel check-in and checkout hours.
Can you leave your luggage at your hotel before you check in? Will a hotel hold your bags after checkout?
We have some luggage storage solutions for you if you’d prefer to avoid paying for an extra night before or after your trip to store your bags.
Will hotels hold your luggage?
Yes, if you are a guest, most hotels will hold your luggage for free at the bell desk, in a designated storage room or a locker. Usually, a bellhop will attach a sticker or a tag to your luggage, write down the number of pieces you’re leaving and hand over a receipt so that your bags can be identified when you return to pick them up.
It’s not a perfect system, but it does work for the purposes of matching the bags to their owner, especially after a shift change at the bell desk.
In some cases, hotel luggage storage isn’t complimentary for guests, and you might be limited in terms of what type or size of luggage you can leave behind. For example, explosives, poison and flammable liquids can’t be stored for safety reasons. In either case, it’s best to read a hotel’s policy before you make a reservation.
Can hotels hold your luggage if you’re not a guest?
Let’s say you have a reservation at the hotel, but check-in isn’t until 3 p.m. — and it’s 9 a.m. Because you’re not an official guest yet, the hotel’s policy may not honor your request to store your luggage for a few hours before check-in.
However, it is possible to make an unofficial arrangement with a bellhop and make sure to leave a tip. Having said that, if your bags go missing or get damaged, the hotel won’t be liable for them.
🤓Nerdy Tip
Consider purchasing a Bluetooth tracker, like an Apple AirTag or a Galaxy SmartTag, and placing it inside your luggage. If the bag is misplaced for any reason, you can locate it with a phone app.
Can you leave luggage at a short-term vacation rental before check-in or after checkout?
Although some hosts offer luggage storage services, it’s pretty rare to find one that does it.
Short-term rental properties need to be cleaned and prepared for the next guest, so if someone is checking out the same day you’re checking in, it’s unlikely you’d be able to leave your bags there. They may not have the extra storage space. We recommend messaging the host beforehand for storage recommendations. They might provide a solution or recommendation for a nearby storage facility.
What to do with luggage before checking into a hotel
If your hotel won’t hold your luggage for you, you still have some viable alternatives for storing your bags while you’re out and about in the new city.
Ask for early check-in or late checkout
Depending on the hotel, you might be able to score an early check-in or a late checkout, especially if you’re traveling during a slow season or if you have hotel elite status.
IHG One Rewards Platinum Elite and Diamond Elite members can get early check-in and 2 p.m. checkout, but it’s subject to availability. Even if you have no status or are staying at a non-chain hotel, it never hurts to ask.
Use storage facilities at an airport or a train station
If you’re traveling in Europe, the main train stations are often located in the city center, so you can take advantage of the storage lockers while you wait for check-in at the hotel.
A less convenient option is the airport. Although you could store your bags at the airport, you have to return to pick them up, which might be quite far from where you’re staying.
🤓Nerdy Tip
Don’t leave your passport, wallet or laptop in a stored bag. Make sure to keep all your travel documents, electronics and other valuables with you at all times.
Look for other storage solutions near you
You can always search online for other storage options in your vicinity. For example, there may be electronic self-storage lockers in your area.
You can also check out Nannybag or Stasher, which offer a network of thousands of temporary luggage storage locations around the world. Expect to pay about $6 per bag per day, regardless of the size. And if you’re worried about leaving your stuff with strangers, your belongings are insured for up to about $1,266 (1,000 euros or British pounds).
Book a sightseeing tour
This workaround works better after checking out since you’re already at the destination, but you can book a sightseeing tour that involves a van or a coach and keep your luggage with you during the day trip. Most buses have storage spaces for transporting passengers, so this way you don’t have to worry about finding another storage facility.
This trick can also work before checking in to your accommodation, but we don’t recommend planning a big activity for the arrival day in case your flight is delayed or you’re too tired to enjoy it.
Spend the day being productive
If you can’t find a place that will store your luggage, find a café or a coworking space and spend the free time that you have catching up with emails or work before your flight home. You can even plan the next leg of your trip if you’re traveling long-term.
Although this is less exciting than exploring a destination, it helps pass the time when you’re waiting to check in to a hotel or for a flight. This option helps you be productive and keep an eye on your stuff.
Luggage storage at hotels recapped
Do hotels hold luggage? Yes, most will do so, even if you’re not a guest yet.
However, there are other ways to store your bags if you want to stretch your legs and walk around after a long flight or spend a little more time sightseeing before heading to the airport.
Since you’re likely to know your flight times in advance, you can make a plan for what to do with your luggage if a hotel can’t hold it for you.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
A credit card can serve as a fantastic financial tool and offer a number of perks, from the opportunity to build your credit to the chance to rake in lucrative rewards. However, using a credit card responsibly is key to reaping those benefits. Otherwise, a credit card is more likely to harm your financial well-being than help it.
Using a credit card responsibly involves sticking to basic rules like making on-time payments and avoiding practices such as spending more with your card than you can afford to pay off. By learning some tips for how to use a credit card responsibly, you’ll be well on your way toward making the most out of this financial tool.
How Do Credit Cards Work?
A credit card is a payment card that offers access to a revolving line of credit. You can tap into this credit line for a variety of purposes, including making purchases, completing balance transfers, and taking out a cash advance. Cardholders can borrow up to their credit limit, which is largely determined based on their creditworthiness and represents the maximum amount they can borrow.
It’s necessary to make at least a minimum payment by the due date each month in order to avoid a late fee. However, to avoid paying interest entirely, cardholders must pay off their balance in full each month; interest accrues on any balance that rolls over from month to month.
Many credit card companies charge compounding interest, which means that not only will you owe interest on any outstanding balance, you’ll also end up paying interest on the interest. That’s because this interest is calculated continually, then added to your balance, and it may be compounded daily. You may be shocked to see how much credit card interest you’ll pay if you only make the minimum payment each month.
Understanding Your Statement
A crucial component of knowing how credit cards work is understanding your monthly credit card statement. Your statement contains a number of important pieces of information about your credit card account, including:
• Your account information
• Your account summary, including your payment due date
• All purchases made with the card
• Your total credit card balance
• The minimum payment due
• When the credit card payment is due
• Your available credit
• Interest charges
• Rewards summary
Many of these details are key to know in order to ensure you’re using a credit card wisely. For instance, knowing your payment due date will ensure you make your payment on time, avoiding any late fees and a ding to your credit score.
Checking on your available credit can help you ensure you’re not using too much of your credit, which can drive up your credit utilization rate and subsequently drag down your score.
💡 Quick Tip: A SoFi Credit Card provides access to a line of credit. It’s essentially a short-term loan that you repay each month.
10 Tips For Using a Credit Card Responsibly
To make the most of your credit card, here are several credit card rules to keep in mind — as well as some guidance on what credit card behavior to avoid.
1. Avoid Making Too Many Impulse Purchases
To use a credit card responsibly, you want to avoid overspending with it. How many is “too many” purchases depends upon how much your impulse buys cost and how easily they fit into your budget. If you know you can pay off your credit card balances and otherwise meet your monthly expenses and savings and other financial goals, then that’s an entirely different situation from one in which your impulse purchases are too costly to promptly pay off and/or prevent you from meeting other financial responsibilities or goals.
If you enjoy making spontaneous buys, you may consider including this as a line item in your monthly budget and then sticking to it. This could add enjoyment to your life without causing financial problems down the road.
2. Use the Right Credit Card
There are a variety of different types of credit cards, and depending on how you plan to use your credit card, one option may make more sense than another. Some credit cards are there to help you build your credit, while others pay out generous rewards.
Selecting which card is right for you requires a look at your financial habits and current situation. For example, if you know that you often end up needing to carry a balance, then it may make sense to find a card that prioritizes low interest rates. Or, let’s say you’re a frequent vacationer — in that case, you might benefit from a travel rewards card.
3. Take Advantage of Benefits Offered
Interested in another way to use your credit card responsibly? Signing up for eligible rewards programs can help cardholders make the most of their card. Each type of credit card may have slightly different reward programs. See what the full range perks offered by your card are — and if you’re not sure, check the card’s website or ask the credit card company for specifics. For example, you might need help understanding what unlimited cash back really means in terms of how you might benefit.
Once you know what perks are available, you can use them strategically. You may discover that the card(s) you have don’t provide the best benefits for you. For example, maybe your card offers one of its highest rewards rates for gas purchases, but you don’t do much driving. In that case, you might be better served by a rewards card that offers a flat rewards rate or that prioritizes a category in which you’re a frequent spender.
Finally, if you’re earning rewards points, it’s also important to consider the best way to use them. Sometimes it’s possible to get a bigger bang for your buck if, say, you use your rewards points at an approved store rather than opting for cash back.
4. Sign Up for Automatic Payments
To avoid missing payments or making them late, consider signing up for automatic payments or autopay. By enrolling in autopay, you’ll regularly have money transferred from a linked account each month in order to cover the amount due (or at least the minimum payment required).
Another option is to sign up for automatic reminders about payment due dates (by text, for example, or by email). You can do this through the credit card company or via a calendar app.
What’s most important is coming up with a plan that works best for you to ensure you make your payments on time. Otherwise, you could face late fees and adverse effects to your credit score.
Recommended: Does Applying For a Credit Card Hurt Your Credit Score
5. Regularly Check Your Statements
Mistakes do happen on credit card statements and, unfortunately, fraudulent activities could impact your account. Check your statement every month to ensure that you made all the charges that appear, and that any payments you’ve made are accurately reflected.
If something is missing, review the statement dates to see if the transaction may have happened right after the statement cut-off date, for instance. If something seems off, contact your credit card company for clarification. In the case of any potentially fraudulent activity, it’s important to report credit card fraud to your credit card company immediately.
6. Pay More Than the Minimum
You’ve just read about how credit card interest works, so you’ll remember that only making the minimum payment doesn’t get you out of paying interest. To avoid credit card interest charges, you’ll need to pay off your monthly statement balance in full.
Understandably, this isn’t always possible, but even then, it still helps to pay as much above the minimum as you can afford to. This will at least cut down on the outstanding balance that accrues interest.
7. Don’t Close Out Old Cards
While it might seem logical to close out an older credit card you’re no longer using, you’ll want to think twice before you cancel a credit card. That’s because doing so can have adverse implications for your credit.
For starters, canceling a credit card will lower your credit utilization rate, which compares your total outstanding balance to your overall available credit limit. Closing out a card will cause you to lose that card’s credit limit, thus lowering the amount of credit you have available.
Closing an old card could also have an impact if the card in question is one of your older accounts. Another factor that contributes to your credit score is the age of your credit. By closing out an old account, you’ll lose that boost in age.
That being said, there are scenarios where it might make sense to close a card, such as if it charges a high annual fee. Just be mindful of the potential effects it will have on your credit before moving forward.
💡 Quick Tip: Aim to keep your credit utilization — the percentage of your total available credit that you’re using at any given time — below 30% (or lower). This could help you to maintain a strong credit score.
8. Maintain a Low Credit Utilization Rate
Another key tip for responsible credit card usage is to avoid maxing out your cards. Instead, aim to keep a lower credit utilization rate — ideally below 30%. The lower you can keep this utilization rate, the better it is for your credit score.
9. Avoid Unnecessary Fees
Another part of using a credit card responsibly is being aware of all of the fees you could face, and then taking steps to steer clear of those costs. Your credit card terms and conditions will spell out all of the fees associated with your card, as well as the card’s APR (or annual percentage rate) and the rules of its rewards program.
Many credit card fees are pretty easy to avoid. For instance, if you’ll incur a fee to send money with a credit card, simply avoid doing that and look for an alternative route. Similarly, you can avoid late payment fees by making on-time payments, and over-the-limit fees by not maxing out your credit card.
10. Avoid Applying for Too Many Cards
As you get into the swing of things with using your credit card, you may feel tempted to keep acquiring new cards, whether to keep on earning rewards or to capitalize on enticing welcome bonuses. But proceed with caution when it comes to applying for credit cards.
Applying for credit cards too frequently can raise a red flag for lenders, as it may suggest that you’re overextending yourself and desperate for funding. Plus, each time you submit an application for a credit card, this will trigger a hard inquiry, which can ding your credit score temporarily. Consider waiting at least six months between credit card applications.
The Takeaway
When used responsibly, credit cards can be helpful for a whole slew of things, from making online purchases to building your credit. The key phrase to keep in mind is “when used responsibly.” To stay on top of your credit cards, tips like signing up for automatic payments, making the most of the rewards programming, and using the right type of credit card for your needs are all important.
Looking for a new credit card? Consider a rewards card that can make your money work for you. With the SoFi Credit Card, you earn cash-back rewards on all eligible purchases. You can then use those rewards for travel or to invest, save, or pay down eligible SoFi debt.
The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1
Take advantage of this offer by applying for a SoFi credit card today.
1Members earn 2 rewards points for every dollar spent on eligible purchases. If you elect to redeem points for cash deposited into your SoFi Checking or Savings account, SoFi Money® account, or fractional shares in your SoFi Active Invest account, or as a payment to your SoFi Personal, Private Student, or Student Loan Refinance, your points will redeem at a rate of 1 cent per every point. If you elect to redeem points as a statement credit to your SoFi Credit Card account, your points will redeem at a rate of 0.5 cents per every point. For more details please visit SoFi.com/card/rewards. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
The state of the mortgage industry is rife with concern as elevated rates and low inventory have stunted both refinance and origination activity. As a result, the makeup of the mortgage ecosystem is shifting.
Private correspondent aggregators play an essential role in the upkeep of a balanced mortgage ecosystem. While this term may be unfamiliar to many, a private correspondent aggregator is a fancy title for an entity that purchases mortgages and repackages the loans into mortgage-backed securities.
When we think of aggregators, often the first entities that come to mind are the GSEs, Fannie Mae and Freddie Mac. However, private aggregators play an equally important part in the facilitation of a balanced market by providing small banks and independent originators with the infrastructure to securitize loans. These private entities not only oversee the eligibility for originators to deliver loans to the Enterprises, but they also serve as a technical resource when it comes to best pricing, underwriting and securitization practices.
Private aggregators provide a wide range of services, including an extra layer of risk mitigation. This has created an advantageous situation for the GSEs. However, recent pricing policies on behalf of the GSEs have illuminated that this relationship may not be as mutually beneficial as it once seemed.
Historically, the Federal Housing Finance Agency (FHFA) has been committed to pricing parity, which has ensured a level playing field for all lenders. The idea that all originators are entitled to a non-varying of loan fees promotes competition in customer service, quality, and efficiency amongst lenders, which benefits the borrower. Despite pricing parity’s vital role in ensuring a competitive market, the GSEs have strayed from this by engaging in activities that exacerbate disparate pricing in the correspondent channels.
We see this disparity most clearly through the pricing advantage Fannie Mae and Freddie Mac cash windows hold over private aggregators. While private aggregators enhance loan quality by essentially vetting a loan through a number of risk analysis practices, all loans that are sent directly through these cash windows secure more advantageous pricing.
The bias in Fannie Mae and Freddie Mac cash windows is contradictory to FHFA’s principle of price equity and promotes a deviation from risk-based pricing. Additionally, this practice has made the cash windows vulnerable to adverse selection, as many of the loans purchased through these windows have already declined in value in large part due to their lack of being properly reviewed.
The incentive to funnel loans directly through the cash windows benefits the Enterprises at the expense of private aggregators and consumers. Rather than evaluate and price loans based on their performance and value, Fannie Mae and Freddie Mac are promoting a system that rewards loans based purely on which channel they travel through.
Moving forward, it is imperative that FHFA addresses this problem in order to safeguard the viability of an equitable mortgage industry. The GSEs should be required to create a comprehensive Seller quality and performance ranking system under the thorough guidance of FHFA.
Such a system would motivate originators to enhance their loan quality, while also ensuring standardized compliance with regulatory requirements. Also, it’s important to promote policies that support aggregators. In a low origination market, there is a need for a strong group of aggregators that will compete for small and mid-sized IMB originators’ loans.
A small or midsized IMB will need to sell a percentage of their loan servicing release to generate the funds needed cover the negative cash flow of originating a mortgage. So, policymakers and regulators should support aggregators’ ability to meet the liquidity needs of small to mid-sized IMBs by having a competitive bid for their loans. Aggregators can only provide competitive pricing if there are treated fairly by the GSEs.
In any ecosystem, a disruption in one area has the potential to adversely impact the entire food chain. While the allowance of disparate pricing between correspondent channels may seem like a small problem in the grand scheme of the mortgage origination process, this inequity in pricing harms the health of independent originators and borrowers by reducing competition and incentivizing a lack of risk-mitigation.
The mortgage industry boasts the impressive reputation of being a highly competitive market because of important regulation that ensures a level playing field. Let’s keep it that way.
David Stevens has held various positions in real estate finance, including serving as senior vice president of single family at Freddie Mac, executive vice president at Wells Fargo Home Mortgage, assistant secretary of Housing and FHA Commissioner, and CEO of the Mortgage Bankers Association.
Ted Tozer is a non-resident fellow at the Urban Institute’s Housing Finance Policy Center (HFPC). He served as president of Ginnie Mae for seven years.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the authors of this story: Dave Stevens at [email protected]
Ted Tozer at [email protected]
To contact the editor responsible for this story: Sarah Wheeler at [email protected]
