Amazon finally narrowed the list of candidates to host its second headquarters down to 20 on Thursday.
The 20 finalists were picked from 238 cities from across the United States, Canada and Mexico to host what Amazon calls HQ2, a new facility that it expects to create 50,000 jobs. On top of that, the company estimates it will invest more than $5 billion in the city it ultimately chooses.
Amazon has been transparent about what it’s looking for in a potential headquarters — focusing on factors like the area’s proximity to airports, major highways and the city’s population center.
But which of the 20 cities is really going to offer those 50,000 employees the best quality of life?
MagnifyMoney researchers decided to do an analysis of the cities on Amazon’s HQ short list to determine which cities are the best to live in. We not only wanted to see which of these 20 cities offered a decent cost of living and relatively affordable housing, but also key quality of life factors like weather and the average commute time, and whether the housing stock has slack to support an influx of jobs.
The cities were rated on a scale of 100, based on these seven factors. Those rankings were summed and divided by seven for a highest possible score of 100 and a lowest possible score of zero.
Average commute time (in minutes)
Median monthly housing costs
Cost of living index (non-housing)
Temperate climate, as measured by the difference between the highest and lowest average temperatures across twelve months (a lower range ranked higher)
Marginal income tax rate for a single filer earning $100,000 in taxable income (state, federal and city)
Vacancy rate of rental homes
Vacancy rate of owner-occupied homes
“We trust that Amazon is doing a great job of evaluating (and negotiating) the core criteria and key preferences they deem essential to their business operations,” said study author Kali McFadden, an analyst at LendingTree, the parent company of MagnifyMoney. “We wanted to take a closer look at what each of these cities can offer their rank and file employees, both local and transferred.”
The best possible Amazon HQs: Pittsburgh and Raleigh
Let's start with the top three. MagnifyMoney gives Pittsburgh and Raleigh a tie for first place, both scoring 78 points.
Overall score: 78
Pittsburgh combines a low cost of living with a decent commute time of just 26 minutes. Bring a jacket. The weather is on the chilly side.
Monthly median housing cost: $791
Avg. commute time: 26 minutes
Climate: Between the hottest and coldest day, there was a difference of 46 degrees
Overall score: 78
Monthly median housing cost: $1,051
Avg. commute time: 26 minutes
Climate: Between the hottest and coldest day, there was a difference of 38 degrees.
Dallas came in at no. 3.
Overall score: 69
Monthly median housing cost: $1,096
Avg. commute time: 28 minutes
Climate: Between the hottest and coldest day, there was a difference of 39 degrees.
The worst of the top 20 contenders
New York City is the lowest-ranking finalist on the MagnifyMoney list, scoring poorly at 22. The Big Apple fell to the bottom of the pack for three key reasons: it has the highest living costs, highest marginal tax rates and longest commute time.
Northern Virginia and Montgomery County share the second-to-last place with a score of 29.
Interestingly, the current Amazon headquarters Seattle, only earned a score of 41 points, but we didn’t include it in the official rankings. Seattle would have been ranked in the 14th place if we had.
The data was gathered on the Metropolitan Statistical or Combined Statistical area for a city, except in the cases of Northern Virginia; Montgomery County, Md.; and Washington, D.C., as these finalists are, at least partly, part of the same statistical area.
County data was used for commute times and median monthly housing costs (county data was not available for the other factors). Similarly, county data was used for Newark, N.J., where available, because it is part of the New York City (another finalist) statistical area.
If you are comfortable enough to start saving, a common rule of thumb is to save 10% of each paycheck for retirement.
Catherine Hawley, a San Francisco-based financial planner, told MagnifyMoney that 10% may too low a bar for many workers, especially those whose incomes may fluctuate.
“[This rule] might be better thought of as a starting place one builds on,” Hawley said. “If you have a high income but anticipate switching careers or if that income is not stable, such as some sales jobs, your long-term savings rate may need to be closer to 50% to keep you on track for retirement.”
By saving more now, you’re allowing yourself a cushion of protection if you were to see a major reduction income.
Another reason the 10% rule isn’t so great is that some people simply can’t afford to go there just yet. In that case, it’s much better to start with 4% or 5% and work your way up than let this rule dissuade you from saving at all.
Instead: If you are earning a lot, don’t let the rule stop you from saving more. If you are early in your career, you don’t have to get up to 10% all at once. At the very least, contribute enough to your company-sponsored retirement plan to capture the full company match, if you are offered one. From there, consider increasing your contribution based on your other financial goals.
2. “Whatever you do, max out your 401(k).”
Financial planners can’t emphasize enough the importance of saving for retirement: The earlier you start saving and the more you contribute, the better. But maxing out your 401(k) isn’t necessarily a good idea for everyone.
The legal maximum amount you can save in your 401(k) is $18,500 in 2018 ($24,500 if you are 50 or over). If you were starting from scratch, you would have to tuck away more than $1,500 a month to max it out by the year’s end.
If you are a high-wage earner, it’s great if you can max it out without much effort. But if you make $50,000 a year, you would have to stash nearly 40% of your salary for retirement. Remember, this is money that, if contributed to a traditional 401(k), can’t be withdrawn until age 59 1/2 without incurring penalties (with some exceptions).
Planning for retirement from an early age is wonderful, but there may be other goals you want to achieve when you are young and need money in the near future. For example, you might want to prioritize paying off high-interest debts like credit cards or auto debt before throwing a good chunk of your paycheck into your retirement fund. And you should definitely save up at least a few months’ worth of income in your savings account so you have money set aside in case of emergencies.
It’s not wise to sacrifice your current life goals if maxing out your 401(k) is a tough task.
Instead: Although there are multiple benefits to saving for retirement, you may want to take a holistic view of your financial situation and review your near-term financial goals before deciding whether or not to max out your 401(k). Read our guidelines on things you should consider before hitting that maximum.
3. “Save at least three to six months’ worth of expenses.”
One common financial planner mantra is that you should have an emergency fund to cover three to six months of expenses.
Clearly, not many people can achieve that goal. The Federal Reserve reported that in 2016, 44% of Americans could not come up with $400 in cash to cover emergencies.
Depending on circumstances, some people probably can make do with a smaller cash reserve, but others may need a bigger one.
Hawley suggested for those who have consumer debt, they may be better off having a smaller emergency fund while prioritizing paying off one’s deficit.
A person who has an unstable income or several mouths to feed may find that three to six months’ worth of expenses may not be nearly enough. For example, if you’re a freelancer or a seasonal worker, you may want to double your savings goal so you can cover any dry spells.
“If you are very conservative or in a volatile industry where you periodically get laid off you may be more comfortable with more cash on hand,” Hawley added.
Instead: An emergency fund is an account you can use to cover necessary expenses in case you lose a job, your car breaks down or you get hit by an unexpected hospital bill. Your non-routine costs like a vacation or a kitchen renovation should not be part of the calculation. Don’t be afraid to go below or beyond the three-to-six-month rule considering your needs and debt situation. In general, the less steady your job is and the more dependents you have, the larger your emergency fund should be.
4. “Subtract your age from 100 to get your perfect investment allocation.”
One of the most basic rules for asset allocation is to subtract your age from 100 to calculate the percentage of your portfolio that you should keep in stocks.
Under this rule, at age 25, for instance, you should keep 75% of your portfolio in stocks and the rest in bonds and other relatively safer securities. At age 75, you invest 25% of your assets in stocks. The idea is to gradually reduce investment risk as you age, because older people don’t have as much time to wait for a market bounce-back following a dip.
Much research has been done about asset allocation adjustment for retirement. Experts have different conclusions based on different models. David Blanchett, head of retirement research for Morningstar Investment Management, concluded in an 2015 article that declining shares in equity as people grow older is best for retirement planning in an environment of low bond yields and decent market performance.
This 100-minus-age rule is a good place to get people started in allocating their investments, but it has its flaws.
Americans are living longer and retiring later. The average life expectancy was 79 in 2015, five years longer than 1980, according to the World Bank. Retirement savings strategies should be adjusted as people need a bigger nest egg, can potentially grow the money more and recover from a market downturn.
At the same time, the yield on a 10-year Treasury Bill is roughly 2.5%, down from a peak of nearly 16% in the 1980s. But the stock market keeps soaring — the Dow Jones Industrial Average shot up 24% last year and hit 26,000 for the first time the third week of January. It may not make as much sense today to dump a large portion of money into fixed income when you could potentially reap greater gains.
Instead: Rebalance your investment portfolio each year, considering your target retirement age, plans on using the funds at retirement, your risk tolerance and market performance. If you’re feeling more comfortable with risk, use 110 (or even 120) as a starting point to calculate your stock exposure.
Maria Bruno, senior investment analyst at the Vanguard Investment Group, told MagnifyMoney that stocks should be a significant part of a young worker’s portfolio — 80-100% in equity is very reasonable. For people in retirement, it’s better to be more conservative but still not too afraid to take some risks. A ratio of 60:40 stocks to bonds is considered a balanced allocation for them, Bruno said.
“Equities still do play a role for somebody at retirement because they could be looking at a 30- to 35-year time horizon,” Bruno said. “Individuals may think that they are playing it safe by staying out of the market, but actually what they are doing is they are overexposing themselves to inflation risk, because the portofolio can’t grow in real terms.”
5. “Withdraw 4% of your savings in retirement.”
Here is another retirement savings regimen: You start withdrawing 4% from your portfolio in your first year of retirement, increasing your withdrawal each year enough to cover inflation.
If you have $1 million in your retirement account, for instance, you take out $40,000 for the first year. If the annual inflation rate is 2%, then you withdraw $40,800 the following year ($40,000 plus 2%). And you continue on the path for the next 30 years. This rule was created based on historical data by financial advisor William Bengen in 1994.
But this is not how life works; it hardly goes as planned. Your spending in retirement may vary year by year. This rigid rule doesn’t take into consideration of your investment performance, your retirement time horizon nor the current market and economic conditions. It assumes retirees have a portfolio split between stocks and bonds. Bengen later revised the rule himself to 4.5%, using a more diversified portfolio.
Instead: Be flexible. Revise your spending rate annually based on needs, portfolio performance and taxes. If you have a personal financial advisor, discuss with your planner to determine the withdrawal rates that best suit your personal situation.
For early retirees or someone who’s invested much more conservatively and may have a smaller nest egg, they would probably need to withdraw a little under 4% to make sure their lifestyle remains sustainable, Bruno said. On the other end, she said someone with a shorter horizon — in other words, someone who doesn’t think they’ll have much time to enjoy their savings — or who’s late in retirement shouldn’t feel tied to that 4% rule; instead, they could stand to spend a little bit more.
6. “Spend no more than 30% of your income on housing.”
The 30% rule is a common budget benchmark for housing costs. The idea is to cap your rent or mortgage at under 30% of your monthly income.
This idea stems from housing regulations from the late ’60s. A U.S. Census Bureau study said the Brooke Amendment (1969) to the 1968 Housing and Urban Development Act established the rent threshold of 25% of family income in response to rising renting costs. The rent standard later rose to 30% in 1981, which has since remained unchanged, according to the study.
But the standard crafted almost four decades ago may not be realistic for many today. A Harvard University study shows that in 2015, nearly 21 million renters — that’s nearly half of the country’s renters — spent more than 30% of their income on housing across the country.
Instead: Think of affordability instead of the 30% rule. Depending on how much you earn, how much debt you bear and where you live, rent could be more or less than 30% of your paycheck. Hawley said she encourages people to work on earning more when rent eats away a huge chunk of income, which may be easier than relocating to reduce rent. If you live in a relatively affordable area compared with California or New York, housing doesn’t have to fill 30% of the budget, she said. In that case, you may have wiggle room to save more.
7. “Buy in bulk.”
Price per unit may be cheaper at club warehouses like Costco than a local grocery store, and buying in bulk saves money for tens of thousands of American families. But bulk-buying won’t necessarily save money if you buy more than what you can consume. Indeed, many shoppers confessed they have always bought more than they needed just because they couldn’t avoid the temptation of “super deals” at those clubs.
In addition, wholesale markets are not a paradise for every family. If it’s a family of two, the quantities of groceries you stocked up from a major trip to a wholesale market are so large that it may take weeks or even months to consume. You are basically paying upfront a lot more for saving money later. Worse yet, jumbo-sized products may go rotten or expire before you remember that they are even there.
A 2014 University of Arizona study found that families trying to buy all their groceries in one major trip, stocking up on discounted items and purchasing in bulk often buy things that end up unused.
Instead: Buy what you need and how much you need now.
8. “Borrow as much student debt as your expected salary.”
Many college students find themselves saddled with an enormous student loan debt today.
When determining how much students should borrow for higher education, a rule of thumb is that you should cap your total student loan debt below your expected first-year annual salary.
But wait a minute, private schools charge far more than public universities. In some industries, wage growth has been in Stagnantville for decades. Graduates may see big wage increases as their careers advance if they are in finance or law. But if they are government workers, their pay raises may not come as often and substantial.
In a MagnifyMoney survey of the 2017 graduate class, 40% of the 1,000 surveyed recent graduates with student loans anticipated that they’d need more than 10 years to repay their student loans.
Aside from the projected initial annual salary, many other factors, including time expected to repay the loan, the school you attend, the industry you may end up entering, should go into the borrowing calculation.
Instead: Figure out how much you actually need to borrow by evaluating the potential costs, including tuitions, fees and living expenses. Adjust your lifestyle and cut down unnecessary expenses. Remember, you want to borrow as little as possible. Finding a loan that works for your future lifestyle. Refinance student loans to a lower interest rate can help you save money.
9. “Pay off your mortgage before saving for retirement.”
You may be advised to pay off your mortgage as early as possible because debt is a liability. It may feel great to be completely debt-free, but slowly paying off your mortgage early isn’t always the best move, especially if you are not living in your home for the long run.
“If you can pay off the house you plan to stay in for five years or more after the debt is retired, great,” said Kristin C. Sullivan, a Denver, Co.-based financial planner. “If not, keep that money for yourself and invest more in your 401(k) or other assets that have the possibility for growth.”
Homeowners who purchased their homes after Dec. 15, 2017 can deduct mortgage interest paid on up to $750,000 in mortgage debt from their taxes under the new tax law. For those living in expensive housing markets who will itemize their taxes, that’s all the more reason to invest that money elsewhere.
Instead: Before adding extra monthly mortgage payment, you should pay off other high-interest debt first, such as credit card balance. Prioritize your financial goals, for example, ask yourself whether paying off the mortgage or investing for retirement is more important for you, or if you want to save for your children’s education. If you can enjoy the tax benefits or plan to move in the next five years, that money can be well used in other ways.
10. “Credit cards are bad.”
Many people shy away from credit cards, being fearful that they will spend money they don't have and later be trapped in debt over their heads. Those people are more likely to rely on debit cards or cash.
But credit cards are not that bad at all if they are used wisely. A cardholder will stay out of trouble if he/she can pay off the balance on time and in full to avoid a high-interest charge.
By steering clear of credit cards, consumers not only miss the opportunity to build credit, but lose rewards, which can come in forms of travel points or cash, that credit card companies give to incentivize cardholders to spend.
Instead: Stick to your budget and spend within your means. Focus on your card balance — not your credit limit. Set auto payment to pay off your credit debt in full, not just the minimum balance, every month. Check our latest review of best credit card offers and how to choose a card that suits your needs.
Maybe this is the year you finally want to save enough money to go to Paris with your significant other. Perhaps you just had children, and thoughts are looming about saving for their future college education. Or maybe you’ve simply decided that you’d like to have enough money to live lavishly once retirement comes.
Whatever the case may be, there are tangible steps you can take to boost your income and improve your overall net worth this year.
The first step is simply calculating your net worth. Understanding your net worth is arguably one of the most important ways to get a clear picture of where you stand financially after hypothetically ridding yourself of liabilities with your assets.
And it’s simple to calculate: “Subtract what you owe from what you own,” said Tiffany Aliche, a financial educator and founder of the Live Richer Challenge. This January, Aliche, also known as the “Budgetnista,” sponsored a multi-week challenge with hundreds of thousands of participants to educate them on the power of boosting their net worth.
Once you know your net worth and determine whether that figure puts you in the red, the next step is a bit more challenging: finding ways to increase it over time.
Get started with these tips to boost your net worth with any or all of the strategies below.
Ask for that raise. This is the initial move to take toward increasing your annual earnings. “Start by establishing where you are,” said Stefanie O’Connell, author of “The Broke and Beautiful Life.”
“Do your research to figure out what the current pay range is for your position by talking to recruiters, speaking to friends and colleagues in similar positions, or by using a website with salary information like Glassdoor or PayScale,” she said.
Consider the cost of living in your city when you negotiate, too. An accountant in Charlotte, N.C. might be paid much differently than an accountant in San Francisco, where costs are much higher, for example.
“Establish where you want to go,” O’Connell said. “What are the going rates in your field, and where do you fall in that pay range? Given your competency and the value you add to your workplace, where do you think you should fall within that pay range?”
If no raise is possible, ask for something else in its place. In you’re denied a raise, don’t be afraid to ask for something else, suggests O’Connell. For example, you could ask for equity in your company if it’s available to employees. Once that equity is vested (meaning, it’s totally available to you to use), you can leverage it in a number of ways and potentially grow it over time if invested properly. That will no doubt boost your net worth.
Other soft perks to consider include a more flexible schedule, more paid time off, access to educational programs, an expense account, a club membership, a bigger office or a new job title.
These may not have a concrete impact on your financial bottom line, but they could definitely add value to your quality of life and make you a more productive worker.
Turn your hobby into a real business. During Aliche’s Live Richer Challenge online workshop, she encouraged people to look into starting a side business to bring in additional income.
“I had people create a mind map of what they’re good at, what they’re passionate about, and [had them] ask their family and friends: Looking at this, what do you think I could start or open?” Aliche said. “Something that’s going to increase your income so you can increase how much money you have saved.”
Thanks to the gig economy, options for side hustles are endless. If none of the obvious outlets appeal to you (Uber, Favor, Amazon Flex) don’t worry. From designing T-shirts and selling them on Etsy to being a remote personal assistant, there are myriad side gig options out there.
“I suggest people do side hustles that are related to what they went to school for or what they’re currently doing,” Aliche said. “When I was a schoolteacher, I side hustled by tutoring and babysitting. You get paid more because you’re already doing it, and there’s no learning curve.”
Look for unexpected income sources. If your skills have lead to additional side income, look for ways to lock in lucrative business contracts.
Aliche says it snowed in her city recently, and she discovered the city had a contract for $210,000 for snow cleanup. You didn’t need a snow plow or even experience to secure the contract. All you needed was a license to drive the vehicle.
In addition, her city’s zoo had a $25,000 face-painting budget, and her friend secured the contract because she was the only one who applied. “You have the ability to lock down good money for doing something you’re already doing,” Aliche said. You need an LLC to secure a contract, but they’re typically only around $125, according to Aliche.
Put your tax refund to work. “Most taxpayers who use the standard deduction will get a tax cut this year,” said Jane Bryant Quinn, author of “How to Make Your Money Last: The Indispensable Retirement Guide.”
“Instead of changing your withholding schedule, consider leaving it alone and collecting the tax cut as a refund in 2019, and save the refund.”
Figure out your hourly rate. You can figure out exactly what your time is worth using this Norwegian website by FINN.no AS, an online classified advertising marketplace. This tool is good not only for figuring out what you should charge for freelance or contract work, but also for determining which things you should do, and which you should outsource.
For example, it might be worth your time to hire someone to clean your apartment once a week, or you might find it’s easier to do your taxes yourself rather than hiring an accountant.
Invest wisely in your 401(k). If you’ve already invested a significant amount in your 401(k) and you’re younger, Quinn suggests taking more risks. “If you’re under 40, don’t be afraid of investing 100 percent of your 401(k) or other savings into stock-owning mutual funds,” she said. The stock market will fall from time to time, but it tends to rebound in time, and you may be better off riding the rough patches if you’re investing for long-term growth.
Start an Individual Retirement Account (IRA). If you don’t have a company 401(k), or you’ve maxed out your contribution for the year, don’t worry. “Start an IRA at a low-fee purveyor of mutual funds such as the Vanguard Group or Schwab,” Quinn said. “Buy an index fund that follows the U.S. market as a whole or the total U.S. and global markets as a whole.”
Look into automatic advising companies like Acorns. If you’re interested in investing but aren’t sure where to start, Aliche suggests dipping your toes into robo-advising, or services like Acorns, Betterment and Wealthfront. “A lot of people don’t know where to begin investing, and that’s truly the only way to grow wealth,” Aliche said. “You have to invest.”
Delay receiving Social Security. “For older people, delaying Social Security collection for even six months can have a big impact on lifetime net worth,” said Teresa Ghilarducci, professor of economics at the New School for Social Research in New York City and author of “How to Retire with Enough Money.” For example, if you delay until age 67, you’ll receive 108% of the monthly benefit and if you delay until age 70, you’ll get 132% of the monthly benefit.
Keep a record of your expenses. This might seem basic, but if you’re not doing it yet, you should be. “Keep a record of expenses and review every month,” said Ghilarducci. “This one low-energy, low-cost habit can help people identify where they are being overcharged and where they spend money without much pleasure.”
Attack your debt head-on. One half of the equation when it comes to increasing net worth is paying off debt. Aliche suggests an automated plan, like Dave Ramsey’s well-known debt-snowball method, in which you pay off debts from smallest to largest.
Ghilarducci also emphasizes the importance of paying off debt, especially high-interest debt like credit cards. “If people can pay off all their debts, they earn a guaranteed rate of interest far above what they can earn risk-free in the stock market or anywhere else,” she says.
That being said, you should also try to keep saving as you pay down your debts. If you don’t have an emergency fund set up for the unexpected expenses, you might find yourself only digging deeper into debt.
Also, consider how much that debt is costing you versus how much you could gain by saving. It might make sense to throw every last penny at that 22% APR credit card. But it might make less sense to forfeit your 401(k) savings in favor of paying off a low-interest mortgage or auto loan more quickly.
Maintain good health. “An overlooked way of saving money is not getting sick,” Ghilarducci said. “Everyone over 20 should pretend they have diabetes and eat a diabetic diet. It’s good insurance against the rising cost of health care, insurance premiums and copays.”
In a less dramatic fashion, you could simply strive to stay on top of your health and preventative treatments that could stave off illness down the road. Maintain your annual checkups and don’t let minor health issues spiral out of control.
Find ways to trim expenses. Whether you grab takeout way too many nights a week or have a penchant for Whole Foods, groceries and eating out are a perfect area to cut back. Try shopping at a cheaper grocery store, or making a goal to cook four nights a week. You might even try becoming a vegetarian, temporarily. “Vegetarianism has lots of pluses – it’s cheaper and healthier,” Ghilarducci said. “A good diet is a good way to raise your lifetime net worth.”
Sell unused items in a Facebook Buy/Sell/Trade group. Groups for selling anything and everything abound on Facebook. If you’re addicted to shopping at Anthropologie or love rare Nikes, there’s a group for you. Some extremely popular groups—such as Lululemon Buy, Sell and Trade — have over 50,000 members.
Peer-to-peer lending is a modern name for a practice as old as money itself — individuals loaning money among themselves. What’s modern is the scale afforded by technology. Ten years ago, an individual needing a loan to start a business, consolidate debt, or cover unexpected home improvements would have been limited to borrowing from his or her immediate friends, family, and acquaintances outside of a traditional bank loan. Today, online peer-to-peer (P2P) lending platforms connect individuals who need to borrow money with investors willing to lend. Technology now allows perfect strangers to borrow from and lend to each other.
For many people, borrowing from peers can be a great alternative to borrowing from a bank, but it’s not for everyone. We’ll take a look at how peer-to-peer lending works and what you need to know before you apply.
The Small Business Administration (SBA) defines P2P lending as, “Individual investors providing small sums to lend personal loans to individuals via internet platforms.” Some of the most popular platforms include LendingClub, Prosper, Upstart and Funding Circle, although there are several others.
Potential borrowers can apply for credit on the platform, and borrower qualifications vary by lender. For example, the interest rate a LendingClub borrower receives depends on an internal score developed by the company, which is one of the largest P2P lenders. “They will give you a grade between A (the best grade, qualifying for the highest amount at the lowest rates) and G (the lowest grade with the highest interest rate),” a LendingClub spokesperson told MagnifyMoney.
LendingClub currently caps its personal loans at $40,000. Prosper caps its loans at $35,000. Typical loan terms range between three and five years.
Who invests in P2P loans
P2P loans may be funded by an individual investor or a group of investors. According to MarketWatch, P2P loans can be a good way to diversify the portfolio of income investors who take time to understand the risks and rewards. Income investing generates a cash income in the form of dividends and interest. In other words, investors don’t buy a stock, bond, or other investment and wait for it to appreciate in value so they can sell it and earn a profit. Simply holding on to the investment generates income.
P2P loans are an income investment because once an investor opens an account and chooses to participate in a loan, principal and interest payments (less fees charged by the platform) are deposited into the investor’s account on a monthly basis.
The investors may be individuals or institutions, such as banks, pension plans, foundations, finance companies, asset managers, insurance companies, broker-dealers, and hedge funds. Individual investors can open an account with Lending Club with an initial investment of $1,000, but other platforms are available only to institutions and accredited investors (those who can demonstrate high-earned income and net worth).
Connor Murphy, a public relations and communications specialist with Funding Circle, says their platform in the U.S. is only open to accredited investors and institutional investors. “We actually use the term ‘marketplace lending’ rather than peer-to-peer lending,” Murphy said, “because investors on our platform globally include large financial institutions and even governments.”
Whether the investor is an individual with $1,000 or an institution looking to invest $250,000, they select loans to invest in and earn monthly returns on. According to Sarah Cain, head of communications at Prosper, borrowers do not know their lenders. “They simply know if their loan has been funded or not,” Cain said.
Why P2P loans?
P2P lending platforms started gaining traction more than a decade ago as a way to bypass banks and use technology to connect investors with money to the borrowers that need it. P2P lenders have claimed their online platforms help them reduce costs, and that, in conjunction with analytics and proprietary algorithms, allow them to offer borrowers lower interest rates or provide loans to individuals who have been refused loans by traditional banks.
LendingClub currently advertises APRs for personal loans from 5.99 percent to 35.89 percent. The company surveyed borrowers during the first seven months of 2017 and found that borrowers who received a loan to consolidate existing debt or pay off credit card balances reported that they saved an average of $287 per month. However, that statistic compares high-interest credit card rates with personal loan rates – not P2P personal loan rates to bank personal loan rates.
As of August 2017, the average APR on credit cards carrying a balance was 14.89 percent, but banks may offer much lower rates for personal loans. Of course, whether you choose a P2P loan or a bank loan, having a high credit score can help you get the lowest rate offers, while a lower credit score will likely stick you with higher interest rates, if you are approved for a loan at all.
Some borrowers just prefer the idea of avoiding large, traditional banks. But as with any borrowing decision, you should compare apples to apples when seeking financing for any purpose and shop around for the best rate.
Applying for a peer-to-peer loan
To apply for a loan, a potential borrower visits a P2P lending website and fills out an application.
The platform leverages online data and technology to assess risk, determine a credit rating and assign an appropriate interest rate. Applicants may receive offers within a few minutes and can evaluate options without impacting their credit score. Once you select a loan offer, you’re required to complete an online application that gathers information about your income and employment as well as identifying information, such as address and Social Security Number.
You may also be required to provide additional documentation to verify your identity, income, and employment. That may include:
Tax forms such as W-2s and 1099s
IRS Form 4506-T, which is used to request a copy of your tax forms or returns directly from the IRS
Recent bank statements or pay stubs
Proof of income from alimony or child support, pension or annuity income, disability insurance or workers compensation benefits, if applicable
Copies of government-issued photo ID
Once you’ve completed the application and submitted the necessary documents, your application is reviewed and the platform matches you with investors to fund the loan. Once the loan is approved, the funds are deposited into your bank account. The process can take anywhere from seven to 45 days.
Each P2P site has its own rules and approval criteria, including minimum credit score, so an application declined by one platform doesn’t necessarily mean that you won’t be approved by the others.
The Financial Industry Regulatory Agency (FINRA) reported that P2P lenders tend to be more forgiving than banks when it comes to short credit histories, but if you’re trying to get a P2P loan with less than stellar credit, don’t expect the lowest rates.
Lending Club states that applicants who qualify for the lowest rates have:
An excellent credit score
A low percentage of total outstanding debt compared with income
A long history of credit with significant successful credit lines
While the approval process isn’t without its hurdles, peer-to-peer loans give borrowers another — sometimes less expensive — option for borrowing beyond credit cards and bank loans. Because P2P lenders facilitate borrowing without a bank intermediary, there is less overhead and none of the capital reserve requirements that drive up costs for traditional banks. As a result, the cost of originating and funding loans is lower, providing more competitive rates to borrowers and a faster approval process.
Plus, some borrowers just like the idea of borrowing outside of the traditional banking industry. Cain says although the process is online, P2P lending is not simply a different way of dealing with a faceless lender. “We do have a robust customer service team that is available to help,” Cain said.
What if your loan isn’t funded?
If your loan application is denied, you will receive an adverse action notice that provides the specific reason for the denial.
Cain says it’s hard to say exactly why a loan application would be denied, as every person’s credit profile is unique. However, some common reasons credit applications may be denied even though the borrower has a good credit score include:
Problems verifying employment. A stable job and stable income indicate that you’ll be able to pay your lender back. If the lender has trouble verifying your employment history, they may decline your application.
Not enough income. If you don’t have enough income in relation to your existing debt obligations to pay back the loan, most lenders will deny credit.
Bankruptcy. Lenders are often wary of approving a loan after you’ve declared bankruptcy. A bankruptcy may remain on your credit report for up to seven or 10 years, depending on the type filed.
Credit card utilization. If you are using a large percentage of your available credit, you may be seen as a potential risk to lenders.
If your loan application is denied, check your credit report to make sure that there are no inaccuracies that are dragging down your credit score. You can check your credit report with each of the three credit reporting agencies for free once a year at annualcreditreport.com.
Also, review your loan application to ensure you filled it out completely and accurately. If you find any errors in your credit report or application, correct them and apply again. Otherwise, take a look at the adverse action notice and see what you can do to improve your situation.
Reduce the amount you owe. Stop using credit cards and make a plan to pay down existing balances.
Pay your bills on time. Payment history accounts for as much as 35 percent of your FICO score, so set up payment reminders to avoid missed or delinquent payments.
Avoid closing unused cards. Part of your credit score depends on the average length of time you’ve been using credit, so closing old accounts can actually hurt your score.
Don’t open new accounts too rapidly. A large number of new accounts in a short time frame can make you look risky to lenders, so apply for and open new accounts only as needed.
Each platform has their own lending criteria, loan limits, fees, interest rates, and areas of operation. Take a look at the FAQs and other information on the provider’s website to get an overview of the types of loans they offer, and the rates and fees they charge.
Here are a few to get started:
Who it’s best for:
3 and 5 years
Borrowers who may not have an
excellent FICO score (or any score
at all) but are good loan candidates
based on other factors such as
education and job history
3 and 5 years
Borrowers interested in a personal
loan to consolidate credit card debt,
fund home improvements, vehicle
purchases or other life events,
or start, or expand a small business
3 and 5 years
Borrowers interested in a personal
loan for consolidating high-interest
debt, funding home improvements,
or paying for unexpected expenses
6 months to 5 years
Borrowers looking for funding to start
or expand their business
Keep in mind that interest rates and other terms can change, so you should compare rates and other terms from a variety of lenders every time you need to borrow.
The P2P lending market is only a little over a decade old, thus P2P platforms have not had the long history of government oversight to which banks and credit unions have been subjected.
And there is reason to be cautious about getting involved in P2P lending. In 2016, the Department of the Treasury released a report, Opportunities and Challenges in Online Marketplace Lending, looking at the opportunities and risks of P2P lending. Their concerns included:
The use of data-driven algorithms for making credit decisions has the potential to violate fair lending laws and doesn’t allow applicants to check and correct the data being used.
Interest rates may be high. The report acknowledged that the majority of loans are made to borrowers with good credit scores, but some platforms offer loans to borrowers with poor credit (FICO scores as low as 580) at interest rates as high as 36 percent.
Borrowers using P2P lending to refinance federal student loans lose the protections available to federal student loan borrowers, including income-driven repayment plans, loan forgiveness, and deferral or forbearance while the borrower returns to school or faces economic hardship or disability.
Many borrowers use P2P loans to fund small business development, but it may be difficult to enforce consumer protection laws and regulations, contract law, or fair lending laws with P2P platforms since these platforms are not subject to the same oversight as traditional banks.
While many marketplace lenders clearly disclose loan rates and terms, not all platforms are as transparent. The report acknowledged a need for standardized disclosures.
Most P2P platforms service loans only until a loan becomes delinquent, at which point collection is outsourced to a collection agency. Not all platforms have plans in place to work with borrowers who are experiencing financial distress or plans to continue servicing loans if the company goes out of business.
However, they are required to follow the same state and federal laws as other lenders. If you encounter any problems with a P2P lender, you should submit a complaint to the Consumer Financial Protection Bureau.
The CFPB began accepting complains about P2P lenders in March of 2016. We reviewed the complaints database in December of 2017 and counted more than 300 complaints about some of the largest P2P lenders. Consumers who submit complaints assign categories themselves and can opt not to have their complaint narrative published, so it’s difficult to parse the top complaints, but they include:
Having difficulty getting the loan
Problems making payments
Problems with the payoff process
Being charged interest or fees that aren’t expected
Inaccurate information reported to the credit bureau
These problems aren’t unique to P2P lenders, given that borrowers from traditional banks can face similar frustrations. Still, it’s important to know what other borrowers have experienced if you’re thinking of pursuing a P2P loan.
Lending Club and Prosper are the most popular platforms, but experts expect the industry to grow, so it’s worth expanding any comparison shopping beyond the biggest players. Just do your research before providing your personal information.
Search for the lender online. Is the platform mentioned in roundups of the best P2P platforms from reputable financial websites? Do your search results include consumer complaints?
Make sure the platform takes steps to protect your personal data. They should have security and privacy certification from a company like TRUSTe or Symantec.
Alternatives to a P2P loan
It makes sense for anyone interested in a P2P loan to also compare alternatives before committing to a loan:
Friends and family
Peer-to-peer lending can be a less expensive alternative to high-interest credit cards and easier to get than a bank loan. But, like all borrowing decisions, it needs to be carefully considered for your individual financial circumstances. The bottom line is that P2P is another option, and more options and increased competition are always good for borrowers.
While nurses may carry a large burden in terms of patient care, they typically receive good pay, solid workplace perks and plenty of job security in return. Afterall, job openings for registered nurses are expected to increase 15% from 2016 to 2026, according to the U.S. Bureau of Labor Statistics — at a time when the average growth for all jobs is projected to be just 7%. Further, registered nurses reported median wages of $68,450 nationwide in 2016, with the top 10% of nurses earning $102,990.
On the downside, the costs of earning a nursing degree can be overwhelming.
An October 2017 report from the American Association of Colleges of Nursing even noted that 69% of nursing graduate students surveyed took out federal loans to finance their education, and the median amount of debt brought on by graduate school was anticipated to be $40,000 to $54,999 for these students.
If you’re considering a nursing degree or a graduate nursing degree, it’s easy to see why these numbers would be disconcerting. The good news is there are a wide range of forgiveness programs available for nurses on both the state and federal levels.
If you’re struggling with expensive nursing school loans or fear you will be, it may help to become familiar with these programs and how to qualify.
Federal student loan forgiveness for nurses
National Health Service Corps Repayment Program
The National Health Service Corps Repayment Program offers up to $50,000 in student loan repayment in exchange for a two-year commitment at a NHSC-approved work site. Accepted sites may be in primary care medical, dental or mental and behavioral health clinics in high-need areas of the country.
According to the program website, priority consideration is given to eligible applicants whose approved work site has an HPSA (Health Professional Shortage Area) score of 26 to 14, in descending order. In other words, student loan forgiveness goes to those who work in the highest-need facilities first. You can look for eligible job sites in your area on this page.
Are you eligible?
If you’re a licensed health care provider who is willing to work or even relocate to an area with a shortage of qualified health care providers for at least two years, you are eligible to apply for this program.
The application process
While the 2017 application cycle is closed, the next application cycle will open in early 2018. To apply, you’ll need to submit a complete application that includes documentation of your loans and proof of qualified employment. You can find a full application checklist on the NHSC website.
Is this program right for you?
This program could be ideal for you if you’re flexible in terms of where you work for the next two years and you have up to $50,000 in student loans to repay.
NURSE Corps Loan Repayment Program
This federal program aims to help registered nurses, advanced practice registered nurses and nurse faculty by paying off up to 85% of their student loan debt in exchange for a 2- to 3-year commitment in a critical shortage position or facility. This program is available to nurses in the three mentioned professions who graduated from an accredited nursing school and work full time in either an eligible critical shortage facility or an accredited school of nursing.
Are you eligible?
To be eligible for this program, you must work as a registered nurse, advanced practice nurse or as nurse faculty and be a U.S. citizen. You need a bachelor’s degree or associate degree in nursing from an accredited school, and you must work full time (at least 32 hours per week) in an approved critical shortage facility (CSF) or accredited school. You must also have outstanding loans related to your nursing degree.
The application process
The 2018 application cycle hasn’t opened yet, although you can sign up to be notified when it does. NURSE Corps suggests reading the Application and Program Guidance document ahead of time so you fully understand the commitment. This document also offers a list of critical shortage facilities and facility types that would qualify for this program.
Is this program right for you?
This program is ideal for nurses who are willing to commit to working in a critical shortage position for at least two years.
Federal Perkins Loan Cancellation for Nurses
If you have Federal Perkins loans and work full time in the nursing profession, you may be able to have up to 100 percent of your student loans wiped away with the Federal Perkins Loan Cancellation program.
Nurses need to be registered and employed full-time to qualify. They also need to be willing to make a five-year commitment to the program. However, since the Perkins Loan program expired on September 30th, 2017, you must have borrowed money for nursing education before that date to qualify.
Are you eligible?
Nurses with Federal Perkins loans who are willing to make a five-year commitment to the program may have up to 100% of their loans forgiven. Unfortunately, you must have borrowed before September 30, 2017 to qualify.
The application process
According to the U.S. Department of Education, you must apply for Federal Perkins loan forgiveness with the school who made your loan or with the school’s Perkins Loan servicer. Your school or servicer will provide forms and instructions on how to move forward with the process, they note.
Is this program right for you?
This program is ideal for nurses who graduated with Perkins Loans before September 30, 2017. Unfortunately, it won’t be of any help to future generations of nurses – at least for the time being.
Programs for nurses by state
While the federal government supports several national programs that can help nurses shed their expensive student loan debt, some states offer their own programs as well. These programs vary in length and commitment, but most require at least a few years of work in a critical shortage area of nursing in exchange for forgiveness.
The following chart highlights the current programs available, what they offer and who is eligible:
Alabama residents enrolled full time in accredited nursing education programs and pursuing graduate degrees to become certified registered nurse practitioners (CRNPs), certified nurse midwives (CNMs), or certified registered nurse anesthetists (CRNAs) are eligible to receive $12,000 in loan repayment. Graduates must be an Alabama resident for at least one year before they apply.
Through Alaska’s SHARP (Support-for-Service to Healthcare Practitioners) Program, nurses can receive up to $27,000 per year in loan assistance in exchange for a work commitment in an eligible critical shortage area.
The Arizona Loan Repayment Program offers loan assistance for health care professionals working in areas of critical shortage. Available to nurse practitioners who work half-time or full time for at least two years, this program offers up to $50,000 in repayment assistance for each year of service in a qualified position.
Registered nurses in California who hold a bachelor’s degree may qualify for this program if they have outstanding student loan debt and agree to serve in a medical shortage area, a prison, or a veteran’s facility. Up to $10,000 is awarded for one year of service.
Colorado nurse practitioners, nurse midwives, and psychiatric nurse specialists may receive up to $25,000 for part-time work and $50,000 for full-time work in exchange for a three-year commitment in a Colorado Health Professional Shortage Area.
Connecticut registered nurses and nursing students may be eligible to have up to 60% of their student loans forgiven in exchange for a two-year, full-time commitment at an eligible Department of Mental Health and Addiction Services Facility. A third year of commitment may result in an additional 25 percent of loan forgiveness.
Delaware nurse practitioners, nurse midwives, and psychiatric nurse specialists who work full time in a designated critical shortage area may receive between $30,000 and $100,000 in loan repayment assistance in exchange for a two-year commitment.
Florida licensed practical nurses, registered nurses and advanced practice registered nurses who work full time in a designated critical shortage site may receive up to $4,000 per year in loan forgiveness for up to four years.
This program, which is available to advanced practice registered nurses in the state of Georgia, offers up to $10,000 per year in loan cancellation in exchange for full-time work in a rural Georgia county.
Nurse practitioners and certified nurse midwives licensed to work in Hawaii are eligible for loan forgiveness after committing to at least two years of full-time work in a healthcare shortage area in the state. Award amounts vary based on grants available.
Licensed nurse educators in the state of Illinois may be awarded up to $5,000 in loan forgiveness for up to four years provided they work as a nurse educator and meet the licensing requirements of the Illinois Department of Financial and Professional Regulation.
Registered nurses and nurse educators who owe a balance on their student loans and have loans in good standing may earn up to $6,858 per year in loan forgiveness for no more than five consecutive years.
Certified nurse practitioners may qualify for up to $20,000 per year in assistance for two years and $5,000 - $15,000 per year in assistance for the next three consecutive years. Full-time work in a designated healthcare shortage facility is required for each year of forgiveness.
Kentucky nurse practitioners, certified nurse midwives and registered nurses can receive $20,000 - $40,000 in loan repayment assistance depending on their designation. A two-year commitment in a critical shortage area in the state of Kentucky is required.
Certified nurse practitioners and certified nurse midwives can qualify for up to $15,000 per year in loan repayment assistance for up to three years. A full-time commitment in a designated healthcare shortage area is required.
Nurses who provide public service in Maryland or local government or nonprofit agencies in Maryland can receive between $1,500 and $10,000 per year in loan assistance depending on their total debt. A full-time commitment in an underserved facility in the state is required.
Nurse practitioners who work full time in a not-for-profit facility with a critical shortage of qualified caregivers may receive up to $200,000 in loan repayment assistance with a commitment of up to eight years.
Nurse practitioners, primary care registered nurses, certified nurse midwives, and a variety of other healthcare professionals can receive up to $15,000 per year in loan repayment for up to two years in exchange for full-time work in an NHSC-approved site.
Primary care nurse practitioners, certified nurse midwives, and psychiatric nurse specialists can receive $45,000 in loan repayment assistance in exchange for a three-year commitment in a critical shortage facility. Candidates who want to extend the program up to another two years may also receive another $20,000 in assistance.
Certified nurse practitioners and certified nurse midwives can receive up to $120,000 in loan repayment assistance over a four-year period of service in an underserved facility with a critical shortage of healthcare providers.
Registered nurses or advanced practice nurses with graduate degrees who teach nursing in the state of New York can receive up to $8,000 per year in loan forgiveness for up to five years through this program.
This program was created to incentivize Ohio students in accredited nursing programs to continue their studies. Awards of up to $1,500 per year are offered and students need to be enrolled in programs with at least half-time study to qualify.
Registered nurses and primary care nurse practitioners can qualify for loan repayment assistance in exchange for a two-year commitment in a health care shortage area. Awards vary based on the shortage level of the facility of employment and funds available.
Rhode Island nurse practitioners and registered nurses can receive loan repayment assistance in exchange for a two-year or four-year commitment in a high-need or critical shortage area. Loan amounts vary.
Nurse practitioners, nurse midwives and registered nurses working in designated shortage facilities in Virginia can receive up to $140,000 (not to exceed their total loan balances) for a minimum four-year commitment.
Nurse practitioners and nurse midwives who agree to a two-year commitment in a facility with a healthcare shortage can receive $40,000 in loan repayment. An additional $25,000 per year in assistance is available for an additional two years of work.
Nurse practitioners and certified nurse midwives can receive up to $50,000 in loan repayment assistance through this program. Eligible providers must work at least three years in a qualified high need facility to qualify.
Alternatives to student loan forgiveness for nurses
If federal or state nurse loan forgiveness isn’t suitable for your situation for any reason, there are several alternative ways to get your student loans reduced or forgiven. Here are some of the main options to consider:
Hospital tuition reimbursement
Some hospitals offer tuition reimbursement to working nurses and nursing students who work in their hospital or hospital system. While some of these programs offer tuition assistance as an ongoing perk for existing employees, others offer loan repayment as an incentive to earn an advanced nursing degree.
The UNC Medical Center in Chapel Hill, N.C., for example, offers tuition assistance for permanent working nurses who dedicate at least 20 hours per week to working at one of their facilities. With this program, hospital employees can attend nursing school or nursing graduate school and receive $316.99 per undergraduate credit hour or $589.62 per graduate credit hour. Limits per class are set at $1,870.24 for undergraduate courses and $3,478.76 for graduate-level courses, at a maximum of 20 credit hours per fiscal year.
Duke University Hospital in Durham, N.C., is another institution that offers tuition reimbursement for nurses. This program promises up to 90% tuition reimbursement for nurses who pursue a master’s degree, post-master’s degree certificate or doctorate of nursing practice degree. Nurses must work for the Duke University Hospital system full time (at least 30 hours per week) with a positive record to qualify.
If you’re interested in pursuing tuition assistance, check hospitals in your area to see which ones, if any, offer this type of program.
Student loan refinancing
Another way to reduce the ongoing costs of excessive student debt is to refinance your student loans with a private lender who may offer a lower interest rate or better loan terms. This strategy won’t make your loans go away altogether, but it may help you save on short-term and long-term interest costs or lower your monthly payment.
While this strategy can be advantageous, keep in mind that it doesn’t always make sense to refinance your student loans. If another lender won’t grant you a lower interest rate or lower your payment, for example, it may be hard to justify the hassle or expense of refinancing.
Not only that, but refinancing federal loans with a private lender can result in losing access to important federal benefits like deferment, forbearance and income-driven repayment plans.
Before you refinance your student loans, make sure to use a student loan refinancing calculator to see how much you might save. Only then can you decide if it would be worth it.
Income-driven repayment options
Income-driven repayment plans allow nurses with federal loans to pay only a percentage of their income toward their loans for 20-25 years. These programs can be especially advantageous for nurses with large debt loads and low incomes since your monthly payment is determined based on how much you earn and a percentage of your discretionary income. Not only that, but each of these plans leads to forgiveness of your remaining student loans once you make payments for the duration of the program.
Several different income-driven repayment programs are available for nurses:
Pay As You Earn Repayment Plan (PAYE Plan)
10% of your discretionary income but never more than your payment on 10-year Standard Repayment
Nurses can qualify if their payment on this plan would be less than the payment on a standard ten-year repayment plan
Revised Pay As You Earn Repayment Plan (REPAYE Plan)
10% of your discretionary income
20 years for undergraduate loans and 25 years “if any loans you’re repaying under the plan were received for graduate or professional study”
Nurses with federal student loans can qualify
Income-Based Repayment (IBR)
10% of your discretionary income if your loan originated after July 1, 2014, but never more than the 10-year Standard Repayment Plan; generally 15% of your discretionary income if you’re not a new borrower on or after July 1, 2014; either way, you’ll never pay more than the payment on a standard, 10-year repayment plan
20 years if you’re a borrower after on or after July 1, 2014; otherwise 25 years
To qualify, your payment under this plan must be less than what you would pay under standard, 10-year repayment
Income-Contingent Repayment (ICR)
20% of your discretionary income, or what you would pay over the course of a fixed 12-year repayment plan
But so long as this program is still available, it’s worth checking out.
According to the education department, “qualified employment” can entail working for a government agency, a not-for-profit or serving full time in Americorps or the Peace Corp. Candidates must work full time (at least 30 hours per week) to qualify, and only Direct Loans are eligible for PSLF.
Since nurses can find work in not-for-profit organizations, the Peace Corp and government agencies, this is typically seen as a feasible loan repayment option for nurses and other healthcare professionals.
Chances are you haven’t heard of Live Oak Bank. After all, this lender, based mostly on the web, has only been around since 2008, and it mostly focuses on giving out small business loans to businesses in specific industries, such as veterinary practices or craft breweries.
That’s no reason to pass it up for your personal banking needs, however. In fact, this little gem of a bank has one of the best-kept secrets in the personal banking world: it has one of the highest savings account interest rates you’ll find from an online bank. (More on that below.) And, most of its other personal deposit accounts offer relatively high rates as well.
Let’s take a more in-depth look at its deposit accounts to see if they’re right for you.
How do Live Oak Bank’s savings accounts compare?
Up to $5 million
(but only up to $250,000 is FDIC-insured)
Rates current as of Jan. 17, 2018.
When it comes to the best savings accounts with high interest rates, Live Oak Bank currently has the highest rate. This means that Live Oak Bank is lowering the bar and allowing anyone to take advantage of these high interest rates, no matter how much is in his or her pocket right now.
What else do I need to know about Live Oak Bank’s savings account?
Live Oak Bank wants you to use your savings account, and use it often, which is one reason why it has no monthly maintenance fee. If there is no activity on your account for 24 months and your balance is less than $10.01, Live Oak Bank will take the remainder of your balance as a Dormant Account Fee and close your account.
Getting money into a Live Oak Bank savings account from an external bank account can take a little bit of time depending on how you do it. If you request the money through Live Oak Bank’s online portal, the funds won’t be available for up to five or six business days. But if you opt instead to send the money to Live Oak Bank from your current bank, the money will be available as soon as it’s received. Your Live Oak Bank savings account will start earning interest as soon as the money posts to your account.
You can easily withdraw your money at any time via ACH transfer. Simply log into your Live Oak Bank savings account and electronically transfer it to whichever bank account you wish. It’ll be available in two to three business days.
You are limited to making just six transactions (deposits or withdrawals) per month with this savings account. That’s not a Live Oak Bank thing; that’s a federal regulation imposed upon savings accounts in the U.S. If you absolutely can’t wait until next month to make another deposit or withdrawal past your allotted six per month, you’ll be charged a $10 transaction fee for each additional action.
This bank’s minimum deposit requirements also seem to be right on par with other bank’s minimum deposit requirements. The current best CDs out there have minimum deposit requirements both above and below Live Oak Bank’s $2,500 benchmark.
Rates current as of Jan. 17, 2018
What else do I need to know about Live Oak Bank’s CDs?
Only U.S. citizens and permanent residents are eligible to open these accounts. It’s a relatively straightforward process to open a CD: Simply complete the forms online, provide any needed documentation (such as your current bank account details), and wait for an account approval. Once your account is open, you can transfer over your deposit, where it will be held for five days before officially launching your CD.
If you need to take out your deposit early, bad news: As with many CDs, you’ll face an early-withdrawal penalty at Live Oak Bank. If your original CD term was for six months, one year or 18 months, you’ll be charged 90 days’ worth of interest. If your original CD term was for longer than that, you’ll be charged a higher rate of 180 days’ worth of interest.
If you are able to resist the urge to withdraw your money early, congratulations! Your CD will automatically renew into a second CD with the same term length. However, don’t panic if that’s not what you want: You have up to 10 days after the CD has matured to withdraw your money penalty-free and park it in your own bank account (whether it’s with Live Oak Bank or not).
Overall review of Live Oak Bank
It’s easy to overlook Live Oak Bank for other larger, more established consumer banks like Ally or Discover Bank. But Live Oak has some of the best CD rates around, and the best savings account available on the market today.
Lest you be scared away by its smaller name, consider this: This tiny-but-growing bank is getting rave reviews from customers and employees alike. It carries an “A” health rating, and has a top-notch online banking portal. About the only thing missing is a checking account to let you seamlessly do all of your daily banking with this great company.
Are you looking to start or grow a business? Opening a business savings account can offer federal protection for the funds you deposit (up to $250,000) and provide a source of liquidity should inevitable expenses arise. You can earn interest while setting aside money for capital improvement or income taxes. A commercial savings account can add credibility to your business, arm you with a business debit card and help your cash flow.
The best way to choose an account that fits your needs is to start by comparing the annual percentage yield offered by banks and credit unions. Then look for benefits that might make the account attractive based on your needs. Is there a monthly maintenance fee or a minimum deposit to open? Does the bank provide ample access to ATM and online account services?
Deciding which business savings account is best for your needs can be a difficult process, but hopefully this roundup of our picks for best savings accounts will help give you a head-start.
The best business savings account rates — January 2018
1. First Internet Bank of Indiana, 1.11% APY up to $250,000, ATM services
First Internet Bank offers an FDIC-insured savings option for businesses with a relatively good 1.11% APY. However, if you have more than $250,000 to put in their business savings account, they'll award you with a 1.36% APY. Unfortunately, the FDIC only insures up to $250,000. So, if you deposit more than $250,000 into the savings account, the excess deposit amount will not be insured by the FDIC.
It costs $100 to open your business account and you must maintain an average daily balance of $1,000 to avoid a $2 monthly maintenance fee.
There is no minimum balance to open or maintain the account. Unlimited deposits can be made each month and six transfers or withdrawals are allowed without charge.
The First IB ATM cards are offered to sole proprietors only. There is no charge for ATM transactions or electronic statements. Founded in 1999 by the First Internet Bancorp, First IB offers remote banking in all 50 states.
Fine print: Only six preauthorized, automatic, PC, or telephonic transfers are allowed each month. This restriction is common among most of these institutions, however, First Internet Bank will charge you $5 per item if you go beyond the allotted six.
BoFI Federal Bank offers one of the top APY rates in the DepositAccounts nationwide survey of business savings accounts. The bank’s Business Premium Savings Account with a high-yield 1.06% APY can be opened with a $25,000 minimum deposit.
There is no monthly maintenance fee for the account and no average daily balance requirement.
BoFI also makes it easy to access your funds when you need it. Customers have ATM access to their accounts along with free online banking. However, ATM withdrawal limits are $1,010 per day and there’s a daily purchase limit of $5,000. BofI is an FDIC-insured bank based in San Diego and publicly traded online. Other products include Business Interest Checking and Business Money Market accounts.
Live Oak Bank awards 1.05% APY on its business accounts are eight times the national average. There is no minimum opening balance or deposit required to open a business savings account.
The business savings account is open to deposits of up to $5 million and is free of monthly maintenance fees. You may make up to 6 withdrawals from your Live Oak Bank Savings account per statement cycle, including preauthorized, automatic and telephone transfers. After that there’s a $10 fee per withdrawal. Live Oak Bank, established in 2008, holds assets of $2.12 billion.
The bank is in Wilmington, N.C., and is a member of the FDIC. Learn more about business savings at Live Oak Bank.
Small Print: The bank may verify credit and employment history at its discretion, meaning you may receive a pull against your credit report.
4. Community Bank of Pleasant Hill, 1.05% APY, No minimum balance
With its 1.05% APY, the Business Premier Money Management Account at Community Bank of Pleasant Hill offers highly competitive rates to explore. You need only put down $25 to open the account and maintain a minimum balance of $10,000 to avoid a $10 monthly service charge and $4 paper statement fee.
ATM access is offered surcharge-free when using ATMs in the MoneyPass® network. Community Bank began operations on Dec. 6, 2006, and is a member of the FDIC. Members can search for partner ATMs online or through mobile access.
Fine print: Just watch out for hefty withdrawal fees. You can make free withdrawals on the second and fourth Wednesdays of the month; on other days, there’s a $25 withdrawal fee. If you plan to make regular in-person withdrawals, this probably isn’t the best account for your needs.
on Community Bank Of Pleasant Hill’s secure website
5. Community Bank of Raymore, 1.05% APY, $25 minimum deposit to open
The Community Bank of Raymore created its Premier Money Management Account specifically for business customers who carry high balances and are looking for security. It costs $25 to open your account but you’ll earn a solid 1.05% APY.
You must maintain a balance of at least $10,000 or you’ll be assessed a monthly $10 charge. You may only make free withdrawals on the second and fourth Wednesdays or face a $25 fee.
Electronic statements are free of charge. Nationwide ATM service without charge is available through the MoneyPass® network.
The Community Bank of Raymore was chartered in Missouri in May 15, 1979. According to the bank website, the idea of the bank originated at a community meeting at Raymore Elementary School in 1976.
Fine print: You’ll be restricted to two days a week for making free withdrawals in Raymar, too, on the second and fourth Wednesdays of the month. Other days, you’ll have to cough up $25.
6. Digital Federal Credit Union (DCU), 1.00% APY, $25,000 minimum balance
Digital Federal Credit Union offers a solid 1.00% APY rate through its Business DCU Ltd Savings Account with a minimum $25,000 balance.
Businesses participating in the DCU Ltd Savings Account receive 24/7 online banking, mobile banking through the DCU Mobile Banking App, access to DCU ATMs, deposits, transfers or balance verification. Watch out for their ATM fees, though. They charge $0.75 per withdrawal from a non-DCU ATM, which will surely add up if you make regular withdrawals. Created by the Digital Equipment Corporation in 1979, DCU is the largest credit union in Massachusetts by assets. Federally insured by NCUA, DCU is based in Marlborough, Mass.
Restrictions on joining: To join, you must meet eligibility requirements within the field of membership for employers, organizations, participating communities or condominium associations.
on Digital Federal Credit Union (DCU)’s secure website
7. Presidential Bank (Maryland), up to 0.50% APY, $5,000 to open, ATM services
Presidential Bank’s Commercial Premier Savings account offers 0.50% APY for balances up to $35,000, making it a decent — if not extraordinary — bet for business owners.
Business customers are not required to maintain a minimum balance on the account in order to receive all ATM privileges. So long as you use one of their ATMs you won't incur fees, but there is a $0.75 ATM fee for non-network ATMs. Free online banking, mobile banking and ATM card come with the account.
Established in 1985, Presidential Online Bank was one of the first lenders to offer online banking. Located in Bethesda, Md., it currently lists assets in excess of $550 million.
The Business Regular Savings account at UniBank currently pays out 0.35% AYP for all accounts starting at $2,500. It costs $500 to open your business account and the monthly service fee is $12.
You can have that service fee waived by maintaining a $2,500 minimum daily balance. Customers have online, telephone and ATM access to their business accounts. There are more than 25,000 surcharge-free UniBank ATMs available through the MoneyPass® network.
Established in 2006, the bank is located in Lynnwood, Wash. While its business savings account rates leave much to be desired, the bank’s strength may lie in its current money market rates, which Deposit Accounts says are 70 percent higher than the national average.
9. Signature Federal Credit Union, 0.30% APY, $100 minimum deposit to open
The Business Convention Savings account at Signature Federal Credit Union offers a 0.30% APY. You can open the account with as little as $100 and the account will begin earning the APY once the account is funded with the minimum deposit amount.
The account comes with zero monthly fees and doesn't require a minimum balance amount to earn the APY as long as you open the account with $100.
Signature Federal Credit Union was founded in 1970 and is currently headquarterd in Alexandria, VA. The credit union has assets over $296.6 million and has partnered with National Shared Branching to allow their customers to conduct business nationwide without the restriction of a Signature Federal Credit Union location.
Restrictions on joining: $5 fee to join the credit union. The $5 will be deposited into a basic savings account.
Rounding out the top 10, the business savings accounts at SaviBank offer a decent 0.30% APY. It costs $100 to open the account. If you keep a minimum daily balance of $250, the bank dismisses a $5 monthly service charge.
Checks and third-party withdrawals are limited to six for each calendar month.
Established in Burlington, Wash., in 2005 as Business Bank, SaviBank offers 24-hour access to accounts through online banking and surcharge-free ATM locations nationwide over the MoneyPass® network.
To come up with this list, we first used data from DepositAccounts.com, which tracks rates on a range of deposit accounts across thousands of banks in the U.S. Note: DepositAccounts is also owned by MagnifyMoney’s parent company LendingTree.com.
We eliminated any institutions that were given a health rating below a B by DepositAccounts. We also weeded out any credit unions that have very restrictive membership requirements. From there, we chose the top 10 business savings accounts with the highest APY. And lastly, all the banks on our list offer FDIC or NCUA insurance.
Business savings accounts vs personal savings accounts
Business and regular savings accounts may offer many of the same features ,such as 24/7 online banking, free electronic reporting, debit cards, fund transfers and ATM machines.
The trade-off in choosing a business account is that you’ll get services focused on business planning and spending in exchange for a less-desirable APY.
When you compare the interest earned on a business savings account with the best APY rates offered on savings accounts, it may not look like opening a business account is a wise strategy. The top business savings account APY right now is 1.11%. The top APY among personal savings accounts is 1.60% with no minimum deposit and ATM access. You can weigh the services, charges and minimum account fees between the top business and top personal savings accounts to decide which is best for you.
There are other benefits to offset any differences in earnings, particularly if your business is incorporated. It’s considered sound business practice to separate your personal saving and checking accounts from your business saving and checking accounts. A business account can help you manage cash flow, accounting, recordkeeping and working capital. At income tax time, separate accounts can help you differentiate business from personal expenses.
Paired with a business checking account, your business savings account can add professional branding, since all payments and correspondence with clients will bear your business name.
Or you can create savings in your business account to pay quarterly income taxes or purchase equipment.
Finally, business savings accounts are secure when you open accounts with banks and credit unions that are insured up to $250,000 per account by the FDIC or the NCUA.
North Shore Bank of Brookfield, Wis., says that a business savings account can boost your credit ratings and make it easier to obtain a business loan, since the lender can see you have an account dedicated to your company.
Choosing the right business savings account
When evaluating a financial institution for your business, there’s more than just finding a good APY.
Many of the banks on our Top 10 list look great on the APY front but carry fees that can eat into any of the returns you might make. Particularly, watch out for fees for ATM or bank withdrawals, monthly service fees and ATM fees.
The Small Business Administration (SBA) has identified the key factors to consider when searching for the right bank or credit union. These include:
When you’re looking for a credit card, there’s a lot to consider beyond the terms and rewards — extra perks might be the deciding factor when you can’t decide between one card or the next.
Some cards may come with World Elite Mastercard® or Visa Signature® benefits. You may be wondering what exactly are those benefits, and in this post, we’ll take a deep dive into the Visa Signature® benefits to see if they provide any substantial value that may sway you to choose a Visa Signature® card over a non-Visa Signature® card.
The Visa Signature® benefits program provides an extensive array of perks for cardholders to enjoy. Benefits are in various categories including travel protection, purchase benefits, entertainment discounts, special offers in food and shopping, and much more.
These discounts are often exclusive to Visa Signature® cardholders and add extra value when you use your card. Some benefits include lost luggage reimbursement, cell phone protection, food discounts at Domino’s Pizza, shopping discounts at stores like Calvin Klein and Levi’s, and many other discounts.
*Please note that the benefits mentioned in this post may not come with all Visa Signature® cards, so check with your issuer to see if your card is covered and to learn more about your specific card benefits.
Let’s start with the tentpole benefits that come with Visa Signature® cards.
Main Visa Signature® benefits
Lost luggage reimbursement: It’s never ideal when your luggage is lost while traveling, however you can be reimbursed for checked or carry-on baggage and its contents when you pay for the airline or common carrier ticket with your Visa Signature® card. In addition to lost luggage reimbursement, you may be covered for luggage theft.
Roadside Dispatch®: If your car breaks down at anytime, there’s no need to scramble to find help. You can easily call Roadside Dispatch and they’ll arrange a tow operator or locksmith to assist you for standard towing, tire changes, jumpstarts and more. This is a pay-per-use feature, so you are responsible for services received.
Travel and emergency assistance services: Accidents happen when traveling, and it’s even worse if you’re in an unfamiliar destination. With this benefit, you’ll have access to multilingual representatives who are available 24/7 to answer any questions that may arise and provide referrals to various services. Some services include medical referral assistance, emergency translation service, legal referral assistance and more. Note that you’re responsible for the cost of services rendered.
Auto rental collision damage: When you’re renting a car, the agency will offer you all sorts of add-on insurances to cover additional damage and liability. That includes collision damage. But when you use a Visa Signature® card to pay for your rental, you are already covered for collision. That means you don’t have to pay extra for the rental agency’s policy. In addition to collision damage, you’re covered for theft, towing and loss-of-use charges.
Global Entry statement credit: Entering back into the U.S. from abroad often requires waiting on a long line to go through security. But not if you’re approved for Global Entry — you can receive expedited clearance at participating airports. Using your Visa Signature® card to pay for the Global Entry application allows you to receive a $100 statement credit.
Warranty manager service: When you make a purchase with your Visa Signature® card, you’ll also get up to an additional year of warranty protection. This feature either will double your current manufacturer’s warranty if it’s less than a year, or add an additional year of coverage for warranties three years or less. This is helpful for any issues that may arise after the typical warranty term.
Year end summary: At the end of each year, you’ll receive a detailed summary of all the purchases you’ve made with key insights into your spending habits. This feature is pretty standard amongst credit cards, but it can be helpful for people looking to be more aware of their spending patterns and looking to budget better.
Cell phone protection: These days, cell phones cost a fortune. And, one of the worst feelings is when your phone gets damaged and you receive a hefty repair bill. But, if you pay your wireless bill with your Visa Signature® card, you can be reimbursed. Note that a deductible is required. Coverage also includes stolen cell phones.
Price protection: If you’re having buyer’s remorse over a costly item, don’t worry — price protection can reimburse you for the difference if you find a lower price in a print ad. Make sure you use your Visa Signature® card to purchase the item.
Entertainment Discounts and Special Offers
Hotel access all over the world: Benefit from free nights, discounts, complimentary breakfast and other premium benefits at over 900 hotels around the globe. This is a great way to make your hotel stay more comfortable and enjoyable.
Black car service discounts: You can ride in luxury with GroundLink chauffeured black car service. GroundLink is a tech-enabled car service providing first-class service worldwide. You can receive 10% savings on service and a one-time $20 credit, valid until July 31, 2019.
Food and Wine Discounts
Taste of Sonoma: If you’re planning a trip to Sonoma any time soon, you’re in luck. You can get discounts on wine purchases, tastings and more at over 50 Visa Signature® wineries plus a 15% discount on transportation from Pure Luxury.
Pizza Hut, Domino’s Pizza, Auntie Anne’s: There are various discounts you can receive from several chains that allow you to enjoy some of your favorite foods for less money. Simply pay with your Visa Signature® card and you can benefit from gift card discounts, free items, and order discounts. Discounts vary by retailer.
Omaha Steaks: Your next steak dinner can come with a great discount — receive a one-time $20 discount on a purchase at OmahaSteaks.com when you spend $69 or more with your Visa Signature® card. Restrictions apply and the offer is valid until January 31, 2018.
Ross-Simons: Shopping online at Ross-Simons.com allows you to receive 25% off your jewelry purchase and free express shipping. This is a substantial discount that can save you a great deal of money. This offer is valid until February 19, 2018.
Tourneau: When you make a watch purchase of $1,000 or more, you will receive a $250 discount at Tourneau; great if you’ve been eyeing a new watch. This offer is valid through December 31, 2018.
Troon Rewards®: Troon Rewards® provides you with savings at over 95 golf courses worldwide. Sign up with your Visa Signature® card and you’ll earn Silver Status, benefiting from 10% off golf fees and merchandise. Current members can earn a one-level upgrade to either Gold or Platinum Status. This offer is valid until January 26, 2020.
Movies and Games
AMC Theatres discounts: Purchasing a $25 eGift card from AMC Theaters with your Visa Signature® card saves you 5%. This is a $1.25 value, and although it’s not a large savings, it nonetheless saves you some money. This offer is valid until May 31, 2018.
GameFly trial: You can receive a 30-day free trial of GameFly by signing up with your Visa Signature® card. This deal ends February 2, 2019. Currently, GameFly has a promotion of a 30-day free trial that you can get without a Visa Signature® card.
Visa Signature® vs. World Elite Mastercard®
You may be wondering how the Visa Signature® benefits program compares to other benefits programs on the market. Below we compare the key benefits of Visa Signature® cards to cards with World Elite Mastercard® benefits. The World Elite Mastercard® program is the biggest rival in terms of premium additional benefits programs you can receive with credit cards.
The Visa Signature® program offers more options in travel protections, food, shopping and jewelry discounts, and car service when compared to the World Elite Mastercard® program which offers more luxury hotels and sports discounts.
There are dozens of cards that offer Visa Signature® benefits, and below we list the personal and business cards that you can apply for to take advantage of the numerous perks mentioned earlier. As a reminder, the benefits mentioned above may come with the cards listed below, check with your issuer to see if your card is covered and to learn more about your specific card benefits.
Finding a credit card in college can be a complicated experience — there are plenty of cards available to choose from, but you may lack the credit history required to qualify. There’s a new crop of cards out there that are specifically targeting college students who have a thin credit file and may not qualify for most credit products.
The Deserve Edu Mastercard is one of the better options out there if you’re a college student looking to build credit. You can qualify for this card with no credit history, giving you better approval odds than some other cards from major banks that require fair or excellent credit. And as an added perk, you’ll earn 1% cash back on all purchases.
But is the Deserve card the best choice for you? We’ll cover that and more in this review.
Deserve is a financial technology company that has the goal of providing credit to underserved people, mainly Millennials and Gen Z with little to no credit history. Founded in 2013, Deserve’s original purpose was to help international students obtain credit, and since then, they have expanded to target all college students in the U.S. and the general market in getting credit. Deserve credit cards are characterized by their straightforward terms and their general openness to accept consumers with no credit history.
What it takes to qualify
To qualify for the Deserve Edu Mastercard, you must be either a U.S. resident, permanent U.S. citizen, or an international student enrolled in a U.S. college or university.
When you submit an application for the card and use your .edu email address, your application may be processed faster than using a personal email. That’s not to say that using a personal email will hurt your approval odds, however.
In addition to your education information, Deserve asks applicants the usual information credit card companies ask for — like your contact information, address, and financial information, such as whether you’re employed and your primary source of income. This income can be from a full- or part-time job, family/allowance, trust/inheritance, investment account, or other source. This information is required so Deserve can see if you have the means to pay your bills. A lack of income doesn’t paint a strong picture of your ability to pay bills, but isn’t the sole factor deciding your eligibility.
Don’t worry if you lack credit history. It isn’t required to qualify. However, Deserve does require you to authorize that they can review your credit history. This may be used as part of the decision process so they can assess any credit products you may have and to prevent fraud. It’s not a bad thing if no credit comes up in their review.
Fees and other fine print
$0 Annual fee: There is no annual fee for this card, allowing you to reap the rewards of the cash back program and build credit without paying to carry the card.
Decent variable APR: You should pay close attention to the APR with any credit card you consider. That’s how much you’ll pay in interest fees if you carry a balance on your card from month to month and it can make borrowing money from a credit card really expensive. The APR for this card is 19.99% variable (variable means it can change at any time), and when compared to other student cards, this is actually on the lower side — there are student cards that go up to 24.99% variable.
No deposit: People with thin credit files have usually had few options to build credit, one of which is a secured card, which requires you to put down a cash deposit. Since the Deserve Card is an unsecured card, however, no deposit is required for you to open the card.
$5,000 max credit limit. The maximum credit limit you can receive is$5,000. Keep in mind the importance of paying down your credit card every month, because that carries a lot of impact when it comes to your credit score. Ideally, strive to never carry a balance of more than 20% of your total available card limit.
1% cash back: There is a cash back program where you can earn 1% cash back on all purchases. This is a sub par rate, but considering that this is a student card and your main purpose is to build credit, this is a decent perk.
Reimbursement for up to $49 of an Amazon Prime subscription: To sweeten the deal for card members, Deserve will reimburse you up to $49 for your Amazon Prime subscription. That’s just enough to cover the whole cost of an Amazon student prime plan. With the student plan, you can receive free 2-day shipping, rent textbooks, access Amazon Music streaming, Prime Video, and more. Upon approval for the Deserve Edu Mastercard, register for Amazon Prime with your card and you’ll either receive a $49 statement credit if you chose the annual plan, or monthly credits of $5.49 if you choose to sign up for the monthly payment plan (for a lifetime total of a $49 credit) to pay for your Amazon prime membership.
The Bottom Line: Is this the right card for me?
The Deserve Edu Mastercard reports to the major credit reporting agencies, allowing you to establish and build credit. Paying your bills on time and in full will allow you to build credit and your credit report will reflect your positive behavior. Note that any missed or late payments will also be reflected on your credit report — so be sure to set payment alerts and stay on top of your spending.
This card benefits students who have no credit history, since Deserve doesn’t require you to have any credit. Compared to other student cards that require fair or average credit, the Deserve Edu Mastercard has a leg up, allowing those who are just beginning their credit journey the chance to qualify.
However, if you’re a student with a fair or better credit score , you may qualify for a better student card that offers more perks and possibly a better rewards program. Check out our guide to the best student credit cards to see what other options are out there.
Tips to build credit while you’re in college
While you’re in college you have a great opportunity to build credit and set yourself up to have a good or higher credit score upon graduation.
Here are some tips to follow so your credit score can rise:
Pay on time: Perhaps the simplest rule, paying on time is a great way to build credit. In fact, your payment history is the single-biggest factor in your credit score. Some cards allow you to set up autopay, and on those that don’t, calendar alerts are an easy way to stay on top of payments.
Pay your statement balance in full each month: Coupled with timely payments, paying your entire balance, not just the minimum due prevents you from accruing interest on overdue balances.
Don’t max out your card: Credit card utilization is a large factor in determining your credit score. Utilization is the ratio of the amount of credit you’ve used and the amount of credit that’s available. So if you have a $1,000 credit line and have spent $200, then your utilization is 20%. We recommend keeping a utilization at or below 20%. Maxing out your card shows that you’re a risk and can hurt your credit score and future credit approval odds.
Don’t take out unneeded cards: It may be tempting to apply for a card at your favorite store or because the rewards program looks good, but don’t take out unnecessary credit cards. Your goal as a student is to build credit, not maximize rewards — that comes after you’ve earned a good credit score.
The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities. This site may be compensated through a credit card partnership.
If you have taken a recent flight, you are probably very well aware of all the rewards airline credit cards promise. Earn enough miles and you could nab a free flight or even a free upgrade. Simply signing up for a airline card in many cases can grant you perks like priority boarding and free checked luggage.
Most airline credit cards rewards are specific to that airline’s offerings — it’s their way of rewarding frequent fliers for their brand loyalty and enticing other fliers who might not yet favor any particular airline.
2X miles on tickets purchase from United, 1 mile on everything else
Regular Purchase APR
What we like about it:
Earn 50,000 bonus miles after you spend $3,000 on eligible purchases in the first three months from account opening. But don’t get too excited about this offer if you’ve nabbed a bonus from this card before — this offer is not available to either current cardmembers of this credit card, or previous cardmembers of this credit card who received a new cardmember bonus for this credit card within the last 24 months.
The United MileagePlus® Club Card is the only one that gives you a full membership into the United ClubSM. This means you can visit any United lounge at the airport regardless of what airline you are flying, and some Star Alliance® lounges when you fly on those airlines.
Earn 1.5 miles per $1 spent on all purchases; earn 2 miles total for each $1 spent on airline tickets purchased directly from United.
You also get great perks when flying aboard United, including Premier Access® travel services and free first and second checked bags — that can easily shave a couple hundred bucks off your cost of flying.
Who is the card best for?
If United is your primary airline and you plan to take more than one international trip every year, the United MileagePlus® Club Card is your best bet. Getting United ClubSM membership from the card is $100 cheaper than buying membership without top tier status. And getting two checked bags on United and some lounge benefits when flying Star Alliance airlines can add up to good long-term value.
Best Cards for American Airlines
CitiBusiness® / AAdvantage® Platinum Select® World Mastercard®
$95, waived for first 12 months
2 AAdvantage® miles per $1 spent on eligible American Airlines® purchases and for every $1 spent on purchases at telecommunications, car rental merchants and at gas stations*, 1 AAdvantage® mile per $1 spent on other purchases*
Bonus offer: Earn 60,000 American Airlines AAdvantage® bonus miles after spending $3,000 in purchases within the first three months of account opening. This is a limited time offer.
In addition to offering a first checked bag free on domestic American Airlines® itineraries and preferred boarding on American Airlines® flights, this is the only American Airlines co-branded offer from Citi that offers bonus points on everyday spending.
Earn 2 AAdvantage® miles per $1 spent on eligible American Airlines® purchases; 2 AAdvantage® miles for every $1 spent on purchases at select businesses, including telecommunications, car rental merchants, and at gas stations; and earn 1 AAdvantage® mile per $1 spent on other purchases. Terms apply.
Who the card is best for?
If you have a small business and American is your primary airline, this card could earn you the most AAdvantage® miles over time. Earning 2 AAdvantage® miles on telecommunications, car rental merchants, and gas stations are among the most generous categories for airline cards, granting many opportunities to earn bonus miles at the places you spend money weekly.
AAdvantage® Aviator™ Red World Elite Mastercard®
$95 For First Year
Earn 2X miles on eligible American Airlines purchases, earn 1X miles on all other purchases
Through Jan. 31, 2018 you can earn 60,000 bonus miles when you make your first purchase in the first 90 days and pay the annual fee. You may not qualify for this offer if you have owned the card before or are a previous cardmember with accounts closed in the past 24 months.
Receive your first checked bag free for the primary cardmember and up to four companions on eligible bags when traveling on domestic itineraries operated by American Airlines®. Conditions apply.
Preferred boarding for the primary cardmember and up to four companions on the reservation for all American Airlines operated flights.
You can also earn $3,000 Elite Qualifying Dollars when you spend $25,000 on purchases each calendar year, and receive 25% in-flight savings on food and beverages in the form of a statement credit. Terms apply.
Who the card is best for?
If you are loyal to American Airlines® and want to earn extra credit towards elite status every year, the AAdvantage® Aviator™ Red World Elite Mastercard® is your best bet. With the bonus miles, free checked luggage and ability to earn elite qualifying dollars toward status, using this as your primary credit card could yield good value over time if you fly American Airlines® often.
Best for Alaska Airlines
Alaska Airlines® Visa Signature® Card
$75 For First Year
3 miles for every $1 spent directly with Alaska Airlines and Virgin America purchases, 1 mile for every $1 spent on all other purchases
Alaska Airlines® Mileage Plan™ miles are among the most flexible available and can be used on more than a dozen different airlines, ranging from American Airlines® to international carriers Air France/KLM, British Airways, and Qantas.
The card also offers a generous new account bonus: get 30,000 bonus miles after you make $1,000 or more in purchases within the first 90 days.
Earn 1 mile per $1 on all purchases; earn 3 miles per $1 on Alaska Airlines® and Virgin America purchases. Terms apply.
Every year on your account anniversary date, you can qualify for Alaska's Famous Companion Fare™. If you buy one ticket, you can get a second one and pay just the taxes and fees ($0 fare plus taxes and fees from just $22) after you make $1,000 or more in purchases within the first 90 days of your account opening. There are no blackout dates.
Who the card is best for?
Even if you don’t live in a city served by Alaska Airlines® or Virgin America®, this card is good for flexible rewards across carriers. Alaska Airlines® Mileage Plan™ awards can be cheaper for flying American Airlines® than using AAdvantage® miles, with good partnerships for travel to Europe and Asia. If you are looking for a card with a lower annual fee and award availability across multiple airlines, this card may be the best for you.
Best for JetBlue
3x points on JetBlue purchases, 2x points at restaurants and grocery stores, 1x points on all other purchases
Although you could transfer Membership Rewards® or ThankYou® Points to JetBlue TrueBlue, the JetBlue Card comes with no annual fee and lets you earn extra points at the places where you shop the most.
Earn 10,000 bonus points after spending $1,000 on purchases in the first 90 days.
You can earn 3X points on JetBlue purchases, 2X points at restaurants and grocery stores, and 1X points on all other purchases and there are no blackout dates.
You can also pool points together as a family, which means all miles earned by your household can go toward JetBlue award flights faster.
Who the card is best for
If you are just entering the world of airline miles and live near a JetBlue airport, the JetBlue Card is a great beginner option. With no annual fee and 2X points at restaurants and grocery stores, this card can help you earn real miles towards discounted travel. This card is also great for those who use JetBlue as a secondary airline: Because there is no annual fee, you won’t have to worry about justifying rewards by holding this card.
Best for Delta
Gold Delta SkyMiles® Credit Card from American Express
$0 introductory annual fee for the first year, then $95.
2 miles on Delta purchases, 1 mile on everything else
The welcome offer: Earn 30,000 bonus miles after you make $1,000 in purchases on your new card within your first three months and a $50 statement credit after you make a Delta purchase with your new Card within your first three months.
This card also offers a generous checked luggage fee waiver for cardholders: The fee waiver is available to those traveling on the same reservation as the primary card member, with a maximum of nine waivers per reservation.
You earn 2 miles on every dollar spent on purchases made directly with Delta
You’ll also earn 1 mile for every eligible dollar spent on all purchases with no cap.
The card also offers priority boarding for cardholders.
Who the card is best for?
If you fly Delta regularly with a family or business colleagues, this is the best card you can hold that balances the annual fee with good benefits. The checked luggage fee waiver covers more companions on the same itinerary than any other card, while the priority boarding allows you to get access to overhead bin space before other flyers. But if Delta is the only airline you fly, you may consider getting a higher credit card that offers more benefits and opportunities to earn Medallion Qualifying Miles, including the Platinum Delta SkyMiles® Credit Card from American Express.
Best credit union airline card
American Airlines Credit Union Visa® Platinum Rewards Credit Card
$0 For First Year
1 Connection Point for every $1 spent on purchases
on American Airlines Credit Union’s secure website
What we like about it:
With this no-fee card, you’re eligible to earn Connection Points™ for every dollar spent on signature-based purchases. But you also get the added bonus of being able to earn points when you use an American Airlines Credit Union Visa Debit Card — one Connection Point for every $3 spent on signature-based purchases.
You’re not beholden to using your points only for American Airlines flights with this card; you can redeem your Connection Points™ for air travel on any airline.
You’ll earn 5,000 bonus Connection Points™ when you make your first purchase within 60 days of account opening. This is a limited time offer only available until March 31, 2018.
There’s no balance transfer fee, however, there is a foreign transaction fee of 1%. That is on the low side for foreign transaction fees, which are typically 3%.
Who the card is best for:
You’ll have to be a professional in the air transportation industry or related to someone who is in order to qualify to become a member of the AACU. If you’re looking for a card where you can use your points for multiple airlines instead of just one single airline, this card could be great for you. However, you can certainly earn better rewards if you opt for an airline credit card tied to a single airline, as they typically offer richer rewards and other perks.
To find the best airline credit cards, we looked at several different features. First, we looked at which cards had specific airline partnerships, not just perks for specific airlines. From there, we narrowed down our picks to focus on non-premium cards, so this article could be more accessible. Finally, we looked for which cards had the best rewards programs, balancing it against annual fees and the APRs on balances.
As a secondary measure, we looked at all the other perks that come with a card, including free checked bags, no foreign transaction fees, and rental car and trip insurances. These benefits can help to offset the annual fee, or provide you even more value than a more stripped-down card.
Although earning airline miles sounds great for free travel, there are situations that can prevent you from flying. With all credit cards, you should watch out for these downsides:
Points devaluation: Miles aren’t a good long-term investment, because their value is constantly subject to change. If you aren’t planning to use your miles regularly, you could be better served with a cash-back credit card.
Hidden fees: Even when using credit card miles, hidden fees for redeeming miles, cancelling trips, or transferring miles to other people can cut your overall value quickly. Be sure to understand all the fees you may face before you decide if a card is right for you.
Blackout dates and reward restrictions: Airlines often place restrictions on the number of seats available on flights, while some dates are completely closed off for awards and companion passes. Unless you can use your airline miles on the dates you want, an airline credit card may not be your best option.
Partner carrier rules: Although you can book flights with miles on partner airlines, their prices are often higher and come with more restrictions on dates and routes. Before you commit to one airline program, be sure you understand how to use miles for partner flights — both the number required and special rules for using them.
Extra perks are all well and good, and airline credit cards can be rewarding for many frequent flyers, but they aren’t the best choice for everyone.
If you are thinking about applying, ask these four questions first:
Am I loyal to one airline?
If you primarily fly one airline and want to maximize your miles towards free flights, a airline credit card could make sense. If not, consider a card that earns bank points or cash back instead.
Do I want miles specifically for flying?
If your goal is to fly more often for a lower price, airline credit cards can help you achieve that plan by earning miles for your everyday spending. Most miles can’t be used for anything outside flying, however, so it’s important to carefully consider how many miles you need for a flight.
Are frequent flyer perks right for me?
Most credit cards offer a number of airport bonuses, including priority boarding, checked luggage fee waivers and lounge passes. If you find value in checking luggage for free or stopping at a lounge for a beverage, then an airline credit card is the right choice for your spending.
Will I get the value of the credit card annual fee in return every year?
Many airline credit cards come with annual fees. If your airline rewards (from perks and free flights) add up to more than the annual fee, then you’re getting a good value from your credit cards.
MagnifyMoney has plenty of options to help you find the right credit card for you. If you want to compare airline credit cards on your own, consider the following:
Point values: Not all miles are equal in value. It’s important to understand how many miles you need to take a flight, and if an airline credit card will help you get there.
Foreign transaction fees: While most airline credit cards offer no foreign transaction fees, many charge fees of 3%. If you plan on traveling abroad, a card with no foreign transaction fees is a must.
Free checked bags: Although most cards come with one free checked bag for cardholders, high-end cards may allow two free checked luggage pieces. Additionally, the number of available pieces varies between cards and airlines, with some offering up to nine people on the same itinerary.
Extra benefits: Annual free lounge passes and priority boarding are two of the luxuries offered to most airline credit card holders. In turn, these perks can help you justify the value of credit cards.
Point flexibility: Although you often can’t use miles for hotel rooms or rental cars, some programs allow more flexibility than others. If you want to use your miles for other rewards, be sure to understand how much those values would cost.
Advertiser Disclosure: The card offers that appear on this site are from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all card companies or all card offers available in the marketplace.