Reviews

Review: American Express Personal Savings High Yield Savings Account

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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.

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There’s no question having a savings account is necessary to get your financial house in order. Savings accounts are great for storing your emergency fund, planning for upcoming purchases like travel or special events, and more. But it can be frustrating to earn little interest on your money while it’s sitting in a savings account at a physical bank, which is why many people have turned to online banks where interest rates on savings and checking accounts are typically higher.

Online banks are able to offer higher interest rates on savings and checking accounts because there are less overhead costs than for brick-and-mortar banks. One online savings account option to consider is an American Express Personal Savings High Yield Savings Account.

American Express Personal Savings High Yield Savings Account Overview

The American Express Personal Savings High Yield Savings Account currently offers 0.90% annual percentage yield (APY). However, this interest rate is subject to change without notice, which is pretty typical for most online banks. There is no minimum deposit required to open an account, but the funds must come from an external account under your same name held at a different bank. Your initial deposit must be sent within 60 days of being approved or your account will be automatically closed.

There are no monthly maintenance fees associated with this savings account, and you can link it to more than one financial institution or current bank account to make deposits and withdrawals.

Funds are FDIC insured up to $250,000, the same as money at a physical bank.

Making a Deposit into an American Express Personal Savings High Yield Savings Account

Once your account has been opened and initially funded, you will need to link any other external checking or savings accounts to your American Express Personal Savings account in order to transfer funds electronically. External accounts must belong to you and have the same ownership as your Personal Savings account. After you have entered your account information to link it, you will be sent test deposits of small amounts to verify your information is correct.

Funds transferred electronically are generally available within five business days.

In addition to electronic transfers, you can deposit physical checks by mail. If you write a check from another bank, make it payable to American Express Bank, write your Personal Savings account number on the memo line, and mail it to:

American Express Bank, FSB

P.O. Box 30384

Salt Lake City, UT 84130

If you send a check made payable to you, sign the back and under your signature write “for deposit only in account” followed by your Personal Savings account number. However, it is more secure to send a check made out to American Express Bank. American Express does not accept cash deposits by mail.

The maximum account balance you can have in an American Express Personal Savings account is $5 million.

Withdrawing Funds from an American Express Personal Savings High Yield Savings Account

A Personal Savings account with American Express is not meant to be used for everyday spending and other transactions, and thus does not come with an ATM card, debit card, or checks. The Federal Reserve Board’s Regulation D allows a maximum of six transfers or withdrawals per statement period for savings accounts and money market accounts within any bank.

That said, withdrawing funds electronically is just as easy as depositing them. You can make transfers to your linked external accounts within your account online. Transfers to external accounts can take one to three business days, if the account is already linked to your Personal Savings account.

Keep in mind internal transfers from one American Express Personal Savings High Yield Savings Account to another will count toward the limit of six withdrawals per month.

However, if you call and request an official check by mail, this will not count toward the limit.

Pros and Cons

Overall, there are more pros than cons with this account. No monthly fees and a higher interest rate on savings is a big pro versus keeping your money in a savings account at a brick-and-mortar bank. Also, there is no minimum required to open or maintain an account. Even with a $0 balance, American Express will not close your account unless it has been inactive for over 12 months.

However, one disadvantage to keeping your money in an online savings account is the waiting period it takes to access your money. It can take one to three business days to transfer your money to an external account. This can be an inconvenience if you are facing a financial emergency, which is why it’s a good idea to always keep a buffer in your checking or savings account in your physical bank.

Alternatives to the American Express Personal Savings High Yield Savings Account

If a higher interest rate on your savings is really what you are after, the Ally Bank Online Savings Account could be a better alternative as it currently offers 1.0% APY on balance of all sizes. However, Ally Bank does have some fees you’d have to watch out for, like an excessive transaction fee of $10 per transaction and a $20 fee for outgoing domestic money wires.

Barclays Online Savings Account also currently offers 1.0% APY, and their tools can help you set savings targets to reach your overall financial goals. You can use Remote Deposit to transfer money into your Barclays Online Savings Account from your computer or smartphone. Funds received electronically or by check will be on hold for five business days after they reach your account.

Another alternative to consider is opening up a certificate of deposit (CD) instead of a high-yield savings account. American Express currently offers CDs for 24 months at 1.0% APY or more for longer periods of time. The rate will be fixed when you complete your application, as long as you fund your CD within 30 days and do not withdraw interest before the maturity date. Early withdrawal of interest will hurt your future earnings, and early withdrawal of principle will result in a penalty. This is why CDs are good for investing money for short periods of time but may not be the best emergency fund option.

Who Will Benefit Most from an American Express Personal Savings High Yield Savings Account?

Anyone looking to earn money on their savings will benefit from an American Express Personal Savings High Yield Savings Account. Just remember you are limited to no more than six withdrawals or transfers per statement period, and it can take up to three business days to receive your money in an external account.

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Investing, Reviews

Hedgeable Review: Robo-Advisor for Investors Who Don’t Mind Risk

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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.

hedgeableYou may get overwhelmed when you think about wealth management. It can feel complex, and you may not consider yourself wealthy enough to justify the expense of having someone manage your investments.

In the past few years, though, wealth management services have been largely democratized by robo-advisers. Rather than paying an individual to handle your investments, robo-advisers manage your money through technology, letting algorithms do the heavy lifting.

In this post we’ll look at Hedgeable, a highly personalized digital investing platform.

What Is Hedgeable?

Hedgeable is a private wealth management platform that is accessible on your computer, tablet, and smartphone. Hedgeable actively invests across a wide range of asset classes, including exchange-traded funds (ETFs) and individual stocks. Because past performance cannot predict future returns, we have no way of knowing if this method will be successful in the future. But we do know that studies have repeatedly shown that the best-performing portfolios over time have often been forgotten.

While forgetting about your retirement account is certainly one way to passively invest, a more conscious option is investing in low-cost index funds. If, however, you are willing to take on the risk of lower returns associated with an actively managed account, Hedgeable’s personalization makes it worth examining.

Unlike other robo-advisers, Hedgeable takes and more active approach to managing client portfolios. When you sign up for an account, you take a portfolio customization quiz that asks you about your assets, goals, and risk tolerance. The quiz takes all of five minutes and then assigns you a very specific portfolio to match your needs.

You can either open a new investment account directly through Hedgeable, transfer an existing account, or roll over a 401(k), 403(b), or 457 to an IRA.

How Hedgeable Chooses Your Investments

While many robo-advising apps use modern portfolio theory to allocate money in a portfolio, Hedgeable uses an objective-based model, which relies less on what the market will do and more on what the investor wants their money to do.

The approach is three-pronged. First, it widens the amount of available asset classes. Your money may be invested in any of the following, depending on your personal risk tolerance:

U.S. Equities

International Equities

Emerging Market Equities

U.S. Fixed Income

International Fixed Income

Emerging Market Fixed Income

Commodities

Real Estate

Master Limited Partnerships

Alternatives

Absolute Return

Currencies

Short U.S. Equities

Short Emerging Market Equities

Short Fixed Income

Cash

To better understand the list above, there are a few key terms you should be familiar with. “Equities” generally means stocks or exchange-traded funds (ETFs). “Fixed Income” is typically indicative of bonds. When you “short” something, you’re betting against it.

Using all of these asset classes, Hedgeable then looks at the goal end date of your portfolio, whether or not you want to invest exclusively in a social cause such as female leadership, LGBTQ equality, or alternative energy, and your risk tolerance to decide where it should invest your money. Riskier portfolios generally have a better potential for return, while lower risk portfolios will likely bring in less, but run a lower potential for losing value.

After your money is invested in specific assets, Hedgeable doesn’t wait a year to rebalance your portfolio. Instead, it implements something called dynamic hedging. As assets become more volatile, the algorithm will cut exposure to them, moving your money into safer assets immediately. Portfolios on this platform are very much actively managed.

Users are also encouraged to take advantage of Hedgeable’s account aggregation, which allows you to link all of your financial accounts to the app. This gives Hedgeable an overall view of your cash and debts. When the app has more information, it can better allocate your money to fit your specific financial situation.

Fees and Costs

Hedgeable’s pricing depends on the size of your portfolio. While there is no account minimum, those with the least amount of money in their accounts pay the highest fees.

While the fees on Hedgeable’s pricing page are annual fees, customers are billed on a monthly basis. For example, if a customer’s fee is 0.75% per year, they would be charged 0.0625% each month. 

Fees cover management fees, trading costs, product fees, administration, technology, analytics, and customer support.

$0-$49,999 – .75%

$50,000-$99,999 – .70%

$100,000-$149,999 – .65%

$150,000-$199,999 – .60%

$200,000-$249,999 – .55%

$250,000-$499,999 – .50%

$500,000-$749,999 – .45%

$750,000-$999,999 – .40%

$1,000,000-$9,999,999 – .30%

Customer Service and Rewards

Hedgeable has a variety of ways to get your problems resolved and questions answered. You can open up a ticket and monitor the progress the support team has made in addressing your concerns. Alternatively, you can text or do live chat with the organization’s customer support team seven days a week. On top of all this, the CIO himself holds office hours twice a week via video conferencing.

In order to increase customer retention and give users the best experience possible, Hedgeable runs a rewards program known as ?lph? clu?. You can earn points by becoming a member, funding your first account, referring new users, sharing on social media, investing specifically for retirement, adding a recurring deposit, and sticking with the company. When you are rewarded for financial activity, your points correspond with how much money you add to your account.

You can claim points for prizes such as Airbnb gift cards, VR headsets, and donations to charitable causes. The more expensive an item is, the more points it will cost to acquire it.

Pros and Cons

Pro: The quick onboarding quiz makes it very easy for users to find an appropriate portfolio and invest without doing mental gymnastics.

Con: While the user might not feel actively engaged in the process, these portfolios are very much actively managed by Hedgeable’s algorithm. Many finance experts stay away from this type of management as it is extremely difficult to do successfully.

Pro: You can start investing with any amount of money, and can do so in accordance with your values through socially responsible investments.

Con: Those with the least amount of money will pay the highest annual fees.

Pro: There is one, flat-rate, easy-to-understand fee that is only assessed once per year.

Other Investing Apps to Consider

Betterment is another investing app with a relatively low barrier to entry. There are no minimum required investments, though it does not invest in as wide of an array of asset classes as Hedgeable. Its fees are lower though, ranging from .35% to .15% annually, depending on the size of your account. Betterment does require a $100 monthly contribution or you will incur a $3 fee.

Wealthfront uses modern portfolio theory like Betterment, but offers a wider variety of potential investable assets. Wealthfront is also free until you have $10,000 or more invested; at that point your fees jump to .25% annually, making it the cheapest option of the three. To get started, though, you must open an account with at least $500.

 

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Featured, Mortgage

Guide to Getting a Federal Housing Administration (FHA) Mortgage Loan

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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.

Couple Celebrating Moving Into New Home With Champagne

Saving up the traditional 20% for a mortgage down payment is the kind of financial obstacle that can bar first-time homebuyers with minimal savings from becoming homeowners. The government-backed Federal Housing Administration (FHA) mortgage is one solution for those who want to buy a home but can’t pull together a large down payment.

FHA mortgages are home loans funded by FHA-approved lenders and insured by the government.

The government backing protects lenders from loss if borrowers default. Because of this protection, lenders can be more lenient with their qualifying criteria and can accept a significantly lower down payment.

You can get approved for an FHA mortgage with a minimum credit score of 500, and you only need to put 3.5% to 10% down to buy a home.

How much can an FHA mortgage help you?

For a $150,000 home, a 20% down payment would mean you would need to bring $30,000 (along with other closing costs) to the table. That’s no small chunk of change. By comparison, an FHA mortgage would require anywhere from 3.5% to 10% for a down payment, which comes out to $5,250 to $15,000.

In this post, we’ll cover the following topics to explain the FHA mortgage, including:

  • FHA mortgage terms
  • FHA qualifying criteria and restrictions
  • FHA costs and mortgage premiums
  • FHA mortgages vs. conventional mortgages
  • How to shop for an FHA mortgage

FHA mortgage terms

There are both 15- and 30-year fixed-rate and adjustable-rate FHA mortgage options. With a fixed-rate FHA mortgage, your interest rate is consistent through the loan term. However, your monthly mortgage payment may increase based on your homeowners insurance, mortgage insurance premium, and property taxes.

Adjustable-rate FHA mortgages are home loans where the rate stays low and fixed during an introductory period of time such as five years. Once the introductory period ends, the interest rate will adjust, which means your monthly mortgage payments may increase.

A unique situation where signing up for a low, adjustable-rate FHA mortgage could make sense is if you plan to sell or refinance the home before the introductory period ends and the interest rate can change. Otherwise, a fixed-rate FHA mortgage has predictable mortgage payments and may be the way to go.

Qualifying criteria and restrictions

Although the FHA home loan is particularly appealing for first-time homebuyers, it’s not only open to first-time purchasers. Repeat buyers planning to use the home as a primary residence may qualify for an FHA home loan as well.

Besides the low down payment, an undeniable benefit of the FHA mortgage is the low credit score requirement. You may qualify for 3.5% down payment with a credit score of 580 or higher. You can also qualify with a credit score lower than 580, but you’ll have to make a 10% down payment.

Debt-to-income (DTI) ratio is another key metric lenders consider in addition to your credit score to determine whether you can afford a mortgage. DTI measures the amount of debt you have compared to your income, and it’s expressed in a percentage.

Lenders look at two debt-to-income ratios when determining your eligibility — housing ratio or front-end ratio and your total debt ratio or back-end ratio.

Your front-end ratio is what percentage of your income it would take to cover your total monthly mortgage payment. Lenders like to see your front-end ratio below 31% of your gross income.

Your back-end ratio shows how much of your income is needed to pay for your total monthly debts. Lenders prefer a back-end ratio of 43% or less of your gross income.

FHA limits

The FHA mortgage can be used for both single-family and multi-family homes, but there are loan amount maximums that vary by state and county.

For an example, in Fulton County, Atlanta, the maximum loan for a single-family house is $342,700. You can find the loan limits for all states and counties here.

 

FHA mortgage costs and mortgage insurance premium

Just like a traditional mortgage, an FHA home loan has closing costs. Closing costs are the costs necessary to complete your transaction, such as appraisals and home inspections. However, you may be able to negotiate to have some of these costs covered by the seller.

The real expense of the FHA home loan lies in the mortgage insurance premiums.

At first glance, the FHA mortgage probably seems like the ultimate hack to buying a home with minimal savings. The flip side to this is you need to pay mortgage insurance premiums to cover the lender for the lower down payment.

Remember, FHA-approved lenders offer mortgages that require less money down and flexible qualifying criteria because the Federal Housing Administration will cover the loss if you default on the loan. The government doesn’t do this for free.

FHA mortgage borrowers must “put money in the pot” to cover the cost of this backing through upfront and annual mortgage insurance premiums. The upfront insurance premium for the FHA mortgage is currently 1.75% of the loan amount, and it can be rolled into your mortgage balance.

The annual insurance premium is broken into a payment that you make monthly. The annual premium for mortgage insurance can be up to 1.05% based on your loan term length, loan amount, and loan-to-value ratio (LTV).

LTV is a percentage that compares your loan amount to your home’s value. It also represents the equity (or lack of equity) you have in the property.

For example, putting 3.5% down means your LTV would be 96.5%. In other words, you have 3.5% equity in the home, and your loan is covering the remaining 96.5% of the home value.

Here’s the annual mortgage insurance premium on a 30-year FHA mortgage (for loans less than $625,000):

  • LTV over 95% (you initially have less than 5% equity in the home) – 0.85%
  • LTV under 95% (you initially have more than 5% equity in the home) – 0.8%

As you can see, starting off with less equity (or a smaller down payment) will cost you more in insurance premiums. You can expect to pay 0.85% in annual mortgage insurance premiums if your down payment is 3.5% on the 30-year mortgage.

Unfortunately, if your LTV was greater than 90% at time of origination, insurance premiums tag along for the entire loan term or 11 years, whichever comes first. There are exceptions if you have an FHA mortgage that was taken out before June 3, 2013.

How does the FHA home loan compare to conventional home loans?

Government-backed home loans like the FHA mortgage are part of special programs that serve borrowers that can’t qualify for a traditional mortgage.

At the other end of the spectrum is the conventional mortgage or the “Average Joe” of mortgages.

These traditional mortgages are offered by lenders and banks backed by Fannie Mae and Freddie Mac’s mortgage standards. Fannie Mae and Freddie Mac are government-sponsored agencies that buy loans from mortgage lenders and banks that conform to preset requirements.

Since conventional mortgages are loans eligible to be purchased by Fannie Mae and Freddie Mac, the qualifying criteria bar is usually set higher. For instance, you should have at least a 620 credit score to qualify for a fixed-rate conventional loan. Although, credit score minimums vary by lender, and a score above 620 will be necessary for the most competitive interest rates.

A misconception about the conventional mortgage is that borrowers must have 20% for a down payment to qualify. Mortgage lenders may accept less than 20% down for a conventional mortgage if you have a high credit score and pay their version of mortgage insurance premiums, which is called private mortgage insurance (PMI).

PMI is a private insurance policy that protects the lender if you default. Be careful not to confuse the two types of insurance policies.

If you have PMI on a conventional mortgage, you’re able to request a removal of insurance payments when you build up 20% equity in your home.

On the other hand, the mortgage insurance premiums for new FHA mortgages (post 2013) can’t be removed unless you refinance.

When to choose a conventional mortgage instead

Putting down less money with the FHA mortgage can be a shortcut to homeownership if you don’t have much cash saved or the credit history to get approved for a conventional mortgage.

But, the convenience doesn’t come without strings attached and the additional insurance costs can follow you for the entire loan term. This can get costly.

Furthermore, putting a small sum down on a home means that it will take you quite some time to build up equity. A small down payment can also increase your monthly payments. Homebuyers with a strong credit score should consider saving a bit more money and shopping for a conventional home loan first before thinking the FHA home loan is the only answer to a limited down payment.

You may be able to qualify for a conventional home loan with PMI if you have a down payment of 5% to 10%. A conventional home loan with PMI may not require the same upfront insurance payment as the FHA home loan, so you can find some savings there. Plus, you’re capable of getting rid of PMI without refinancing.

How to shop for an FHA mortgage

If your present credit score and savings make you ineligible for a conventional home loan, the FHA home loan is still a viable option to consider for financing. Just make sure you understand the implications of the extra cost.

Like a conventional mortgage, you need to shop around with multiple FHA-approved lenders to find the most competitive rate. If you’re unfamiliar with FHA-approved lenders in your area, you can go to the HUD website to find a few.

Don’t rush to a decision. If you’re not sure which option (FHA or conventional mortgage) will be the most cost effective for you, ask each lender you shop with to break down the costs for a comparison.

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Mortgage

Mortgage Insurance Explained: What It Is and Why You Should Have It

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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.


There’s a lot to consider when purchasing a home. Location, size, and cost spring to mind as three of the most important factors. Perhaps you’ve budgeted and figured out how much you can afford for a down payment, but have you also considered your total monthly mortgage payments?

If you’re applying for a mortgage and can’t afford to put at least 20% down, you may have to pay for mortgage insurance.

What is mortgage insurance?

Mortgage insurance helps protect the lender’s investment, not the homeowner.

A homeowner’s insurance policy may reimburse you for a variety of expenses, including vandalism, thefts, and environmental damage to your home. Mortgage insurance is a bit different. Although you are responsible for mortgage insurance premiums, the policy protects the lender.

Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage,” explains mortgage insurance “insures the lender against principal loss in the event you default, they foreclose, and the foreclosure sale doesn’t bring in enough money to cover what they’ve lent you.” In short, if you don’t pay your bills, the insurance company will help make the lender whole.

The 20% down payment rule

Mortgage insurance isn’t required for all homebuyers. “Typically, homebuyers looking to get a conventional mortgage must pay PMI if they are making a down payment of less than 20%,” says Josh Brown of the Ark Law Group in Bellevue, Wash., which specializes in bankruptcy and foreclosures. Brown points out PMI serves a valuable function by allowing otherwise qualified homebuyers (with an acceptable debt-to-income ratio and credit score) to be approved for a conventional loan without the need for a large down payment.

How to find mortgage insurance

Mortgage lenders will often find a PMI policy for you and package it with your mortgage. You will have a chance to review your PMI premiums on your Loan Estimate and Closing Disclosure forms before signing paperwork and agreeing to the mortgage.

Types of mortgage insurance

There are two main types of mortgage insurance: Private mortgage insurance (PMI) and mortgage insurance premium (MIP).

PMI helps protect lenders that issue conventional, Fannie Mae and Freddie Mac-backed, mortgages. You’ll often be required to make monthly PMI payments, a large upfront payment at closing, or a combination of the two. These payments are made to a private insurance company and are required unless you have at least 20% equity in your home. You may request to cancel your PMI once you have paid down the principal balance of your home to below 80% of the original value.

Mortgages issued through the Federal Housing Administration (FHA) loan program also require mortgage insurance in the form of a mortgage insurance premium (MIP). You will be required to pay an upfront fee at closing and an MIP every month as part of your monthly mortgage payment. Your MIPs depend on when your mortgage was finalized and your total down payment.

How much mortgage insurance will cost you

PMI premiums can vary depending on the insurer, your loan terms, your credit score, and your down payment. The premiums often range from $30 to $70 per month for every $100,000 you have borrowed, according to Zillow.

Many homeowners’ monthly mortgage payments include their PMI premium. Alternatively, you might be able to make a one-time upfront PMI payment. Or, you could make a smaller upfront payment and monthly payments.

As we mentioned earlier, for an FHA loan, you will have to pay upfront mortgage insurance premium (UFMIP) which is generally 1.75% of your loan’s value. You may have the option of rolling this premium payment into your mortgage and pay it off over time. Your MIP depends on your down payment, the base loan amount, and the term of the mortgage and can range from .45% to 1.05% of the loan’s value. The MIPs must be paid monthly.

Mortgage insurance doesn’t have to be forever

There are a few situations when you may be able to stop making mortgage insurance premium payments.

There are two eligibility requirements for conventional mortgages closed after July 29, 1999. As long as you’re current on your payments, PMI will be terminated:

  • On the date when your loan-to-value is scheduled to fall below 78% of the home’s original value.
  • When you’re halfway through your loan’s amortization schedule; 15 years into a 30-year mortgage, for example.

Your home’s original value is often the lower of the purchase price or appraised value. The current value of your home and your current loan-to-value aren’t figured into the above criteria.

You can also submit a written request asking your lender to cancel your PMI:

  • On the date your loan-to-value is scheduled to fall below 80% of the home’s original value.
  • If your current loan-to-value ratio is lower than 80%, perhaps due to rising home prices in your area or renovations you’ve done.
  • After refinancing your mortgage once you have at least 20% equity in the home.

Unlike PMI, if you have an FHA loan, your MIP may not ever be removed. The date your mortgage was finalized and the amount you put down determines your eligibility:

  • The MIP stays for the life of the loan for mortgages closed between July 1991 and December 2000.
  • The MIP will be canceled once your loan-to-value is 78%, if you applied for the mortgage between January 2001 and June 2013, and you’ve owned the home for five or more years.
  • If you applied after June 2013 and put at least 10% down, the MIP will be canceled after 11 years. If you put less than 10% down, the MIP stays for the life of the loan.

Refinancing an FHA loan to a conventional mortgage may provide you with additional options.

The pros and cons

There are a variety of pros and cons to consider when weighing the options of waiting to save a 20% down payment versus paying mortgage insurance.

Melanie Russell, a mortgage loan officer in Henderson, Nev., points out buying now can make sense if you expect home prices to increase or interest rates to climb.

What about waiting? In addition to avoiding mortgage insurance, putting more money down could lead to lower closing costs and a lower interest rate on your mortgage. Also, if you expect prices to drop, you’re saving on all the costs that could come with ownership, including taxes, mortgage, insurance, maintenance, and potential homeowners’ association fees.

In the end, it’s often a situational and personal choice. While Russell shared a few positives to buying early and paying for PMI, she also notes, “Only you can answer this question for yourself.”

When you don’t need mortgage insurance

There are also a few options that don’t require mortgage insurance, even if you can’t afford a 20% down payment.

For example, Veterans Affairs (VA) loans, offered to qualified veterans, don’t require mortgage insurance. You might not have to put any money down either, but these loans usually require an upfront payment at closing.

The Affordable Loan Solution program offered through a partnership between Bank of America, Freddie Mac, and the Self-Help Ventures Fund allows borrowers to put as little as 3% down without taking on PMI. Maximum income and loan amount limit requirements may apply.

You may also find some lenders willing to offer lender-paid mortgage insurance. You’ll pay a higher interest rate on the loan, but in exchange, the lender will make the insurance payments for you. “The math works differently every time,” says Fleming. “If a borrower thinks they won’t be in the property very long, [lender-paid mortgage insurance] might be a good choice, as sometimes the additional amount you pay is lower this way.”

However, if you’re in the home and paying off the mortgage for a long time, it could be more expensive than taking out a conventional loan with PMI. Because the premiums are built into your mortgage, you won’t be able to get rid of the extra payments after building equity in the home.

Another option could be to take out a second loan, called a piggyback mortgage. Although there are potential downsides to this route, you can use the money from the second loan to afford a 20% down payment and avoid PMI. Some people also borrow money from friends or family to afford a 20% down payment, but that could put your relationship in jeopardy if you run into financial trouble.

Finally, you might also discover lenders offering no-mortgage-insurance loans with a 10% to 15% down payment. As with the lender-paid mortgages, it’s important to review the fine print and the potential pros and cons of the arrangement.

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Life Events, Mortgage

What Is Mortgage Amortization?

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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.

Owning a home can feel good. But is it a good financial decision?

There’s a lot that goes into answering that question, and one of the biggest factors is something that sounds both incredibly boring and incredibly confusing: mortgage amortization.

It’s not the sexiest financial topic in the world, but it has a big impact on your personal finances. In this post we’ll break it down so that you understand what it is and how it should factor into your decision about whether to buy a house.

What Is Mortgage Amortization?

Each time you make your monthly mortgage payment, that payment is split between paying interest and paying down principal (reducing your loan balance). Amortization is simply the process by which that split is calculated.

See, your payment isn’t split the same way throughout the life of your mortgage. It’s actually different with each payment, with your earliest payments going primarily toward interest.

For example, let’s say you buy a $250,000 house, put 20% down, and take out a 30-year, $200,000 mortgage with a 4% interest rate. That means your monthly payment would be $955.

To calculate how much of that first payment goes toward interest, you simply divide the interest rate by 12 to get a monthly interest rate and multiply that by your outstanding loan. Here’s how it looks in this example:

  • (4% / 12) * $200,000 = $667

That means $667 of your initial mortgage payment is used to pay off interest, while the remaining $288 reduces your mortgage balance to $199,712.

Next month the same calculation is run again, but this time with your slightly lower mortgage balance. That leads to a $666 interest payment and $289 going toward reducing your loan.

And that’s how it works. Your early payments are primarily used to pay interest, but over time it slowly shifts so that more and more of your monthly payment is used to reduce your mortgage balance.

You should receive an amortization schedule when you apply for a mortgage, and you can also run the numbers yourself here: Zillow Amortization Calculator. This will show you exactly how much of each payment goes toward interest, how much goes toward principal, and how much interest you’ll pay over the life of the loan.

What Does That Mean for You?

Okay, great, so you have the technical explanation for how mortgage amortization works. But how is that actually relevant to you? Why should you care?

There are two big implications to keep in mind as you consider whether or not to buy a house.

The first is this is one of the reasons it often requires you to stay in your house for several years before your home purchase pays off versus renting. People often talk about renting as if you’re “throwing money away,” but they forget that you’re doing something very similar in those early years of your mortgage as well.

Remember, those interest payments you’re making, which are the majority of your early mortgage payments, aren’t building equity in your home. That money is going straight to your lender and will never be yours again. It usually takes a while before your home equity really starts to grow.

The second is buying a house costs much more than most people realize. Take the example above. You might think of it as just a $250,000 purchase, but when you include all the interest you pay over the life of that 30-year mortgage, the total cost rises to $393,739.

And that doesn’t even include the cost of homeowners insurance, property taxes, repairs, upgrades, and everything else that comes with owning a home.

The bottom line is buying a house is expensive, and in many cases renting is actually a better financial move, especially if you aren’t committed to staying in the house for an extended period of time. You can run the numbers for yourself here: New York Times buy vs. rent calculator.

How to Combat Amortization

To be clear, mortgage amortization isn’t a bad thing. It’s just how mortgages work, and it’s important to understand so you can evaluate the true cost of buying a house.

But if you’d like more of your money to go toward principal sooner, and therefore decrease the amount of interest you pay, there are a few ways to do it.

The first is to put more money down when you buy the house. That down payment is immediate equity in your home that will not be charged interest.

The second is to make extra payments and make sure they go toward paying down principal. You will have to double-check your mortgage’s specific terms, though, to make sure there aren’t any prepayment penalties or other clauses that would make this a bad idea.

And the third is to take out a 15-year loan (or other shorter term). Using the same example above and changing only the length of the loan from 30 years to 15 years, the monthly payment increases to $1,479, but the total cost of the house over the life of the loan decreases to $316,287. That’s a savings of $77,452 and doesn’t factor in the likelihood of getting a better interest rate in return for the shorter loan period.

Keep in mind all of these strategies can be beneficial in some situations and not in others. In some cases it can make more sense to invest your money elsewhere, so you’ll have to run your own numbers and make the best decision based on your personal situation.

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Reviews

AccountNow Gold Visa Prepaid Debit Card Review: High Fees Make This Card a Last Resort

Advertiser Disclosure

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.

accountnow prepaid debit

AccountNow is marketed as a prepaid debit card that is safer than cash, easy to load and use, and an alternative to a traditional checking account. But a MagnifyMoney review finds AccountNow’s Gold Visa Prepaid Card carries fees that may make it too prohibitively expensive for most people to use.

The fees associated with this card make it a risky bet for cash-strapped consumers looking for a checking account alternative. While it’s free to signup and activate the card, the monthly maintenance fee ($9.95/month) alone adds up to $119.40 per year. The card has also received quite a few complaints from cardholders with the Better Business Bureau, which raises a red flag.

In this review, we’ll go over the features of the AccountNow prepaid debit card, including the pros and cons. We’ll also get to the bottom of the fee structure and expose any hidden fees this card may have.

Why you should use prepaid debit cards

If you’re worried about overspending or you have a poor history with traditional bank accounts, prepaid debit cards can be an ideal alternative. Prepaid debit cards work similar to bank-issued cards because you can deposit and withdraw money and use the card to make purchases.

However, since you can only spend what you have loaded onto the card, it eliminates the risk of overdrafts and spending more than you can afford.

It’s important to know that not all prepaid debit cards are created equally. There are dozens of options to choose from and some cards carry fees that can quickly become expensive.

Overview of the AccountNow Gold Visa Prepaid Card

With the AccountNow Gold Visa Prepaid Card, you can add money to your card through a variety of different methods, shop everywhere and access thousands of different ATMs, send money and pay bills, and earn discounts and rewards.

Fees

While the AccountNow Gold Visa Prepaid Card may help you avoid overdraft fees that traditional banks have, there are many different fees to consider before signing up. These fees include:

  • Monthly service charge of $9.95
  • ATM withdrawal fees
    • U.S. ATM withdrawals – $2.50 per transaction
    • Non-U.S. ATM withdrawals – $4.95 per transaction
  • Teller cash withdrawal – 3% of amount withdrawn
  • Balance inquiry at ATMs – $1.50
  • Reload at retail locations – up to $4.95 (varies by retailer)
  • Automated Clearing House (ACH) debit fee (charged each time funds are withdrawn from your card account using your account and routing number) – $2.50 per transaction
  • Monthly paper statements – $1 per statement
  • Additional debit card – $10
  • Expedited shipping of replacement card – $25
  • Expedited Bill Pay service – $9.95 (whenever you request to have your funds delivered 1-4 business days faster using the Bill Pay service)
  • Foreign currency conversion – 3% of total transaction amount

According to AccountNow’s listing with the Better Business Bureau, they have hundreds of customer complaints, and many of them are complaints about the fees associated with this prepaid card.

Most customers complained that AccountNow didn’t disclose any of their fees when they signed up and the fees were very inconvenient. Imagine needing to withdraw cash from an ATM or wanting to expedite their Bill Pay service and being faced with an extra fee.

A quality prepaid debit card shouldn’t cost you much money each month.

Direct Deposit

While AccountNow states you can get your paycheck up to two days earlier when you sign up for direct deposit, that is not a guarantee.

How soon you receive your paycheck depends on your employer’s payment processing system and how soon they notify the bank of direct deposit paychecks. Prepaid card holders with AccountNow do receive account and routing numbers to set up direct deposit with an employer, but you will have to verify with your specific employer to make sure you can set up direct deposit. Speaking with them directly may also give you a better idea about how soon you’ll receive your funds.

Options to Load Money onto Your Card

Direct Deposit

Direct deposit is free to set up, and you can get paid up to two days faster (depending on your employer’s payroll process and timing). When you sign up for direct deposit, you may also qualify for a $15 bonus.

Use a Loading Network

You can also add cash by using a cash load network like Green Dot’s MoneyPak and Reload at the Register, Western Union, Visa ReadyLink, or MoneyGram. You can find many of these loading networks at locations like Walmart, 7-Eleven, CVS, Kmart, Walgreens, UPS, and more.

With any of these methods, your money will be available within 30 minutes. However, it’s important to keep in mind some stores may charge a small fee to load your card with one of these networks.

Using MoneyGram may be the most affordable option because most stores that offer MoneyGram only charge $3.95 to load your card.

Deposit a Check

If you have a government, payroll, or personal check, you can deposit it for free from your smartphone by using the Ingo Money App. When you use the app to deposit a check, funds are available immediately for a small fee or within 10 days for free.

Making Purchases and Withdrawing Money

You can use your AccountNow Gold Visa Prepaid Card to make purchases anywhere Visa cards are accepted. You can use your card to shop online, reserve rental cars, pay for travel, and more.

AccountNow has a Visa Zero Liability policy. As long as you carry this card, it protects you from unauthorized purchases that can occur as a result of identity theft.

When it comes to withdrawing cash from your card, you can select any ATM, but you may be subject to a fee.

To reduce ATM fees, AccountNow suggests visiting surcharge-free ATMs, or you can request cash back when making purchases at the store.

Options to Send Money and Pay Bills

Paying bills is easy with the AccountNow Gold Visa Prepaid Card because cardholders can simply log on to their bill company’s online portal and enter their card number to pay bills online, or they can use the AccountNow Bill Pay feature to plan ahead and create a list of monthly bills and the due dates so they can be automatically paid each month.

Discounts and Rewards

If you set up direct deposit, you can get $15 credited to your account. In order to qualify for this offer, within six months after being approved for your AccountNow prepaid card, you must have at least $500 deposited into your account via direct deposit for two consecutive months.

AccountNow also has a refer-a-friend program where you can earn $20 and your friend can earn $10 when they sign up for an account using your referral code and add at least $10 to their card within 60 days of applying and signing up.

How to Get Approved

To open an account for a prepaid debit card with AccountNow, you need to be at least 18 years old. You can go to their website to sign up online or call the company at 866-925-2036 to sign up by phone.

The application process is free, and you need the following information: your name, phone number, email, address, mailing address (not a P.O. box), and Social Security number.

AccountNow also states on their website there is a 100% approval rate (subject to verification), and there are no credit checks or activation fees.

How to Access Your Account

Once you open an account and receive your prepaid Visa card, you can go to the Customer Center to view your account balance, transaction details, and user information.

You can also get information about your account on your cell phone via SMS alerts. Carrier message and data rates may apply, but you can set up automatic notifications to receive text messages any time money is deposited into your account.

Fine Print

The terms of this card come with quite a bit of fine print, and you’ll want to review all of it before opening an account.

Fees

Applying for and activating your card is free. It takes 5-7 days for your card to arrive after you sign up. There is no minimum balance requirement, but there is a monthly fee of $9.95, which is high compared to other leading prepaid cards. AccountNow also provides free monthly statements, but charges $1 for paper statements.

Loading Money onto Your Card and Making Withdrawals

The maximum daily limit is $10,000 for direct deposit and $1,500 for cash loads. Third-party money transfer services used to load funds to your card may have their own daily, weekly, or monthly limits on the frequency or amount of cash you can load.

AccountNow encourages cardholders to view their specific cardholder agreement for specific details.

There is a daily limit on how much you can withdraw from your card as well. AccountNow says these limits may vary and recommends cardholders refer to their specific cardholder agreement for more details.

Transaction fees and usage limits can also change without prior notice, except as required by law.

Using Bill Pay

Cardholders can make payments to anyone in the U.S and U.S. territories. However, AccountNow discourages people from making the following payments:

  • Tax payments to the Internal Revenue Service or any state or other government agency
  • Court-ordered payments, such as alimony or child support
  • Payments to insurance companies

Fees may apply for expedited requests.

If you are setting up automatic Bill Pay, you can choose from the following options:

  • Weekly
  • Every other week (payment will be made 14 days apart)
  • Twice a month (your first payment will be the same day every month, with the second payment 15 days later)
  • Monthly
  • Every two months
  • Every three months
  • Every six months

Pros and Cons

Pro: 100% approval rate and no credit check as long as you can verify your identity.

Con: Monthly fee of $9.95.

Pro: No minimum balance requirement, but if you don’t at least have enough money in your account to cover the monthly fee, it will go negative.

Con: Low ATM withdrawal limits.

Pro: Using the card is safer than cash because your purchases are protected.

Con: Expedited fees to pay bills faster or clear deposited checks quicker can be inconvenient and costly.

Pro: Ability to set up direct deposit and receive a $15 bonus.

Con: ATM fees are unavoidable unless you get cash back or find a surcharge-free ATM.

Pro: Automatic Bill Pay.

Con: Many different fees to consider that can add up, such as calling customer service or checking your balance.

Pro: Referral bonuses for signing up friends.

Con: Daily limit for direct deposit and cash deposits.

Other Prepaid Card Options

Given the pros and cons of the AccountNow Gold Visa Prepaid Card, their high fees overshadow most of the benefits leaving much to be desired in terms of a good prepaid card. Below are two alternative options with much lower fees.

Kaiku Visa Prepaid Card

Kaiku is a prepaid Visa card that allows you to load money onto your card easily and even transfer funds from PayPal and Amazon. The Kaiku card has a $3 monthly maintenance fee that is waived as long as you load at least $750 onto the card each month.

There are also no ATM fees when using this card as long as you use in-network Allpoint ATMs.

American Express Serve

American Express has three different Visa prepaid cards, including a cashback card that provides cardholders with unlimited 1% cash back for every dollar spent in-store and online.

American Express Serve’s basic card provides free early direct deposit, free online bill pay, and free ATM withdrawals at over 24,000 MoneyPass ATMs, along with helpful tools to help you manage your money.

While the American Express Serve cashback card has a $5.95 monthly fee, the basic American Express Serve prepaid card has a $1 monthly fee that is waived as long as you set up direct deposit for at least $500 every month.

Final Word

The AccountNow Gold Visa Prepaid Card seems like a last resort option for people who don’t qualify for a regular checking account at a traditional bank and want to control their spending.

If you want to deposit money for a large purchase or withdraw cash from the ATM, you may not like encountering some of their daily deposit or withdrawal fees either.

Overall, the fact that cardholders can pay their bills easily on time, set up direct deposit, earn small rewards, and use their prepaid card just like a bank debit card to make purchases at their favorite stores and online can make this card look attractive.

However, there are much better prepaid cards on the market with lower fees and less limitations even if you have a poor banking history.

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Featured, Investing

3 Common Mistakes Savers Make When They Invest in Target-Date Funds

Advertiser Disclosure

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.

archer target arrow investing retirement saving

Target-date funds (TDFs) are one of the most popular investment options offered by employers because they provide employees an all-in-one portfolio within their retirement plans. To show how popular they are, more than 70% of all 401(k)s provide TDFs, and approximately 50% of participants own them. However, most employees don’t even know what target-date funds are or how they work.

So why the fuss about target-date funds? Although popular, many participants are misusing them and hurting themselves in the long run.

What a Target-Date Fund does:

A TDF is simply an investment fund that owns a bunch of index-style mutual funds. Because TDFs include funds with broad exposure to different types of assets, they allow novice investors to access countless stocks and bonds. For example, the Vanguard 500 Index Fund tracks the S&P 500, which gives investors access to 500 different stocks. A TDF may contain several funds similar to the Vanguard one.

According to a recent study by Aon Hewitt, retirement savers who choose to invest in a single TDF and no other funds had higher investment returns by over 2%. In addition, those participating in TDFs outperformed people who manually managed their retirement investments by a whopping 3%.

Here are some reasons they have been misused, how to overcome them, and why you only need one in your portfolio.

Choosing the wrong year

The name “target-date fund” means exactly what it sounds like. You choose a fund based on the year or “target date” that you plan to retire. TDFs are offered in five-year increments — 2035, 2040, 2045, 2050, and so on. Your goal is to pick a TDF associated with a date that is closest to when you expect to retire.

For example, if you’re 25 years old today and plan to retire at age 65, you would opt for a 2055 TDF option.

Why does the year matter so much? Because the closer you get to retirement, the more conservative your investments should become. This is important, because you have less and less time to bounce back from setbacks as you get closer to retirement. The way TDFs work, they tend to be more heavily invested in risky assets like stocks in your early working years.

“As the investor ages and moves closer to their intended retirement date, a target-date fund will reduce the overall investment risk,” explains John Croke, a certified financial adviser with Vanguard. This process is known as the glide path.

Choosing more than one TDF

Since TDFs are pretty straightforward, many people mistakenly think that they need to split their retirement savings among more than one TDF in order to be truly “diversified.” But the whole point of a TDF is that you only need to invest in one — it is automatically diversified among many assets for you.

“TDFs are designed as ‘all-in-one’ solutions that provide automatic diversification across multiple asset classes,” Croke says. “Owning more than one TDF is not advised or necessary.”

You shouldn’t treat your TDF as if you were a day trader trading stocks either. It’s better to invest in your TDF and keep your funds there rather than to jump in and out trying to time the market.

Paying too much in fees

Compared to traditional mutual funds, TDFs are especially appealing because they charge such low fees. In the world of investing, fees come in many different forms, but the important fee to watch out for is called the “expense ratio.” This is the amount your fund manager charges you for the ability to own that fund. Expense ratios can be as low as a fraction of a percentage or as high as several percentage points. It may not sound like much of a difference, but even a difference of one or two points can mean losing tens of thousands if not hundreds of thousands of dollars over the decades until you retire.

Also, participating in more than one fund just subjects you to more fees that are unnecessary. Why pay more when you don’t have to?

The final word

All in all, TDFs provide an easy, diversified, and low-cost means to invest for retirement. All you need to do is choose one that matches the year you plan to retire, make tax-deferred payments from your paycheck into the fund, and allow your account to grow with history proving that time is on your side when it comes to the markets.

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Featured

3 Investing Strategies to Save for a New Home

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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.

Buying a home is one of the most significant financial decisions you will make in your lifetime. For many Americans, saving for a purchase of that magnitude can feel impossible. The good news is there is no shortage of strategies you can choose from. The number one factor to consider (apart from your income) is how much time you have to save. Depending on when you plan on buying, some options may be better than others.

Here’s a guide to saving for a new home with various timelines in mind.

If you want to buy a home in the next 3 years…

Every investment option comes with a degree of risk, and with only a few short years to save, it’s likely not a wise idea to take big risks with your savings. The last thing you want is for the money to lose value without enough time to recover.

In this case, you should be looking for savings options that offer safety rather than growth, like a high-yield savings account and certificates of deposit (CDs). These are very low risk and, best of all, come with guaranteed returns on investment. If you’re looking for the highest paying savings accounts in your area, you can use our free comparison tool. We also have a list of the best CDs for the month.

If you want to buy a new home in 4 to 7 years…

The longer you have to save for a home, the more creative you can be with your investing strategy. The key is to strike the right mix between safety and growth. You want your money to grow at a comfortable enough pace to beat inflation but maintain enough conservative investments to offset any potential losses you might experience in the market.

You may be able to achieve this with a 25/75 portfolio.

The 25/75 portfolio strategy is pretty simple — no more than 25% of your money is invested in stocks, and the remaining 75% are in bonds. This blend of stocks and bonds should allow your money to grow modestly while keeping safety top of mind. You can start this process by opening a brokerage account and choosing your own mutual funds to reach the right mix. But do your research first. For example, U.S. News & World Report maintains a list of funds that are ranked for their allocation, fees, and performance. 

If you want to buy a home in 8 to 10 years…

Time is certainly on your side if you’ve got nearly a decade to save for your dream home. The key is taking on the right amount of risk. Because you have so much time to save, you can afford to take riskier investment bets, which can potentially reap much higher rewards in the long run.

Consider a 50/50 investment strategy: You’ll invest 50% of your savings in stocks and 50% in bonds. You should have just enough risk to ensure you’ll beat inflation and then some, but still be conservative enough to be able to weather any downturns in the market. To achieve the perfect 50/50 mix, you could split your money evenly between your own selection of stocks and bonds. For those who like a more hands-off approach, U.S. News & World Report has a ranking of mutual funds that are preset to give you the 50/50 allocation. There you can select the fund you feel suits you best. 

Deciding where to invest 

Where you invest your money matters. Save your money in the wrong place and taxes could eat up a portion of your gains each year. You could also be in a situation where taking the money out to buy a home could cause a penalty as well.

If you plan on buying a home in five years or more, strategically using a Roth IRA could be your best option. With a Roth IRA you can withdraw all of your contributions without penalty; additionally, you can withdraw $10,000 of the earnings without tax or penalty for a first-time home purchase. 

Lastly, a plain brokerage account may suit you. There are no tax advantages to investing here, but if you’re using the account to buy a home in the future, there may be more benefits in other areas. You can only contribute $5,500 ($6,500 after age 50) in a Traditional IRA or Roth IRA, and withdrawals are subject to strict rules. A regular brokerage account, on the other hand, has no limits to what you can put in or take out for home purchases or any other purchases. Take a look at your situation and see which options fit you best.

What about my 401(k)?

A common question most people ask is whether they should use their 401(k) to grow the money and then use it to buy a home. This is usually a bad idea. If you withdraw the money before age 59½, you would be subject to a 10% penalty, plus income taxes on top of that amount. In addition, the amount that you withdraw could severely alter your retirement goals. This is called an opportunity cost.

A better idea, though still not one we recommend, is taking a loan from your 401(k). You are allowed to take a loan of up to $50,000 or half the value of the account balance, whichever amount is less. This is still a loan, however, meaning it could affect your ability to qualify for a mortgage. You also have to pay this loan back. Depending on your company’s 401(k) rules, if you leave the company, the entire balance of the loan might come due within 60 to 90 days after you leave. If you stay with the company, you could be required to pay the loan back within five years.

Thankfully, your 401(k) isn’t your only option. Taking money from a Traditional IRA is a bit better. You are allowed to withdraw $10,000 without penalty for a first-time home purchase. This may change your tax situation as any withdrawal would have to be counted as part of your regular income. For most people this still isn’t the best option but certainly better than dipping into your 401(k).

Making a clear goal

Do some research to see what home prices are like in your desired area. Then make a clear savings goal. An easy way to do this is to take 10 to 20% of the average home value in your area to estimate your downpayment. Use this calculator to see how long it will take you to reach your goal.

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Reviews

Victoria’s Secret Angel Credit Card Review

Advertiser Disclosure

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.

If you’re a big Victoria’s Secret shopper, the Angel credit card may be one you’ve considered signing up for especially since the holidays are right around the corner. The Angel card gives members the opportunity to earn Victoria’s Secret rewards, free shipping, and other gifts.

You can swipe the Angel card at Victoria’s Secret and PINK stores and Bath & Body Works (in-store only). But, you’re only able to earn and redeem points at Victoria’s Secret and PINK stores.

The Angel Rewards Program has three rewards tier levels including Angel, Angel VIP, and Angel Forever. A rewards level is assigned to you based on the points you earn from the card. We’ll discuss the benefits of each tier in this post along with:

The credit card basics
How to redeem points
The fine print details
How to qualify for the card
The pros and cons
The basics of the Angel credit card

Victoria’s Secret Angel Credit Card Basics

1. Earn 1 point per dollar when you purchase non-bra items.

Victoria’s Secret stores sell perfume, clothes, panties, and many other items besides bras. For these items, you earn 1 point for every dollar you spend.

2. Earn 3 points per dollar on bra purchases.

Victoria’s Secret gives you a special bonus when you shop for bras. On bras, you earn 3 points per dollar including ones that are on sale.

3. Extra benefits such as free shipping.

vs-credit-card-logCardholders also get free standard shipping for orders that include a bra purchase. All cardholders get a birthday gift as well. According to Angel credit card services, the birthday gift is a $10-off shopping coupon.

Redeeming Victoria’s Secret rewards

The Angel Rewards Program is multifaceted. You get extra opportunities to earn more points than the basic 1 point per dollar spent, and there’s a tiered rewards system that determines what exclusive offers you qualify for.

How to earn bonus points

Besides earning 3 points per dollar on bras, cardholders will be notified of special promotions where they can earn extra points for other items.

In addition, each cardholder can choose a triple point day or days. Triple point days are days you select throughout the year where you will get 3 points per dollar on all purchases, no restrictions.

The number of triple point days you can choose depends on your rewards tier.

Angel Rewards Program tiers

The Angel card has three rewards tiers:

Angel – no point requirement

Angel VIP – cardholders must earn 500 points to reach this level

Angel Forever – cardholders must earn 1,000 points to reach this level

You’ll be bumped up automatically to the next tier if you earn the amount of points required during the 12-month Angel Rewards Program year. The program year goes from February 1 to January 31.

If you get moved up to the second level, Angel VIP, you stay on that level until you earn enough points to reach Angel Forever status. You will never be demoted back to the Angel tier.

If you attain Angel Forever status, you’ll stay there for the entire program year you earned 1,000 points and one year after. However, the following year, you need to requalify by earning another 1,000 points. Otherwise, you’ll be taken down to the Angel VIP tier.

Cardholders at the very lowest tier (Angel) can choose 1 triple point day per program year. Angel VIP cardholders can choose 2 triple point days per year. Angel Forever cardholders get to choose 3 triple point days per year.

Exclusive benefits for Angel VIP and Angel Forever members include access to exclusive event invitations (like store promotions). Angel Forever cardholders also get a special thank-you gift each year.

Redeeming points

Every time you earn 250 points you receive a reward that’s essentially a store coupon. Angel and Angel VIP members get a $10-off reward. Angel Forever members get a $15-off reward.

The reward will be mailed to you within 3 to 6 weeks of earning it. It expires 90 days after it’s issued, so be sure to use it right away.

You cannot use points earned for statement credit, for cash redemption, or to purchase gift cards.

The fine print and fees

The Angel card has no annual fee. However, the red flag is in the interest rate. The interest rate is 25.24% APR, which is pretty high. Carrying forward a balance on this card will be counterintuitive if you want to benefit from the rewards program because you’ll pay quite a bit in interest charges.

The Angel card is standard in regard to other fees. The late fee is up to $37, and the returned payment fee is up to $25.

Qualifying for the Angel credit card

You can apply for the Angel card at a Victoria’s Secret or PINK store. You can also apply online. A credit check will be performed to determine your creditworthiness. Like most store cards, you can apply and get approved within minutes at the store checkout counter. Just know that any time your credit is run for a new credit card application, it will ding your credit score. 

However, there is a way to see if you are pre-qualified for a Victoria’s Secret credit card without hurting your credit. Getting pre-qualified is simply a company’s way of telling you that you could qualify for a credit card if you decide to apply for it. You are not actually signing up for a credit card if you are pre-qualified. This is simply a way to make sure you will qualify for the offer if you apply, so you don’t ding your credit score for nothing.

Here’s how: 

 

Step 1: Go to checkout with an item in your cart (you don’t need to buy anything in order to get pre-approved).

Step 2: Enter your name, address and phone number. Be sure to use the address you typically use for bills so they can match it up.

step1

Step 3: Continue to the payment and offers page

Step 4: If you’re pre-approved for a credit card, you will see a pop-up message with your initial credit limit and a link to apply (for real this time). You can then go on to open an account.

step4

If additional information is needed to make a decision, you may have to wait up to 30 days before you’re officially approved for the card. Victoria’s Secret doesn’t have a preset credit score requirement that’s used to qualify (or disqualify) applicants.

Current cardholders report getting approved for the card with a credit score in the mid-500s and higher. The high interest rate is also an indicator this card may be open to those with fair credit.

Pros and Cons

Pro: No annual fee. There’s no annual fee, so Victoria’s Secret shoppers will get rewarded for spending without having to worry about that extra expense.

Con: The interest rate. The interest rate for this card is high. If you carry an account balance, any reward earned (free shipping, coupons, or gifts) will be diminished by the amount you pay in interest charges.

Pro: No cap. You can earn an unlimited amount of points. You’ll automatically get a coupon whenever you reach the 250 point threshold.

Con: The restrictions. Even though there’s no cap, there are a few restrictions in other areas. Points expire 12 months from the date that you earn them. You’re also restricted in how you can use points. There’s no way to cash out other than making a new purchase with your rewards coupon.

Pro: Extra benefits. Beyond the $10 and $15 rewards given for points earned, you get free shipping on purchases that include a bra. Victoria’s Secret may occasionally offer more points for certain purchases as well. You also get a special birthday gift.

Other rewards cards

Ultimately, a store card won’t be worthwhile if you don’t have a reason to spend in that store often. Here are a few cards that will reward you for all spending:

Citi Double Cash – The Citi Double Cash card will give you 1% cash back when you make a purchase and another 1% cash back when you pay off your credit card statement. You can redeem cash back for statement credit, gift cards, or checks.

Chase Freedom – The Chase Freedom card is a cash back card with revolving quarterly categories. Shopping in the bonus category will earn you 5% cash back.

For 2016, the bonus categories are:

January to March – Gas stations and local commuter transportation

April to June – Grocery stores and wholesale clubs

July to September – Restaurants and wholesale clubs

October to December – Wholesale clubs, department stores, and drugstores

The cap for the bonus category is $1,500 per quarter. All other purchases on your Chase Freedom card get 1% cash back. You can use cash back for statement credit, direct deposit into a savings or checking account, gift cards, or travel.

Who will benefit the most from the Angel credit card?

Unless you shop heavily at Victoria’s Secret and PINK stores, getting a card that will only reward you for spending at these retailers is not a good idea. And since the credit card reward is a coupon for more shopping, taking part in the program may even cause you to spend more than necessary.

Be careful if you’re thinking about opening this credit card just for holiday shopping. Buying now with the intent to pay later can cost you. Accumulating interest charges may outweigh any benefit that you would get from free shipping, rewards points, or birthday gifts. 

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Judge Deals Major Blow to Obama Administration’s New Overtime Rule

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In a major blow to one of the last major regulations proposed by the Obama administration, a Texas federal judge has temporarily blocked the implementation of a rule that would have made 4.2 million workers eligible to receive time-and-a-half pay for overtime work.

The judge ruled on Tuesday in favor of a joint lawsuit filed by 21 states challenging the rule, which was set to take effect Dec. 1, arguing that the rule was imposed “without statutory authority”.

The rule would have required companies to pay overtime wages to non-exempt employees who earn less than $47,476 per year — double the current threshold of $23,660. The rules were first proposed in May and the Obama administration gave business owners six months to comply.

Over that time, many companies decided to bump salaried workers pay above the $47,476 threshold to avoid paying overtime hours. Other employers considered hiring more part-time workers and capping existing workers hours at 40 hours per week to avoid the increased cost of paying overtime.

The fate of the overtime laws is uncertain. The judge’s injunction precedes a final ruling on the law, but it suggests he will rule against it. President-Elect Donald Trump has been vociferously against heightened federal regulations and has vowed to impose new limits on how many new regulations can be implemented — for each regulation approved, at least two must be removed, he’s proposed.

So, about those pay raises…

MagnifyMoney spoke with several workers who received raises over the last six months. Christa Hoskins, a 25-year-old graphic designer in Fort Meyers, Fla., received a whopping $10,000 salary increase. Caroline Powell of Athens, Ga. not only received a 10% pay raise but was also promoted to director of customer service at the startup she’s worked for since 2015.

Is it possible that employers will try to walk back raises if the rule is ultimately blocked? Unfortunately,  that may be the case, says Suzanne Boy, an employment law attorney with Henderson, Franklin, Starnes & Holt, in Fort Myers, Fla.

“I do think some employers may decide to walk back pay raises and other changes that were made in anticipation of the rule change,” Boy says. “For the most part, employers will not face legal consequences for rolling the changes back, particularly if the changes were not due to be implemented until next week.”

However, if employees who received raises were granted new contracts, it will be much more difficult for their employers to walk back on those promises. Since each state can have different wage laws, she suggests business owners consult with an employment law attorney in their state before moving forward with any changes.

“If the [compensation] changes have already been implemented and the employee is working at the new rate, employers must be more cautious,” she says.

If the regulation is ultimately implemented, it will increase the number of workers eligible for overtime pay by 3.5% and give business owners the unquestionable challenge of coping with increased labor costs. There hasn’t been an increase to the salary threshold for overtime pay since 2004, when it was raised to $23,660.

Read next: 5 Ways the New Overtime Rules Could Impact Your Paycheck >

Additional reporting by Lori Johnston

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