If you have a credit card, your financial institution has likely mailed you checks for cash advance purposes. Understanding this aspect of your available credit is incredibly important, as it can be much more expensive than simply making a purchase.
Taking a cash advance gives you money now in cases where you can’t use a credit card (perhaps paying rent), or have otherwise maxed out your purchasing power. Many financial institutions will charge you a fee between 1% and 5% just for making this transaction.
But some cards have no fees for cash advances.
The catch is, interest starts accruing immediately on cash advances, meaning that even if you pay your statement balance in full by the due date, you will still incur interest charges in the interim. So if you do a cash advance, try to pay it off as quickly as possible, even before the due date, to minimize the interest you pay.
Best Cards with No Cash Advance Fees
These credit unions offer no cash advance fees on all their credit cards. While you’ll pay interest from the day you take out the cash, as a last resort it’s a better bet than paying an upfront fee. These are all credit unions anyone can join, but many of them require excellent credit to qualify for a card.
Pentagon Federal Credit Union, commonly known as PenFed, offers five different credit cards with no cash advance fees. None of them charge a foreign transaction fee, and all interest rates are the same for purchases and cash advances.
Anyone can join PenFed Credit Union simply by making a one-time donation of $17 to either Voices for America’s Troops or the National Military Family Association.
PenFed Platinum Rewards Visa Signature® Card
PenFed Promise Visa® Card
PenFed Premium Travel Rewards American Express® Card
American 1 Credit Union offers four different credit cards with no cash advance fees. Interest rates on purchases and cash advances are the same, though there is a foreign transaction fee of 1%.
Anyone can join American 1 Credit Union by joining Community 1 Cooperative. You pay $3 for membership, which includes a litany of discounts on consumer products and services across an array of industries.
CapEd Federal Credit Union offers one card with no cash advance fees. It also carries the same interest rate for purchases and cash advances, but does have a foreign transaction fee that varies depending on if the transaction is in USD or requires conversion into a foreign currency.
To join CapEd, all you have to do is make a one-time $20 donation to the Idaho CapEd Foundation.
First Tech Federal Credit Union offers three different cards that come with no cash advance fees. The interest rates on these transactions will be higher than the interest rates on regular purchases, however. There are no foreign transaction fees.
Anyone can join First Tech through membership in the Financial Fitness Association, which costs $8 per year, or a digital membership to the Computer History Museum, which will run you $15 per year.
ISU Credit Union offers two cards that have zero cash advance fees. Interest rates on cash advances are higher than those on regular purchases for the first year only, and there is a foreign transaction fee of 1%.
To join ISU Credit Union if you don’t live, work or study in Southeastern Idaho, you can qualify through paid membership at a number of Southeastern Idaho organizations including humane societies and educational cause groups. Also, ISU has a $1.00 membership fee and a minimum deposit of $25.00 which represents your share of ownership in the credit union . You must maintain a share balance of $25 while your account is open.
Stanford Federal Credit Union offers several cards with no cash advance fees for which the general public qualifies. There are no foreign transaction fees, and rates are the same for purchases and cash advances.
Digital Credit Union offers two cards with no cash advance fees. While interest rates are the same for both cash advances and regular purchases, foreign transaction fees will vary based on the need for currency conversion.
You can join Digital Credit Union by donating to any number of organizations that match your interests. The most common organization new members choose is Reach Out for Schools, which only requires a one-year membership at the cost of $10.
DCU Visa® Platinum Credit Card
DCU Visa® Platinum Rewards Credit Card
Other Options with Restricted Membership
There are other credit unions that offer no cash advance fees, however they have restricted membership based on your residence or other factors. Here are some other cards that can be an option depending on where you live.
While cards that offer no fees on cash advances are cheaper, that does not mean these transactions are cheap. You should only take a cash advance as a last resort in a true emergency. In order to avoid becoming one of the American households that can’t cover $400 financial hardships, start building an emergency fund today. When you withdraw money from your own savings account, you have to pay zero interest and zero fees.
If you don’t have an emergency fund, but you do have a credit card, it is wiser to charge emergency expenses as a purchase rather than taking money out as a cash advance if at all possible. Even when interest rates are identical for these two different types of transactions, cash advances will start charging you those rates immediately, while purchases won’t require you to pay interest until after the first statement is issued.
Payday loans are another alternative. However, they’re not necessarily a good one. They often come with numerous fees and aren’t as hassle-free as some lenders make them out to be. If you don’t pay off your loan at the end of the term (often about two weeks), you risk incurring fees that can add up to more than your loan. This can translate into effective interest rates in the triple digits. If they’re your only option, be extremely careful. Above all, make sure you fully understand the terms and costs.
Foreign travelers will also want to charge purchases whenever possible for this same reason. If you must use cash, a cash advance is a safer alternative to withdrawing money from your bank account abroad, but it is also wise to pay it off using your financial institution’s online services as soon as possible to avoid paying more interest than you have to.
Cash advances aren’t ideal, so if you can avoid them you should. However, they are a much better option than turning to the alternative lending industry where you’ll find predators and payday loans.
There are, however, some products for which you’ll have an easier time qualifying. Before you apply, make sure you’re prepared to be responsible with your new line of credit so you can boost your score and credit history rather than damaging it further. The best way to do this is to spend within your means by creating a budget and sticking to it. Here are some helpful tools to help you do just that. Remember to always pay your bill off in full on or before the due date each month to establish good credit.
Here are the products and topics we’ll be discussing today:
Before you apply for a credit card check if you’re pre-qualified from a variety of institutions. This does not hurt your credit score. Sites such as CreditCards.com provide good tools that can match you to offers from multiple credit card companies without impacting your credit score. This is a good first step when looking to apply for credit. You can read our complete guide to getting pre-qualified for a credit card here.
Build Credit with Secured Credit Cards
If you are trying to rebuild your credit, one of the best approaches is to get a secured credit card. In order to get the card, you will have to write a check to deposit with the credit card company. This money will be your line of credit.
In order to effectively rebuild your credit, you must actually use the card, and we recommend not charging more than 20% of your credit line. For example, if you have a $500 credit line, you should not charge more than $100. Then, pay off your balance in full every single month. You can even build credit with $10 a month on a secured card and see your credit score rise.
After you’ve consistently managed your secured card well over a period of time, you may be able to increase your credit line beyond your initial deposit or migrate to an unsecured credit card. With most companies, this is a tedious process that you’ll have to initiate. You also aren’t guaranteed to get results even after you’ve made a request.
Discover operates differently than most companies in this realm, making it our number one pick for secured cards.
If you’re looking for a secured credit card, look no further than Discover it® Secured Card. On top of being great for people with a bad credit score, Discover will also accept applicants who have no credit history at all. Discover offers great ways for you to rebuild your credit and be on the way to an unsecured card.
Bankruptcies May Be OK If you have a Chapter 7 bankruptcy on your credit report, it won’t automatically disqualify you from getting approved for a Discover it® Secured card. However, there are no guaranteed approvals. This is a positive if you’ve had trouble getting a credit card in the past.
Helps You Rebuild Your Credit This is a legitimate way to rebuild your credit when you don’t qualify for other cards, or the agreement you are offered by another company is laden with fees and high interest rates.
Offers a Rewards Program Not only can you rebuild your credit, but you’ll also earn rewards points as you do so. This is a great feature that many secured cards don’t offer and is a reason why we consider Discover number one. Earn 2% cash back at restaurants or gas stations up to $1,000 in combined purchases each quarter. Plus 1% cash back on all other credit card purchases. During your first year, Discover will also match your cash back.
Easy to Get a Credit Increase Every eight months, Discover reviews your account to see if you’re eligible for an increase on your line of credit. This is typically a process you’d have to initiate with other lenders. So rest assured that Discover will give you an updated line of credit reflective of your changing situation.
Easy to Transition to an Unsecured Card Some companies will make it difficult to transition from a secured to unsecured card. Not Discover. They assess your eligibility during that eight-month checkup. This helps facilitate you from a secured to unsecured card.
Rewards Limited The higher 2% reward tier is limited to the first $1,000 you spend at restaurants and gas stations each quarter. Regardless, that’s $20 back, which is a great reward when your goal is to increase your credit score.
Be Careful Not to Overspend As with the other cards in this review, you have to be careful that the rewards program doesn’t entice you to overspend. Otherwise, you run the risk of damaging your credit score further. Make sure that your primary goal, to raise your credit score, precedes the urge to spend too much money in order to get rewards.
Discover it® Secured card is a fantastic product for those with bad credit. Pay your balance in full by the end of every statement period and your financial life is almost guaranteed to get rosier. You’ll even have the added benefit of rewards — just be careful not to let the rewards program lure you into overspending. With proper practices, you’ll be on your way to an unsecured card and a better credit score.
This card does not do a credit check, and no bank account is needed to apply. This is beneficial for those with low credit scores or no access to a bank account. If you’ve filed for bankruptcy, you’re in luck because they don’t care to know, unlike other institutions. However, OpenSky charges a $35 annual fee, which Discover does not. This can be a deal breaker if you don’t want to pay a fee, since there are many secured cards without fees.
If you’re looking to open a credit card with bad credit, it can be hard to find a card you qualify for. That’s where credit unions come in. They are sometimes more accepting of your credit history and have cards especially designed for people with low credit scores — helping your approval chances.
Georgia’s Own Credit Union offers a variety of credit cards all with low interest. Their Visa Classic unsecured card is positioned toward those who need to rebuild credit and boasts a low APR. When you apply for a credit card on Georgia’s Own website you are directed toward an application that is for all credit cards they offer. This means that depending on your creditworthiness, you may not be directed to the Visa Classic as an option. Therefore, if you want to apply directly for the card, the best bet is to speak with a loan officer who will tell you if you’re pre-approved for the Visa Classic card.
Good chance of getting approved Georgia’s Own tailored this credit card toward those needing to rebuild or re-establish their credit history. This gives those with bad credit a greater chance of being approved. Also, if your score is above 620, you are more likely to be approved.
Fair APR This card has a fair APR ranging from 12.99% to 17.99% variable. This is significantly lower compared to other cards targeted to people with less than perfect credit, with APRs as high as 23.99%. Although your goal is to pay every bill in full and on time each month, if you keep a balance, this low APR won’t accrue as much interest as other cards.
Have to join the credit union In order to get this card, you have to join Georgia’s Own Credit Union. Anyone can become a member regardless of residence. If you don’t qualify for Georgia’s Own free eligibility options, you will have to join the GettingAhead Association, which has a $5 annual membership fee. The best bet is to speak to a loan officer (404-874-1166) and see if you’re pre-approved for the credit card, and if pre-approved, you can join GettingAhead while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.
2% foreign transaction fee Make sure to leave this card at home when you travel abroad as you’ll be charged a 2% foreign transaction fee on all purchases. This is slightly lower than most cards, which charge a 3% foreign transaction fee, yet high enough to increase your bill significantly if you make purchases abroad.
No rewards program There is no rewards program for this credit card. Georgia’s Own offers several other cards that have rewards programs, but you may have a harder time qualifying if you don’t have a good credit score.
The unsecured Georgia’s Own Visa Classic card is a good option for people who have a bad credit score. If you don’t mind joining a credit union and plan on practicing proper credit behavior, you can rebuild your credit score. Later on, you’ll be able to qualify for other credit cards that have rewards programs.
If you’re looking to get some cash in your pocket, credit cards in general aren’t your best answer. Cash advances are not ideal, and putting a purchase you can’t currently afford onto a credit card with a high interest rate attributable to your not-so-great credit score is going to be an expensive venture.
Instead, you’ll want to consider personal loans. They’re admittedly a little more work up front with the application process, but the savings can be worth it. YOu can check to see if you are prequalified without impacting your credit score at most lenders. And LendingTree (the parent company of MagnifyMoney) has created a tool that lets you compare rates from dozens of lenders at once, without impacting your score.
LendingTree, our parent company, offers a one-stop tool that can help borrowers find numerous personal loan offers. After entering some basic information, you can receive offers from lenders in a matter of minutes. If you prefer to go directly to the lender’s site you can use one of the options listed below.
Check Multiple Offers at OnceYou can check personal loan offers from a wide range of lenders including Avant, LendingClub and Best Egg. The entire process happens online for free and is fast and easy.
Soft Pull on Your CreditLendingTree performs a soft pull on your credit in order to give you accurate loan offers. This does not affect your credit score and can give you a good picture of what to expect if you're approved for a loan.
Need to Create and Account to View OffersThe only way to view your personal loan offers is to create and account at LendingTree. This is a minor step, but it does allow you the ease of saving your offers so you can review them later.
LendingTree offers a great tool that lets you easily check your rates for a variety of lenders, all in a matter of minutes. This is a great way for you to see what rates you may get and allows you to shop around for the best offer, without the hassle of going to multiple websites.
Checking your Loan Options will not affect your credit score.
Apply Online The entire Avant application process happens online. This saves you the hassle of filling out paperwork and visiting a local branch.
Check Your Loan Options Before You Apply Avant allows you to check your Loan Options that you would be offered with a soft pull on your credit. This will not impact your credit score. This is helpful if you’re shopping around for different rates and gives you a realistic picture of what to expect should you choose Avant.
Could Save Money over Subprime Credit Cards Depending on the interest rate and upfront fee percentage you are offered, a personal loan from Avant could save you money over putting purchases on a subprime credit card. The ability to preview your interest rate can also help you compare between personal loans and other possible options.
High Interest Rates Because you’re a subprime borrower, you’re not likely to qualify for the lowest interest rate offered. You’re more likely to be offered something closer to the 35.99% rate. This is a very high rate, and it’s important that you make all of your payments on time to avoid paying interest and damaging your credit score.
While there’s only one con for Avant’s personal loans, it’s a pretty big one. The interest rate can be extremely high, so do your math before deciding if this is a good product for you. And be sure to take advantage of the fact that they’ll let you check your interest rate before officially submitting your application. Use this feature to shop around for best offers and check if you qualify for a better loan
Avant is easier to apply for as the application process will take place online, but if you’re willing to go somewhere in person, you can also apply with OneMain. Its application is also online, but in order to be approved, you’ll have to show up at a local branch with documentation backing the information you submitted at home.
Talk to a Loan Officer At OneMain you have the benefit of talking to a loan officer and explaining your personal situation. This is a positive experience that can help you explain anything that can’t be seen on an application.
Receive Money Same Day If you apply online before noon, you usually will receive the loan the same day. This is helpful if you need money quickly. After the loan is approved, you have 14 days to change your mind and return the loan proceeds. If you do that, you will not be responsible for any of the accrued interest.
High Interest Rates Accrued Daily Even though the interest rates may be more reflective of your situation, they are still high. Interest accrues daily, which could add years to your loan if you don’t pay on time. Be sure to make your payments on time each month to avoid paying high interest rates.
Must Meet in Person You have to physically bring your paperwork into a OneMain branch after applying online. You will also have to complete an interview with a loan officer. This can be a tedious process if there is no OneMain branch located near you.
Must Borrow a Minimum of $1,500 Depending on how much cash you need, the $1,500 minimum may be too high if you only need a couple of hundred dollars. There is no maximum loan amount offered.
OneMain locations can be a good choice if you want to have your loan the day you apply. If you’re okay meeting someone in person and have the transportation to get to your closest branch, this may be an option worth exploring. Make sure you decide if this offer is right for you and if you need a loan over $1,500. Check to see if you’re pre-qualified for a better offer from other institutions.
Last Resort: Subprime Credit Cards
Subprime credit cards are those that lending institutions issue to those with “bad” credit. They are not a good solution to your credit woes. They almost always come with high interest rates and a litany of fees — both of which make it difficult to use this product responsibly.
For example, First Premier makes a business out of lending to subprime borrowers with bad credit. Most of their applicants are only awarded a $300 line of credit. That’s after they pay a $95 fee just to apply (which is not a common practice in the credit card industry) and a $75 annual fee. If you are approved for a higher credit limit, your annual fee for the first year may be higher ($79-$125). In the second year, the annual fee drops ($45-$49), but at this point you are charged a $6.25-$10.40 account servicing fee every single month.
The cherry on top? The card’s APR is 36%. Heaven forbid you are ever late on a payment — your balance will skyrocket with the insanely high interest rate. Don’t forget about the late payment fee — up to $38.
Another example is Credit One Bank — not to be confused with Capitol One Bank, though their logos do look eerily similar. Not every Credit One Bank credit card comes with outrageous fees. In fact, there are 26 separate possible card agreements. But if you are a subprime borrower, you’re likely to qualify for higher rates.
Your credit may not be great, but that doesn’t make subprime credit cards a “fair” product. You may qualify for other, better options that aren’t as laden with fees. That’s why we recommend you first check if you’re pre-qualified for offers then look at store cards and personal loans before choosing a subprime credit card.
Store cards can be used as payment anywhere the credit card company, such as MasterCard or Visa, is accepted. Private label cards can only be used at the branded company’s store. For example, if you get a private label card for New York & Company, you can only use it for purchases at New York & Company. You would not be able to use it at any other store.
Your best bet is to ask. If you are applying online, pick up the phone and call or use the company’s online chat if available.
If you have a physical card in front of you, you’ll notice that store cards always have the associated credit card company shown on the front, whether that be Visa, American Express, MasterCard, or another.
Private label cards tend not to display this information, though a major financial institution that a lot of companies work with for their private label cards is Comenity. If you have a card associated with Comenity Bank, it is likely a private label card.
Personal loans are typically issued by more reputable lenders who aspire to more transparency than those in the payday loan space. Payday loans are often advertised as having interest rates somewhere between 10% and 30%, but that interest is charged over a short period of time, making their effective APR (annual percentage rate) much higher. Some payday loans have an effective APR of 400% or more.
The lender isn’t likely to tell you that, though. Many businesses in this space are predatory. Payday loans also tend to come with outrageous fees.
While rates and fees on personal loans for those with bad credit aren’t ideal, they’re more than substantially lower than those of payday loans. Make no mistake about it: despite enticing advertising promises of deceptive payday lenders, personal loans are an infinitely better option.
Borrowing cash from your credit card company often comes with a fee of 1%-5%. That may not seem terrible when you look at the upfront fees of many personal loans, but you also have to account for interest.
Unlike purchases you charge to your card, interest on cash advances starts accruing immediately. You do not get to wait for your next statement to be issued. The interest rate for cash advances is also often higher than that of regular purchases.
A personal loan is an installment loan with a balance that will go down if you pay the minimum payment each month. This makes it far easier to manage than debt accrued via a cash advance. If you only pay the minimum payment on a cash advance each month, your balance will go up at a quick pace, potentially spiraling out of control.
First of all, the less you charge, the easier it will be to pay back. Since you have a bad credit score, you may have had issues with charging too much in the past and being unable to pay it off.
Secondly, around 30% of your credit score is made up of your credit utilization ratio. You find this ratio by dividing the amount of credit extended to you by the amount you have borrowed. By borrowing only 20% of your available credit, you reduce the risk of having your current balance negatively impacting your credit score.
Potentially. Ten percent of your credit score is made up of something called “credit mix.” You don’t need to have every single type of credit in your credit report, but you should have more than one type. Here are the five that count:
Finance company accounts
Conceivably, if you have a mortgage or business debt tied to your Social Security number or EIN, you might be able to get away with rebuilding your score through a personal loan (which is an installment loan). The key is to manage all of those debts well — and to do so consistently — especially since you already have bad credit.
Who doesn’t want to save the planet and maybe save a little money along the way? One way to chip in and do your part is by changing where you get your electricity on a day-to-day basis. Instead of using traditional electricity to power your home, you can look into greener alternatives like solar panels.
These systems used to be very expensive, however, as more people have moved into the market, the pricing on these sun-gathering energy collectors has come down rapidly.
On top of decreased costs at the time of purchase, solar panel systems can actually have a profitable return on investment. Here are some of the costs and benefits you should take under consideration before making the plunge.
Cost of solar panels
When figuring out upfront costs, you’ll want to account not just for the panels, but also for their installation. The national average cost to purchase and install a solar panel system is $3.50 per watt, with the average American home requiring a 5,000 watt system. That means that the average upfront investment is $17,500.
The price for your power system may vary your particular home in your state. You should, of course, do local research, but we’ll go with the national average for the purposes of our calculations.
The Federal government offers a 30% tax credit for the installation of solar or wind systems at residential properties, so this will effectively bring the average cost down to $12,250. On top of federal tax credits, also do some research for state and local tax credits or programs that can further bring down costs.
Over the life of your solar panels, which will likely be between 25 and 40 years, you will have to perform regular maintenance. National averages for this cost come out to a little over $20 per year.
You will also want to call your insurance provider to see what will happen to your homeowner’s premiums. In many cases the costs stay the same or even go down as those who are eco-conscious enough to install solar panels are currently viewed as more responsible than the general populace. The rate cut is even more likely if you have the panels set up in your yard rather than on your roof. Some insurers will raise rates, though, because of the added load to the structure when panels are installed on the roof.
Benefits of using solar panels
If you’re going to spend about $12,500 on a solar panel system and then pay at least $500 in maintenance over the term of its life, warm and fuzzies about saving the planet may not be doing it for you. You’ll want to know there’s a return on investment.
Producing solar power is not inherently cheaper than using regular electricity at this point in time. When you purchase your solar panels, you are essentially paying for your electricity for the next 25 to 40 years up front. Depending on where you live, this may or may not be cheaper than actual costs of electricity.
However, one beauty in making this investment is that you can actually sell off any excess energy you generate. Those that deliver electricity have to meet certain quotas of green energy per month. They do this less often by generating green energy themselves, and more often by buying green electricity from others.
That green energy is bought and sold via Renewable Energy Certificates, or RECs. When you generate 1 megawatt-hour in excess of what you actually use, you will be issued a certificate that you can then sell to your local utility company. How much you get for each of these certificates will vary both by geographic location and current market value, but to give you an idea, last year you could get about $200 per certificate in the state of New Jersey.
Financing Your Solar Panels
Don’t have $17,500 up front to invest? Because of the potential savings on energy, depending on your area, and the added bonus of RECs, it may be worth it to finance. (You’ll have to wait until tax season to see that 30% credit from the IRS.)
The government offers Energy Efficient Mortgages to fund these types of improvements. In order to obtain one, you will need to get your home assessed so the government can calculate how much savings the solar panels would provide to you. That way, they know the loan is a good investment.
You can also take out a Home Equity Line of Credit (HELOC) where your home serves as collateral if you are unable to repay your loan. Taking out a HELOC means you have the potential to lose your home if you fall behind.
Another option is personal loans. Here are some of the most competitive lenders in the personal loan industry, all of them providing unsecured lending, so you won’t have to hand over any collateral.
SoFi provides unsecured personal loans, currently at a fixed rate of 5.49%-14.24% APR and variable rate of 5.29%-11.44% APR depending on your cash flow and credit history. Loans can be for either 3-, 5- or 7-year periods with no origination fees, and if you lose your job during that time, SoFi may temporarily pause your payments and help you find new employment through its Career Services resources.
LightStream actually provides loans specifically for the purchase of solar panels. Shorter terms of 2-3 years based on our average loan come at a fixed rate of 4.99% with AutoPay for those with excellent credit, and rates increase with your term up to 7.99% on 7-year loans for those with excellent credit. It charges no origination fees.
If you have a credit score of 720 or over, you may want to look into Earnest. It provides personal loans in 1-, 2- and 3-year increments at starting fixed interest rates of 5.25%, 5.35% and 5.49% APR respectively, based on our $17,500 number. These loans also have no origination fees.
Upstart loans do come with an origination fee of 3.655%-8%, but they are more likely to accept a wider range of applicants than the above lenders. Its interest rates are competitive starting at 9.56% APR, though those with lesser credit scores can end up paying up to 29.99% APR if approved. Upstart’s loans come in three-year terms.
If you can’t qualify for a personal loan, or simply don’t want to go through the hassle of installation and maintenance, there is hope yet. You don’t necessarily have to purchase your own solar panels in order to turn your house into a green machine.
The reason companies are able to install and maintain your panels free of charge is that they will be taking all of those tax credits; you don’t get to claim them come April. They will also be benefiting from the sale of any RECs your household generates.
You are likely to save a little money long-term when you lease, and you’ll be making a decision that will help the planet for future generations. Doing so costs very little up front, and you won’t have to deal with any stress related to maintenance over the years.
If you’re looking for an investment that will net you cash long-term, though, buying is the way to go if you can afford it or get your hands on a personal loan with a competitive interest rate. Be sure to do research relative to your local community as far as costs and energy generation goes, as solar panels will be far more financially advantageous in some regions of the country over others.
Recently, you hopped online to make your mortgage payment. On the front page of your financial institution’s website, you saw refinancing advertised at a much lower interest rate than the one you currently carry.
Your gut instinct may be to fill out an application for a refi. Who doesn’t want a lower interest rate on their mortgage?
But before you jump at the offer to refinance with your current lender, you should shop around. There may be better deals out there.
Pros And Cons Of Refinancing A Mortgage With Your Current Lender
They have all of your personal information on hand, which may help the approval process go marginally faster.
You may be able to use your continued patronage as a bargaining chip for lowering closing costs and other fees.
If you like your current financial institution, there’s nothing wrong with staying with them out of brand loyalty — as long as it’s not costing you money.
You will still have to provide documentation such as bank statements and W-2s, and your lender will still have to pull your credit report.
They may not have the best rates on the market. You’ll need to shop around to find out.
They may have more or higher fees than their competitors.
If you’re a customer service nightmare, your current institution may offer you higher rates
How to shop for a refi loan
That advertised rate you saw may not be the best option on the market. Even if it is, there’s no guarantee you’ll qualify for it.
Step 1: Compare rates from multiple lenders
Before you fall in love with the benefits of refinancing with your current lender, check to see what you can find elsewhere. A great way to do this is to use a site like LendingTree, which is MagnifyMoney’s parent company and one of the biggest online marketplaces for loans.
Without performing a hard credit pull (which saves you from dinging your score), LendingTree will ask you some basic underwriting questions via an online form. They can then match you with potential lenders who participate in its marketplace. The lenders will contact you via email or phone with quotes, which you can compare.
Of course, you can always work directly with lenders in your area as well.
Armed with this information, you can go back to your current lender to see if they can meet or beat the lowest rate you’ve been offered.
Step 2: Get all quotes the same day
“It is important to get all the quotes at the same time on the same day,” says Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage,” “because at that moment, everyone is looking at the same data, and their wholesale cost for that loan is identical.”
That’s because of the way mortgage lenders set their rates. When you take out a mortgage, your financial institution actually owns it for a very short period of time. But not for long. Eventually, they will bundle your loan together with a bunch of other loans and sell it to investors, and they continue to service your loan for a small fee.
They offer standard, wholesale interest rates to investors daily. Your financial institution needs to charge you more than that wholesale interest rate if they want to make a profit on the sale. You should apply to all financial institutions on the same day to ensure they’re all basing your quotes off of the same wholesale rate.
Step 3: Go to your lender to negotiate
When you find the best offer, use it as leverage with another lender. If they’re eager for your business, they may be willing to outdo their competitor. Remember that you’re not just negotiating interest rates but also origination fees, closing costs and appraisal report costs.
After you are offered a quote you are happy with, the lender locks it for a specified period of time before it is rescinded. Better rates merit shorter lock periods, the shortest being 15 days.
What if I find a better deal and they won’t match it?
If your current lender won’t match the outside quote, it likely makes sense to go with the outside lender. You’ll have a limited window in which to lock in your new refi rate, called a rate lock period. Be sure you know how long your rate lock period lasts so you can decide before you lose your rate.
A great rate isn’t all you should look at when comparing the costs of remaining with your lender versus choosing a new lender. Ask about origination fees, balloon payments and prepayment penalties — all of which could potentially make it more expensive to refinance.
After you have applied for the loan, you will be issued a Loan Estimate form, which outlines the proposed terms. At this point, a home appraisal will be performed to determine the value of your home.
Once final approval is issued, you will receive a Closing Disclosure form, which will tell you exactly how much you will need for closing costs. At this point you are still able to walk away from the table. After three days have passed, you’re finally allowed to sign the documentation agreeing to the loan.
How do I know it’s time to refinance my mortgage?
Whether you decide to refinance with your current lender or not, before taking the plunge you want to figure out if doing so will actually save you money.
Fleming says, to make a fair judgment, you need to look at interest and other costs over the same holding period.
“Very few people hold their mortgage until it’s paid off,” he explains. “Comparing the two for a period longer than [a few years] makes no sense, since your savings on the proposed loan will stop once you sell the house or refinance.”
For example, let’s say you currently have a mortgage with a balance of $284,020 with a 5% interest rate. You are considering refinancing to a 4% interest rate. In order to refinance you’d have to pay $4,100 in fees, including closing costs and origination fees.
Let’s look at how each of these options would pan out over an 84-month holding period:
Your current mortgage
Fees and closing costs: N/A
Fees and closing costs: $4,100
Total interest charges over 7 years: $92,385
Total interest charges over 7 years: $77,207
Total savings: $15,178
The refinance will, indeed, save you money even with the closing costs and fees. It’s time to refinance.
How to negotiate a refinance with your current lender
Like we mentioned before, when financial institutions issue a mortgage or refinance, they don’t typically keep it. They usually sell it off, and then continue servicing your loan for a kickback from the buyer. And they know that in order to keep getting paid that servicing fee, they’ll have to keep servicing your loan. That gives you a bit of leverage.
If you have other offers on the table, your current lender may be willing to meet or beat them.
“Call [your lender], and one of your options will be to speak with a loan officer, or mortgage adviser, or mortgage planner,” says Fleming. He notes that all of these titles are indicative of the same job description. “Tell them that you believe you can get a better rate, and that you have begun shopping and wanted to give them a shot at keeping you as a customer.”
This will only work if you can actually get a better rate elsewhere. While you can refinance with your current lender, the lender will be able to tell if you’re bluffing as they’ll have to pull your credit report and look at recent bank statements and W-2s.
“If [you] love the service of [your] existing lender, by all means ask them for a quote,” says Fleming, “but the market is very competitive today so shopping will almost certainly save you money.”
According to CollegeBoard, the cost of tuition, fees, and room and board has gone up about 162 percent at private nonprofit four-year colleges since 1971 when adjusted for inflation. Public schools have seen an increase of 142 percent in in-state tuition, fees, and room and board over the same time period.
College is an expensive endeavor, yet we know that those who hold bachelor’s degrees make an average of $1 million more over the course of their lives than those who do not. Higher education is still worth investing in, even if prices have increased astronomically.
Today we’ll look at how to evaluate the costs of college and how to get your education funded.
When you first look at the cost of tuition and fees, room and board, and meal plans, most colleges appear oppressively expensive. Appearances are sometimes deceiving. The first number most people find is the advertised sticker price, and it isn’t what you end up shelling out for your education.
The number you actually end up paying — the net price — is usually lower for most students. Net price is how much the school charges minus the amount of financial aid you are awarded.
Net price vs. sticker price
If you already know how much financial aid you will be receiving, you can subtract that number from your school’s sticker price. The difference will be your net price.
The numbers they produce will be estimates only, and are not guaranteed.
Some calculators base all calculations on in-state tuition. If you’re an out-of-state student, be mindful that your costs may be higher unless explicitly stated otherwise.
Some calculators base their numbers on financial aid opportunities available to first-year students. There is usually more funding for freshmen, so you can expect the subsequent three years to be more expensive.
Nonprofit vs. for-profit schools
Nonprofit schools tend to cost a good deal less than for-profit institutions. And, when you look at the net price of for-profit schools, they can cost even more than private nonprofit schools.
This is because for-profit schools offer less institutional aid — or financial aid through the college itself. Instead, they rely heavily on federal financial aid for the funding of their students’ education.
As a result, students who attend for-profit schools generally wind up with far more student loan debt after graduation. With 59 percent of students enrolled in a certificate or associate’s degree program, average student borrowing per year was at $6,179 for the 2011-12 school year compared to an average of just $953 at comparable public, nonprofit two-year institutions, according to a recent analysis by the Brookings Institution.
Because of this, the bulk of their advertising efforts are focused on low-income students who qualify for maximum federal financial aid. These students should be careful to weigh net prices at nonprofit institutions before agreeing to attend a for-profit school based on the sticker price.
Nonprofit institutions will offer more scholarships and grants, reducing the number of loans — and therefore debt — they have to take on.
Public vs. private school tuition
The sticker price on a public college is undoubtedly lower than that of private institutions. However, many private schools have large endowments providing substantial student aid at the institutional level. This aid is often extended to middle-income families even if they don’t qualify for a large amount of aid through federal programs.
For example, Cornell University offers significant grants to students from families with under $60,000 in annual income as long as their assets are under $100,000. In an example generated by the university, a traditional student from a household with $51,000 in annual income can qualify for over $64,000 in institutional grants — even when they hold personal assets of $3,000.
In this example, the student’s net price is a whopping $3,450 for one year at an Ivy League university.
What college expenses should I be prepared for?
Part II: How to Pay for College
There are several different ways to find money for college expenses. If you stay on top of financial aid application deadlines and have a high GPA and high test scores, you can easily shave tens of thousands of dollars off your cost of attendance.
In this section, we’ll cover the most common sources of college funding.
The Free Application for Federal Student Aid (FAFSA) is the single most important document you will likely fill out as a college student.
Because without the FAFSA, you won’t be able to access the majority of the best financial aid options we are going to cover in this guide. Those include:
Federal student loans
Direct PLUS Loans for parents
Not only will the FAFSA tell you how much aid you are eligible for through the federal government, but it is also a required step to getting institutional financial aid from your college or university.
How to fill out the FAFSA
It’s important to note that you do not have to pay to file the FAFSA. It is entirely free.
Go to https://fafsa.gov/ to create a Federal Student Aid account and start your application.
Important: You must fill out a FAFSA every year that you attend college.
The Expected Family Contribution (EFC) is how much the federal government determines you or your parents should be able to contribute to your education costs. This number is then used to figure out how much aid the government is willing to extend to you.
For example, to qualify for a full Pell Grant in the 2017-18 school year, your family’s expected family contribution can’t be higher than $5,328.
It should be noted that students interested in FSEOG Grants and Perkins Loans should apply as soon as possible, as these funds are doled out on a first-come, first-served basis and actually do run out.
Student Loans: Explained
The final form of aid distributed by the federal government is student loans. You will know which federal student loans you qualify for after you fill out your FAFSA.
Because student loans will have to be repaid with interest, they should only be pursued after you have exhausted all grant, scholarship and work-study options.
Types of federal student loans
As an undergraduate student, there are a variety of federal student loans you may be offered.
Important: You should be absolutely sure that you have maxed out your federal student loan eligibility before turning to private loans. Federal student debt often has better rates than private loans and a range of flexible repayment options.
Private student loans
If federal student loans aren’t enough, you can turn to private student loans as a last resort for college financing. These loans from banks, credit unions and online marketplace lenders do not have the same generous repayment programs, though some may have deferment options in some situations, such as unemployment.
Private loans come with variable or fixed interest rates. At this moment in time, interest rates are low. If you take out a variable interest rate loan, the rate is likely to go up over the course of your loan. Fixed interest rates start higher, but remain stable throughout the course of your repayment.
Should I get a co-signer?
If you haven’t yet established credit, you will likely need a co-signer in order to qualify for private student loans. If you’re a nontraditional student and have a less-than-stellar credit history, you’ll likely also benefit from having a co-signer.
If you have a good credit score, you can skip the co-signer. But if you do need some help, look for loan options with a co-signer release. This lets the co-signer off the hook after a certain period of time — generally once your payment history has allowed you to establish a better credit history yourself.
How much should I borrow?
You don’t want to borrow more than you can reasonably afford to pay back. Certain professions that require extensive education, like doctors and lawyers, will have considerably more student loan debt than other professions.
However, some professions, such as teaching, may require a master’s degree in some regions. Four years of undergrad plus grad school isn’t cheap, but a teacher’s entry salary typically doesn’t make up for all of your education expenses.
In these situations, talk to professionals in the field you want to enter to find a reasonable expectation for entry salary and potential salary growth over the course of a career. While using online sources to find this information is great, it’s not going to replace the regional knowledge of a professional working in the field.
You can then plug that number into CollegeBoard’s Student Loan Calculator, along with how much money you intend to borrow. It will analyze and tell you if your monthly payments will exceed 10 to 15 percent of your monthly income — which is generally considered to be the absolute maximum you should allot to student loan payments.
If you take out federal student loans, you may be able to borrow more as most loan options allow you to pay based on your income level. Just be careful not to bury yourself in debt — you don’t want to be paying student loans into your seventies.
You won’t find scholarships on the FAFSA, but they’re a great alternative to student loans. When you are awarded a scholarship, you receive free money for school that you never have to pay back.
Merit-based vs. need-based scholarships
While the majority of grants are need-based, the majority of scholarships are merit-based. There may be maximum income levels or priority given to those in dire financial straits, but for most scholarships, you’re going to have to do a little bit of work beyond filling out an application.
Most scholarships will require you to maintain a certain GPA, though standards vary wildly. Almost all scholarships will require some type of essay. Traditionally, this is done in written format, but in 2017 some scholarship essays can be done via multimedia such as video.
If your family’s income doesn’t help you establish a strong financial need, don’t lose hope. There are plenty of scholarships out there that have no financial requirements and are completely based on your essay — on rare occasion, they won’t even ask about grades.
Recurring vs. one-time scholarships
Most scholarships only last one semester or one school year. However, there are some you can apply for that will cover your entire tenure as an undergrad. Keep in mind that these options are likely to require you to maintain a certain GPA throughout your studies.
How do I find scholarships?
The first place you can look is your financial aid office. Many schools have endowments not just for grants but for scholarships as well.
After you have exhausted scholarship options at your school, look in places such as:
Professional organizations in the field you want to enter
Professional organizations or unions your parents may belong to
National student organizations related to your major
Potential future employers — especially if they’re a larger company
Within the community you grew up in
Organizations based on your ethnicity or heritage
Organizations related to any extracurricular activities or hobbies
You can look for scholarships on major search engines, like Fastweb, CollegeBoard and Scholarships.com, but you’ll find a ton of competition. If you can look for scholarships focused on what makes you unique, you’re likely to find a dramatically smaller applicant pool, boosting your chances of winning an award.
How soon should I start applying?
Start applying for scholarships as soon as possible. It is possible to fund your education this way in its entirety, though you will have to fill out a lot of applications and write a lot of essays. The sooner you get started, the better.
Each scholarship has a window, which is typically opened annually or once a semester, in which you can file an application. While high school sophomores will be able to apply for some scholarships, opportunities really start opening up in your junior year.
Grants are money you never have to pay back unless you drop out of school or in some other way violate the terms of agreement. In undergraduate studies, they are typically need-based.
In order to qualify for federal grant programs, you must fill out the FAFSA and meet eligibility requirements. There are four types of federal grants:
Federal Pell Grants are distributed based on income-eligibility only. They can be granted to full-time, three-quarter-time, half-time or less-than-half-time students.
For the 2017-18 school year, the maximum Pell Grant awards are:
$5,920 for full-time students
$4,440 for three-quarter-time students
$2,960 for half-time students
$1,480 for less-than-half-time students
These awards are distributed in two parts over two semesters.
During the summer of 2017, Summer Pell Grants were awarded for the first time since 2011. These grants gave you an additional 50 percent of the full award to spend on summer studies — particularly helpful to community college students whose course of study typically runs through the summer.
The 2017 expansion was part of a budget deal passed by Congress in May affecting only one school year. Whether Summer Pell Grants will be available for the 2018-19 school year or any other future years still remains up in the air. Legislation for the permanent reinstatement of Summer Pell Grants was introduced in the Senate in April, but received no vote.
Federal Supplemental Educational Opportunity Grants
The maximum award is between $100 and $4,000, depending on your personal financial situation.
Iraq and Afghanistan Service Grants
If you lost a parent while they were serving in the military in Iraq or Afghanistan post-9/11, you may be able to get a full Pell Grant regardless of your family income through the Iraq and Afghanistan Service Grant.
In order to qualify, you must:
Meet all Pell Grant requirements save EFC requirements.
Have lost your parent before the age of 24 — or while you were enrolled in college at least part time at the time of your parent or guardian’s death.
Over the next couple of years, the maximum award for this grant will be reduced thanks to budget sequestration. If your grant is distributed prior to Oct. 1, 2017, you will receive a maximum award of $5,511.52.
If your grant is distributed between Oct. 1, 2017, and Oct. 1, 2018, you will receive a maximum award of $5,529.28.
If you are planning on becoming a teacher, you may be interested in a Teacher Education Assistance for College and Higher Education (TEACH) Grant. In order to qualify, you must be enrolled in a TEACH-eligible program. Not all schools participate, and the ones that do determine which of their programs qualify for TEACH Grants, so be sure to sit down with your financial aid counselor to determine your potential eligibility.
When you accept a TEACH Grant, you are agreeing to serve four out of your first eight years in the workforce in a high-need specialization in a low-income area. You can also meet this obligation by teaching at a Bureau of Indian Education school.
Your college or university may also issue need-based grants. While your EFC is not likely to be measured in the same way, a FAFSA application is still required in order to be considered.
Some colleges, though typically not Ivy League schools, will offer merit-based grants, as well. Your grades will be a factor here.
Work-study programs are another form of aid that will not be accessible unless you complete your FAFSA.
Many schools participate in federally backed work-study programs for students with a financial need. You are assigned a set amount of hours dependent on your financial need. You may find yourself working for the school, in a community service role, or in a field relevant to your course of study.
Work-study programs pay at least minimum wage and pay at least once per month. You can choose to receive a monthly paycheck or have your pay directly counted against any money you may owe the school.
Your eligibility for work-study will be determined by your FAFSA application.
529 college savings plans
529 accounts are tax-advantaged accounts to help you save for future college expenses. Contributions go in after you’ve paid taxes on your income. That money is invested and grows tax-free — as long as you spend the money on qualified educational expenses.
Types of 529 accounts
Not all 529 accounts are created equal. They are issued by state, and each state has specific rules on how their 529 accounts can be used. However, many states will let you purchase their 529 accounts even if you are not a state resident.
There are two basic kinds of 529 accounts.
College Savings Plans
The College Savings Plan structure allows your money to grow in traditional investments as made available by your state. You can use this money to pay for school at almost any U.S. institution — and even some schools abroad.
When you take money out, it will be based on the real dollar value your investments have grown to. For example, if you have $20,000 in your account, you would be able to take $20,000 out. If school cost $25,000, you would still have to find $5,000 to fund the additional tuition and fees not covered by your 529.
Utah’s 529 plan is a College Savings Plan, and commonly cited as one of the best in the nation.
Prepaid Tuition Plans
Prepaid Tuition Plans allow you to save for tomorrow’s college at today’s rates. There may be different tiers of saving for different types of schools.
One thing to be careful of with Prepaid Tuition Plans is that if you save at the state school level, and your child ends up not wanting to attend a state school when they graduate from high school, you could run into some funding problems. Pennsylvania allows you to change your investment tier at any time, but this is a potential point of friction you should consider at the outset of your 529 decision.
You will also notice that price per credit is quite high for Ivy League schools. As discussed earlier with the example of Cornell, Ivy League schools tend to have extensive grants. If you’re making a median income, saving in this manner may reduce your child’s future institutional aid, costing you more money than you would have had to pay without the dramatic savings.
What can I use my 529 account for?
You can only use the money in your 529 account for qualified educational expenses. If you use the money for anything else, you will have to pay taxes on the withdrawal.
Qualified educational expenses include:
Tuition and fees*
Room and board — though you must be enrolled at least half-time to claim this expense
Technology required for school — including internet access
Required equipment and materials as dictated by your professor
*Some Prepaid Tuition Plans cover tuition and fees only.
How to make a 529 withdrawal
Most programs allow you to make a withdrawal online or via postal mail. Your 529 account issuer will not keep records of how that money was spent. Producing documentation to show that the money was spent on educational expenses falls squarely on your shoulders.
If you have a high enough income level, your child may not qualify for need-based financial aid. Saving in a 529 plan is a generous investment in their future given that they won’t have as many funding opportunities available to them.
Because you are investing, your money is likely to grow — and grow federally tax-free at that. This means you won’t have to save as much in a College Savings Plan in order to meet your goals.
Cons of 529 accounts:
The amount you have saved could reduce institutional aid — especially if you open the account in your child’s name. Open the account in your name and list your child as a beneficiary instead.
When saving in a Prepaid Tuition Plan, do your best to ensure you’re saving at a level your child will actually be able to use. If they don’t end up going to school in state, you could hit a bump in the road if you’ve been saving at state school tuition levels.
Because you are investing, there’s no guarantee of growth. You could conceivably lose money in a 529 account.
Through a combination of federal and private loans, there’s really no set limit on how much you can borrow. You should figure out how much you want to borrow, though, after realistically examining your potential future earnings.
To figure out if your college degree is worth the cost, you need to figure out the net price of your education and your expected salary. A good tool to figure this out is College Reality Check.
Funded by the Bill & Melinda Gates Foundation, College Reality Check helps you estimate the net price of your school based on a number of different factors. Then it shows you how much you can expect to make upon graduation.
Technically, you’re only allowed to spend federal student loans on educational expenses. These can include:
Tuition and fees.
Room and board
Books, supplies and equipment
Transportation while at school
Dependent child care expenses
No one will be monitoring your bank account. However, if you end up having the money to go on shopping sprees after you’ve paid for all of the above expenses, you’re probably borrowing too much. Consider returning the money rather than paying interest on it after you graduate.
Check your loan agreement with non-federal lenders for specific restrictions on private student loans.
Most of the time, no, you do not. However, some colleges and universities require their traditional freshmen to live on campus. Even these stipulations can sometimes be worked around if you are commuting from your parents’ home.
If at all possible, yes. Make an effort to make at least interest-only payments. This will keep interest from accruing while you’re in school and deferment, which costs you more money in the long run.
The only time it doesn’t matter as much is when you have Direct Subsidized Loans — which will not accrue interest while you’re in school. Even then, making principal payments early isn’t a bad thing if you can swing it.
If you miss one payment on your federal student loans, you will have to make it up before 90 days — otherwise you get reported to the credit bureaus.
If you miss several payments on your Direct Loans and don’t make payments for 270 days, you will be in default, which puts you at risk of not only being reported to the credit bureaus but also losing all benefits of federal student loans like income-driven repayment options. You could also end up in court.
Consequences for Perkins Loans and private student loans depend on the agreement you sign prior to disbursement, but they can report you to the credit bureaus as soon as you are 30 days late with a payment.
Jana Lynch was 27 years old when she was formally diagnosed with depression. The illness wasn’t severe enough for her to start seeking regular treatment until eight years later, when a panic attack at work sparked a series of events that changed her career — and her finances — forever.
At the time, Lynch was working full-time for a social service agency. “Not only was my anxiety and depression through the roof, making it hard to get out of bed, concentrate on tasks, meet deadlines, communicate with coworkers, and remember meetings, but the nature of my job made it a dangerous environment for my mental health at the time,” she says.
Rather than resign outright, she decided to take a four-month leave on short-term disability. A break, she thought, might help. But when the time came to return to work, the same issues began to surface again. In the end, she chose her mental health over working full time.
“Looking back, it was a terrible choice because of the impact on my long-term personal finances,” she says. “But in the moment, it was the best decision for me and my family.”
Lynch’s story is not unique. In a 2004 study that followed workers over the course of six months, researchers found workers with depression dropped out of the workforce at a rate of 12 percent compared to only 2 percent of their peers.
While depression may force affected workers out of active employment at higher rates, it is also true that those who become unemployed are more likely to show signs of depression — three times more likely, according to a 2010 NIH study.
Thomas Richardson, a leading researcher at Solent NHS Trust, one of the largest community providers in the UK’s National Health System, notes that there is most definitely a correlation between unemployment and depression, but that causation is not as easy to pin down.
“In research such as this it’s always a case of chicken and egg: Which came first?” he says. “A lot of research is only at one time point, so it’s hard to say which came first.”
Some research shows losing your job impacts depression because it makes it hard to cope financially, but other studies suggest it has little impact.
“I think it probably works both ways and is a vicious cycle,” Richardson continues. “Someone becomes depressed, struggles at work, and loses their job. This then exacerbates their depression further.”
6 Strategies to Manage Depression and Work
Abigail Perry, author of Frugality for Depressives, had already been formally diagnosed with depression as a part of a bipolar disorder when unrelated chronic fatigue forced her out of traditional employment.
“I thought I’d be nothing but a burden for the rest of my life,” says Perry. “I wondered who would ever want someone who couldn’t pull her own weight financially, and I became suicidal. A lot of therapy and medication management doctor visits later, I finally started believing that I might have worth despite not being able to work.”
Those struggling with balancing their career and depression need not lose hope.
Richardson notes that many are able to develop coping strategies, allowing themselves to stay in the workplace. He’s developed six key strategies that his research has revealed to be helpful to workers with depression.
1. Intentionally look for work you enjoy.
“Try and do a job you enjoy or are interested in,” Richardson encourages. “If not possible, then try and focus on those bits of your job you do enjoy.”
Allyn Lewis, lifestyle blogger and storytelling strategist from Pittsburgh, Pa., has learned this technique through the course of building her business.
Diagnosed with a depression that was further fueled by her father’s suicide when she was a teen, Lewis never truly entered the traditional workforce, but has found self-employment to suit her disability.
Her motivating enjoyment comes from the community-based aspect of her business.
“Telling my story and talking openly about my anxiety, depression, and the loss of my dad is what keeps me active in my career,” says Lewis, 26. “That might sound strange, but when I keep my mental health journey to myself, it feels like it’s all about me. And if I’m having a down day, week, or month, what’s it matter if I do the work or get the things done? But, by talking about my mental health and using my own story to raise awareness, it makes it something that’s much bigger than myself.”
2. Don’t push yourself too hard.
“Don’t push yourself too hard at work,” says Richardson. “Acknowledge when you are struggling. It’s best to slow down early on than to keep going until you crash.”
Lewis learned this lesson through experience.
“Back in the day when I owned my own public relations firm, I would take on any client, under any circumstance, for any amount of money, and I’d make any accommodation or request they asked for. I ended up overbooked, underpaid, and at a point that was way beyond burnt out,” Lewis says.
“I kept trying to push my anxiety and depression aside to pretend like it wasn’t getting in the way, but the best thing I ever did was starting to tune into what my mental health was telling me. Only then was I able to shift into a business model that worked for me.”
3. Ask for help — and know your rights.
Richardson recommends going to your manager or supervisor for access to resources when your symptoms become too much to bear. If you work at a larger company, it may be more appropriate to get in touch with your human resources department.
This can seem intimidating, as you don’t want to give your superiors any reason to question your work ethic or your ability to provide value to the company.
But Perry, who now works full time in a remote position, notes that depression is covered by the Americans with Disabilities Act (ADA). This means your employer cannot fire you because of your disability — in this case, depression — and that they have to provide reasonable accommodations in order to allow you to do your job.
“Even if you don’t ask for accommodations, you need to make it clear that your absences or other work difficulties are based on a real medical condition,” Perry says. “Imagine being a supervisor with an employee who takes a lot of sick days, or may be easily agitated by interpersonal interaction or additional stress. In a vacuum, that’s a problem employee. Understanding the context, that’s someone who is doing their best to be a good employee despite a disability.”
4. Keep a healthy perspective on your career goals.
“It’s easy in a career to focus on goals, but this makes you vulnerable to depression,” says Richardson. “If you don’t get that promotion it might really impact you and lead to self-critical thoughts which fuel depression.”
He recommends instead harkening back to why you enjoy your work and the current position you’re in.
Lynch, who currently works as a freelance writer and editor, relates to the depression that can be felt when career expectations aren’t met.
“I try hard not to get angry at myself if I didn’t do as much as I’d like, or if my inbox isn’t bursting with inquiries,” says Lynch, “which is hard to deal with when you like to work and tie your work to your self-worth. But depression makes it difficult to look for clients. It’s a horrible, vicious cycle that I deal with only by telling myself this is temporary. It will get better at some point.”
5. Nurture hobbies and social contacts.
Lynch and Lewis both note exercise as a way of sustaining a healthy hobby. Lewis teaches yoga, and Lynch regularly attends a gym. While not the primary goal, a side effect of going to the gym or studio happens to be spending time with other people of similar interests.
Nurturing hobbies and maintaining social contacts are important from Richardson’s research — even if doing so initially feels overwhelming.
6. Practice mindfulness.
Finally, Richardson recommends practicing mindfulness, even when you’re not in the throes of depression. Emerging research suggests that mindfulness may not only alleviate depression, but could prevent relapses.
Richardson has produced a free mindfulness resource, which can be accessed here.
Depression and Your Finances
Career and finance often go hand in hand, so it’s no surprise that the ripple effects of depression can often extend into your finances as well.
By understanding and confronting these challenges head-on, there are strategies you can use to protect your finances as you learn to manage depression.
In a recent study published in the British Psychological Society’s Clinical Psychology Forum, Richardson studied people with bipolar disorder as they were going through a depressive episode. During these episodes, he found four key ways that their finances suffered.
Lynch notes that before she set up automatic payments, she would have trouble remembering pay upcoming bills. She’d get her statements, but ignore them. This led to unnecessary costs like late fees.
Richardson’s study finds that this behavior is typical for depressives. It found that missing bills was a financial manifestation of avoidant coping behaviors. In order to avoid being late on charges you may not know or remember exist, it’s important to get in the habit of confronting through that pile of mail as you establish the habit of paying through automation.
“It can be harder to keep track of your finances when things get tough,” relates Perry. “Monitoring spending, keeping up with due dates — it’s exhausting even in good conditions. If you spend more because of depression, or if you simply don’t keep as close of an eye on things, your budget could take a big hit.”
Perry’s insights are congruent with Richardson’s findings. Those with depression have a harder time completing tasks like budgeting because planning ahead is made more difficult. The study also revealed that rational thinking and the ability to remember past purchases in order to log them into a spreadsheet were impaired.
Perry says that when you’re depressed, you’re more likely to get caught up in comfort spending.
“This could be anything from convenience or junk food, which adds up, or going out for drinks, dinner, or entertainment. Alternately, you may be more likely to spend money on things that you think will make you happy or comforted — from convenience gadgets to home décor to clothes.”
Richardson adds the example of being overly generous with one’s family as an example of comfort spending.
Richardson’s study finds that financial stress compounds anxiety and depression. This stress leads to more dire mindsets, like extreme anxiety and hopelessness.
“As a business owner, there’s always so much pressure around profit,” says Lewis. “Even when you’re up, you never know how long it will last, so you have to keep hustling. When I’m going through a period of depression, this puts me in a cycle of ‘I’m never making enough,’ which is a thought that likes to pair itself with ‘I’m not good enough.’ Depression has a sneaky way of switching my mindset from one of abundance to one of scarcity.”
Lewis’s reports of low self-worth are also common, according to Richardson’s work. Self-criticism over “economic inactivity” was detected in study participants.
Seeking Mental Health Care
For help developing more coping strategies or getting resources that can help you manage your depression, consider seeking out mental health care services.
“I think all depressives — especially ones who aren’t on medications — should have therapists,” says Perry. “It may take a few tries to find someone you work well with, but then that person will be a great lifeline. Therapists can help you deal with the things that depression makes harder with strategies, workarounds, or just working through past events that are contributing to or causing your current depression.”
Therapy and medication management specialists can be expensive, though. Many regions in America face a shortage of mental health care providers, and the matter is further complicated when you consider that some providers may be out-of-network, bringing copays up even if you are currently insured.
If you can’t figure out how to fit these services into your budget, seek out therapists who offer sliding-scale payment options based on your income. Another affordable resource is public mental health care clinics, though their availability may be limited.
If you have insurance and don’t immediately need medication, keep in mind that a mental health care professional may not have an M.D. or Ph.D. after their name. Licensed Clinical Social Workers (LCSWs) and other counselors often accept insurance and are able to provide therapy, referring you out to a psychiatrist for prescription needs when necessary.
Lynch did seek therapy and go on medication for a while, though she now leans on other coping mechanisms such as avoiding triggers and exercising regularly.
“I recommend it if you feel you need it,” she says. “There is no shame in getting whatever kind of help you need.”
Today, Lynch operates from a place of acceptance. Depression is a part of her life that she has learned to deal with. While she doesn’t categorize herself as what we would consider classically “happy,” she does consider herself to be as content as possible, and actively seeks out happiness within her circumstances.
Graduate school funding is a bit trickier than undergrad funding. Your options for loans and grants become more limited, and while work-study opportunities may be attainable and provide great experience, they often eat up a lot of time but offer low compensation.You do have options, though — whether you’re a grad student or a parent. This guide will take you through them all in detail.
As a grad student, you have three federal student loan options: Direct Unsubsidized Loans, Direct PLUS Loans, and Perkins Loans. Each financing option looks different, and you may need a combination of these loans to fully fund your education.
Federal loan options and programs
In order to qualify for any federal student aid, you must meet certain requirements. You must:
Have a high school diploma, home-school high school education, GED, or other certification of equivalency.
Be a U.S. citizen, national, or permanent resident.
Have a Social Security number. This requirement is waived if you are from the Marshall Islands, Palau, or Micronesia.
Register with the Selective Service if you’re a male age 18-25. If you do not do so during this time frame, it can impact your ability to access federal financial aid later in life.
Be enrolled or accepted into a school with the aim of obtaining a degree, certificate, or other recognized educational credential.
Maintain good grades. Standards for this requirement vary from school to school.
Certify that you aren’t currently in default on any federal student loans, that you owe money back on a grant, and that you will only use the money for educational endeavors. This certification happens on the FAFSA application.
If you meet all of these requirements, you now have to look at specific qualifications for each type of student loan.
Direct Unsubsidized Loans
In order to qualify for a Direct Unsubsidized Loan, you must be attending a participating educational institution at least half-time. You must also be enrolled at least half-time in a program that will lead to a degree or certificate. There is no need to demonstrate financial need in order to qualify for a Direct Unsubsidized Loan.
Direct PLUS Loans
Direct PLUS Loans have very specific credit standards. In order to qualify, you must meet the following requirements:
Must be pursuing a degree or certificate at the graduate or professional level and going to school at least half-time — or be the parent of a student who is doing so.
Cannot have a debt that is currently 90 days delinquent with a balance of over $2,085.
Cannot have an item worth over $2,085 sent to collections or written off in the two years prior to your application.
Cannot have any of the following appear on your credit report in the past five years: default determination, bankruptcy, foreclosure, tax lien, repossession, wage garnishment, or a write-off of other student loan debt.
These standards apply to both student and parent borrowers. If you cannot meet them, you can still borrow money by finding a co-signer who does meet these standards.
You may also be able to qualify if you can prove the blip on your credit report was caused by extenuating circumstances. In order to qualify in this way, you’ll need to complete credit counseling to the satisfaction of the PLUS program.
Perkins Loans are reserved for those with exceptional financial need. You prove this need by filling out the FAFSA as you normally would.
If you are eligible based on need, you need to get in touch with your financial aid office because your school is the actual lender. Not all schools participate, and not every school has sufficient funding for this program to offer the full $8,000 grad students may be eligible for. It’s important to fill out the FAFSA early and to approach your school about these loans as soon as you get your results.
Pros & cons of federal student loans
There are times when taking out federal loans will be advantageous to you as a grad student and times when other options may make more sense. Let’s drill down into the pros and cons.
Aside from Perkins Loans, federal student loans give you access to a number of repayment options, including options that allow you to adjust monthly payments based on your current income.
Depending on the private lender, credit requirements are typically more lax than they will be in the private sector.
Interest rates on Perkins Loans are competitive — if your school participates and if your financial situation is considered dire enough to qualify.
The fact that there are origination fees on Direct Unsubsidized Loans and Direct PLUS Loans is a major negative as it will cost you money to borrow the money in the first place.
Interest rates on Direct PLUS Loans are not competitive if you have a good credit history. You may be able to save money by moving to the private sector in specific circumstances.
Direct Unsubsidized Loans and Direct PLUS Loans require at least half-time enrollment. If you are pursuing a graduate-level degree while working a day job, this may present a problem depending on how many credits you are able to take on at once.
Federal grant and programs for grad school
While loans are money you will have to pay back, grants and work-study programs are sources of funding that you won’t have to repay. It’s essentially free money. At the graduate level, you have a few federal options.
The Teacher Education Assistance for College and Higher Education (TEACH) Grant is a program that pays for part of your education as long as you promise to use your degree in a high-need, low-income area for four of the eight years following the completion of your education. You can also teach at a Bureau of Indian Education school during this time period to qualify.
If your grant was disbursed today, the maximum grant amount you could qualify for would be $3,724. If it isn’t disbursed until after October 1, 2017, the maximum amount awarded jumps to a potential $3,736.
Your school will have to participate in the TEACH program, and your school will have specified which programs qualify for the grant. Get in touch with your financial aid office to find out if your program is eligible.
While you’re there, make sure you are eligible by checking your school’s academic requirements for qualification.
If you do not teach in a high-need field in a low-income or Bureau of Indian Education school for four of the first eight years after your graduation, your grant will turn into a Direct Unsubsidized Loan, which will have to be repaid.
It is extremely rare for a grad student to qualify for a Pell Grant. In fact, for eligibility purposes, you’re not allowed to be pursuing a graduate degree.
The only time Pell Grants are available after undergrad work is when you are pursuing a postbaccalaureate teaching certificate. Even then, your certificate program must meet the following requirements:
It does not lead to a degree.
It is a prerequisite in your state in order to work as a primary or secondary school teacher.
It comes from a school that does not offer a bachelor’s degree in education.
It must be a postbaccalaureate program.
For your part as a student, you must meet the following requirement as well, if you’re going to qualify:
Enrolled at least half-time.
Pursuing your initial teacher certification/licensure within your state.
If a financial need is demonstrated when you fill out the FAFSA, you may be offered a work-study position. If your school participates, you’ll be given an hourly or salaried job where you are paid at least monthly. Your financial need will determine the number of hours you receive.
The kind of job you are assigned will depend largely on your school. You may find yourself in one of these fields:
Positions at your school
Fields relevant to your course of study
If you end up with a position on campus, you’ll likely be working for the school. If you are working off-campus, you’re more likely to be assigned to a position serving the public good or working in a position relevant to your future career.
You’ll make at least minimum wage, though as a grad student you may have some desirable skills that could land you a position with a pay boost.
Your school is obligated to issue you a paycheck at least once per month. The money will come directly to you unless you set up ACH payments, or you are applying your earnings toward tuition, fees, or room and board.
Grants are a form of financial aid that you don’t have to pay back under most circumstances. However, if you don’t hold up your end of the educational bargain, you may have to return money that was paid to your school, or money you received as a refund check from your school.
You could end up owing money back for your federal grant if:
You don’t meet TEACH program guidelines as outlined above.
You drop out of school partway through the semester.
You reduce the amount of credits you are taking after the grant has been issued.
If you are disappointed by your FAFSA options, you should know that there are other ways to find funding for your graduate-level education. Be sure to review theses resources prior to taking out loans.
Federal grants at the graduate level are admittedly thin. If you’re looking for other ways to pay for school that don’t involve student loans, here are some additional federal agencies outside the Department of Education. They may be able to help.
In exchange for all of this money, you will be obligated to serve either on active duty or in the reserves after you have completed your education. Because you have a college education, you will enter the military as an officer.
Post-9/11 GI Bill
If you served in the military for at least 36 consecutive months after September 10, 2001, or were honorably discharged due to disability after serving 30 consecutive days after the same date, the Post-9/11 GI Bill may cover your tuition and fees.
If a smaller portion of your service happened after September 10, 2001, you may be eligible for prorated benefits.
All in-state tuition and fees will be paid at public schools, and up to $22,805.34 will be paid at private schools. This number changes annually.
If you still have a gap between how much the school charges and how much the Department of Veterans Affairs (VA) will pay under the latest version of the GI Bill, check to see if your school has opted in to the Yellow Ribbon Program. Schools that do so reduce the tuition of veterans to meet the maximum VA payout, leaving you with a bill of zero dollars.
Yellow Ribbon schools may also provide funding equivalent to a Basic Allowance for Housing in addition to a stipend for books.
AmeriCorps is a volunteer opportunity with some perks for college students. When you volunteer, you earn money for school through the Segal AmeriCorps Education Award. The amount of money you earn depends on how time-intensive your service is.
For example, currently if you volunteer in an approved position for more than 1,700 hours over a 12-month period, you would qualify for an education credit worth $5,920 for the 2017-18 school year. You can only earn up to two full-time education credits. You can find further examples of how much you can earn on the Segal Award Eligibility page.
As a member of AmeriCorps, you may find yourself in one of the following positions or one like them:
Relief efforts after a natural disaster
Tutoring K-12 students
Building affordable housing
Working with local nonprofits and community groups
If you have served as an AmeriCorps member after October 1, 2009, at the age of 55+, you may have accrued educational benefits that you can pass on to your child, stepchild, or grandchildren. You can learn more program specifics here.
Other sources of federal grants for grad school
Higher education agencies in your state
Another great place to look for funding is the agency that handles higher education in your state. These state-level organizations typically offer grants. You’ll likely be prompted to visit your state’s website at the end of your FAFSA application, but if you want to learn more about available programs now, you can find yours here.
Your school’s financial aid office
Your school likely has endowments and partner employers — both of whom are likely to offer scholarship and/or grant opportunities. To find out what may be available at your school, schedule an appointment with the financial aid office.
Industry and professional organizations
Many industry and professional organizations offer some type of scholarship program for those studying in the field. Applying for these scholarships won’t just help you pay for school if you’re awarded — if you win one, it will look phenomenal on your future resume.
Some of these organizations will require membership prior to application. While membership fees can be expensive in some organizations, many provide student-level memberships at a steep discount.
Private loan options for grad school: A last resort?
Private student loans are issued directly by lending institutions without the backing of the U.S. Department of Education. You can look to banks, credit unions, or online marketplace lenders to access these loans.
Pros & cons
If you have a good credit history, you may be able to obtain a loan with lower rates than those currently offered via federal programs.
You may be able to access more capital than you would with federal loans, depending on your credit history and the type of federal loan.
You can shop around for different options. Some lenders don’t charge origination fees, and some are even willing to work with you in cases of hardship.
You will not have access to advantaged repayment programs like PAYE, REPAYE, IBR, ICR, and PSLF, which are all covered in sections below.
If you do not have a good credit score, interest rates may be higher than federal loans, or you may not be able to get a private loan at all, depending on the severity of content in your credit report.
You have to shop around for different options. Some lenders will not work with you in cases of hardship, and factors like variable versus fixed interest rates may throw you for a loop if you’re not careful.
Questions to ask before you borrow private loans for grad school
Before you take out any student loans, you’ll want to get answers to these questions.
Variable interest rates start out lower. They may even stay lower for a set amount of time. But after that, they adjust to the market. You may get lucky and have rates go down, but rates are already so low at the moment that you’re almost sure to see them go up instead.
Fixed rates start out higher than variable rates but stay stable throughout the course of your loan term.
Shorter loan terms sometimes mean higher monthly payments, but you’ll usually end up paying less in the long term because of the way interest accrues over time.
If you can’t afford the monthly payments, though, you could end up paying late fees or damaging your credit. Longer loan terms may mean paying more interest by the time you’re through, but they also have the potential to lower your monthly payments.
Some lenders provide payment plans that allow you to defer payments until after graduation. Other payment plans start your payments immediately. Still others require interest-only payments while you’re in school, with principal payments being added after graduation.
Does the lender offer any type of deferment in times of economic hardship? Some lenders will even work with you to help you find a new job or temporarily reduce monthly payments while you are in specific employment conundrums.
There are a slew of different repayment options depending on which type of loan you take out. Whether you start repayment during your studies or after, there are some things you can do to prepare.
Federal grad school debt
Students are not required to make payments until six months after their graduation — or nine months if you have a Perkins Loan. Just because you don’t have to make payments during this time period doesn’t mean you shouldn’t.
When to start repaying your federal grad school loan debt
The types of federal loans available to you as a graduate student accrue interest while you’re in school and during your grace period/deferment. You are not required to pay that interest immediately, but the unpaid interest will be added to your principal balance.
By making interest-only payments while you’re in school, you prevent these interest rates from multiplying upon themselves, saving you money.
You can pay toward the principal while you are in school as well, if you so choose, as there is no prepayment penalty on federal student loans.
Parents who have PLUS loans are typically required to start repaying immediately after the loan is disbursed. You can, however, request a deferment for the period during which your child is in school. It would be wise to make interest-only payments during this period if you choose to go this route.
Federal loan forgiveness and repayment assistance programs
Federal loans give you access to many advantaged repayment and forgiveness programs. Keep in mind that while advantaged repayment plans are designed to make your monthly payment lower, they have the potential to cost you more over the course of your loan — especially if they don’t end in forgiveness — as interest will be charged over a longer period of time.
Income-Based Repayment (IBR)
If you took out your first student loan prior to July 1, 2014, and your student loan payments are more than 15 percent of your discretionary income, this program allows you to pay a maximum of 15 percent of your discretionary income for 25 years. After that point, your remaining debt is forgiven.
If you took out your first student loan after July 1, 2017, the capped percentage is 10 percent, and you will only have to pay it for 20 years.
Take your income and subtract 150 percent of the poverty level in your state. If your monthly student loan debt payments are more than 10 percent of the difference, you may qualify for PAYE. Use this calculator to see if you qualify.
Your monthly payments will be limited to 10 percent of your income and will never exceed what you would pay on a 10-year Standard Plan. After 20 years, the remainder of your debt will be forgiven.
You only qualify for this plan if your first student loan was disbursed after October 1, 2007, and you have received at least one disbursement since October 1, 2011.
REPAYE does not have the same timing restrictions of PAYE. In fact, the date you took out your loans is irrelevant. There are also no income restrictions.
However, while you will only have to pay 10 percent of your discretionary income, there is no protection stating that your payments will not exceed those of a 10-year Standard Plan. You could end up paying more with this program — especially with a higher income.
Remaining balances on graduate school loans will be forgiven after 25 years.
Under PSLF, you make payments for 10 years while you’re working 30+ hours per week and considered a full-time employee by your employer. This job must be in a position of service, and the remainder of your loan balance will be forgiven. Your 10 years of payments should be made under IBR, ICR, PAYE, or REPAYE.
States have regional needs in a number of different fields, including medicine, education, social work, veterinary sciences, law, and more. Across the country there are programs offering to pay off portions of your debt if you agree to live and work in high-need communities.
Different lenders will require different repayment terms from their borrowers. Be sure to understand what is expected of you before signing on the dotted line. Ask questions like:
Will I be required to make payments while I am in school?
If so, are they interest-only payments?
Will there be a grace period after graduation?
Do you have any deferment options in case of economic hardship?
What is the maximum time allowed for deferment?
When you should start repaying private grad school debt
The sooner you can pay off debt, the better. If your loan requires you to make principal and interest payments, make them without delinquency.
Before you make any payments prior to their due date, make sure there is no prepayment penalty. Otherwise a good portion of the money you think you’re throwing at your debt could end up going toward fees instead.
Learn more: Refinancing grad school debt
If you can get a lower interest rate on your student loans by refinancing, you may be able to save money as long as you pay off your debt in the same amount of time.
In order to avoid ruining your credit score, you may also want to refinance if you cannot afford your monthly payments.
There’s a lot more to qualifying for a mortgage than simply saving up money for a down payment. You need to find a good real estate agent, have money on hand for closing costs, and understand your budget and taxes.
But for as much as there is to do while you’re preparing to buy a home, there are also things you shouldn’t do. Taking any one of these actions can jeopardize your purchase, leaving you disappointed at best, and potentially in a financial bind.
Don’t take on new debt
Mortgage underwriters consider your debt-to-income ratio when evaluating your ability to make monthly payments. If you have too much debt, it can affect how much you can borrow or whether or not you can even get a mortgage. Neil Cannon, a mortgage loan officer at PenFed Credit Union, encourages potential homeowners to start thinking about their debt usage as soon as they start planning to save for a down payment.
“If you want to own a home in two years, but you need to buy a car now, the decision on the car can affect your home purchase in two years,” Cannon explains.
He gives the following example: If you purchase a used car for $6,000 and pay it off within two years, you’ll look much better financially than someone who bought a $50,000 car with 0% financing and still has four years left on their auto loan.
While you should carefully evaluate any decision to take on debt years before purchasing a home, it’s especially vital to do so before closing. Cannon notes that if you prequalify for a mortgage, and then take out a loan for a car or other purchase prior to closing, it can threaten the entire deal.
Don’t switch jobs
Cannon says that before closing, your lender will perform a Verification of Employment — also known as a VOE. The VOE typically occurs up to two weeks before closing, though it can happen as late as hours before you sign on the dotted line.
If you’ve resigned between prequalification and closing, you will not be able to close. If you’ve switched jobs, you must have already reported to work at the time the VOE is completed if you want your new salary to be included.
Generally, though, it’s wise to stay with the same employer for at least two years before closing on your home. This is because compensation like bonuses, overtime, and commissions are variable, and your underwriter will need two years’ worth of documentation if you want this money to be considered as income on your mortgage application.
Cannon also notes that underwriters consider bonuses discretionary, no matter how your employer may pitch them.
“I have had dozens of clients tell me they have a ‘guaranteed bonus,’” says Cannon. “If that is the case, then it is not a bonus, and your employer is torturing the English language.”
This means that your bonus may not be counted as guaranteed income on your mortgage application, even if you feel confident your bonus will come in as it has in years past. If your bonus is particularly large, this could impact how much money you qualify to borrow — or if you qualify to borrow at all.
Don’t move money around
“If we cannot track the source of large deposits, we can’t use the assets for qualifying,” says Cannon.
“I had a recently married couple have a deposit of $14,000 into their savings account. It was all wedding presents, and it was basically all cash. It could not be traced. We could not use it.”
The couple was lucky: Their parents were able to give them a documented gift of $14,000 to make up the difference. Without their parents’ generosity, the couple wouldn’t have qualified, even though they had the money on hand.
If you cannot properly document where your money came from, the best-case scenario would be that your underwriter would not allow the funds to factor into the equation — meaning you can’t count them as an asset toward purchasing or closing on the home.
The worst-case scenario is that the underwriter could assume the money is recently acquired debt. Without documentation, the lender has no way of knowing. This could negatively affect your debt-to-income ratio.
Cannon notes that while it is possible to move money around, it’s wise to do so with guidance from your loan officer — especially during the 60 days prior to filling out your mortgage application all the way through closing.
Don’t sign a contract before getting prequalified
“You always want to be prequalified before you start shopping for a home so you do not make knee-jerk emotional decisions,” says Cannon. Signing a contract puts you under legal obligation. Doing so without being prequalified is a risky move, as you’ll lose any earnest money you put down in good faith at the time you signed the contract should you not qualify. You could also end up with a lawsuit against you, depending on how far the seller is willing to go.
Even if your contract has a financing contingency clause — meaning you have a set amount of days to secure a loan or terminate the contract — it’s still in your best interest to get prequalified. You may have as little as 15 days to secure a loan with the contingency.
If you are unable to, and you do not terminate the contract in writing within the specified time frame, some contracts will still legally obligate you to purchase the home. Because you lack capital, you won’t be able to. If the seller chooses to sue, you could end up in court.
Don’t assume you know as much as your real estate agent
With so much knowledge at their fingertips, it’s easy for today’s homebuyers to feel empowered. There are calculators that tell you how much you should theoretically be able to borrow. You can easily obtain an estimate on a house’s market value versus asking price. You can even research all the first-time homebuyer assistance programs in your area from the comfort of your couch.
But don’t mistake the ease of obtaining information for professional expertise. As a buyer, using a real estate agent costs you nothing. Your agent has likely gone through the home-buying process more than you will in your entire lifetime, and their depth of knowledge — especially of your local market — is something to take advantage of.
“If you are a buyer, you likely need guidance to figure out why this home seems overpriced to you and why that home looks like a great bargain,” says Cannon. “Realtors are compensated fairly, and good Realtors create value for their clients.”
Looking for a travel rewards card with a big bang for your buck? Chase Sapphire ReserveSM may be right for you.It comes with a litany of benefits for frequent travelers including:
3 points per dollar spent on travel and dining.
1 point per dollar spent on anything else.
Your points are worth 50% more when you redeem through the Chase Ultimate Rewards® portal.
Ability to transfer your points on a 1:1 basis to major airline and hotel rewards programs.
$100 statement credit after you pay for your TSA PreCheck or Global Entry application.
The first $300 you spend on travel during each 12-month period measured by your sign-up date will be automatically reimbursed through statement credits.
Currently, you can get 50,000 bonus points when you spend $4,000 within three months of opening your card.
These benefits do come at a cost. The card has a $450 annual fee — and it is not waived in the first year. While the benefits are top-notch, they’re only accessible to those who can float the $450 in upfront costs.
The information related to the Chase Sapphire ReserveSM and Chase Sapphire Preferred® has been collected independently by MagnifyMoney and has not been reviewed or approved by the issuer.
How to earn points
The best way to earn points with Chase Sapphire ReserveSM is by placing all of your travel and dining purchases on this card exclusively. These purchases will get you 3 points for every dollar spent on travel or restaurant dining, while all other purchases will get you a less competitive return of 1 point per every dollar spent.
What, exactly, qualifies as a travel purchase? The obvious things, like hotels and car rentals, are included. But don’t forget merchants like Airbnb, Expedia, or even your state DOT when you drive on toll roads.
Certain travel-related expenses do not count as travel purchases. Amusement park tickets, excursions purchased directly through tour companies, and that Starbucks latte you purchased at the airport will not be counted as a 3-point-per-dollar travel expense, for example.
If you’re making a big purchase, but you’re not sure if it will qualify as a travel expense, it’s worth it to call the company you will be purchasing from. You want to find out how they are coded to credit card companies. Do they come through as “travel” or is the business classified into another category? Finding the answer to this question can help you decide if you should make the purchase on your Chase Sapphire ReserveSM or if you should charge it somewhere else where you’ll get more than one measly point per dollar.
Best ways to redeem points
Whether you’re purchasing a plane ticket for a work trip or booking your next family vacation, you want to make sure you’re maximizing all those points you’ve earned.
One of the best ways to redeem your points at booking is by using the Chase Ultimate Rewards portal. Here, you’ll be able to find flights, hotels, and more with no blackout dates. Because you’re a Chase Sapphire ReserveSM holder, your points will be worth 50% more here. That means that instead of your 50,000-point bonus being worth $500, it will actually be worth $750.
Another potentially great way to book is by transferring your points to one of Chase’s partner airline or hotel rewards programs. This can be done in real time on a 1:1 basis. Sometimes, it may even be a better deal than booking through Chase’s Ultimate Rewards portal.
For example, a flight from New York City to Tokyo may run you $1,200. If you booked within the Chase Ultimate Rewards portal, that would cost you 80,000 points.
However, if you transferred your points to United MileagePlus® miles, you could score a flight for 70,000 points if you booked at the “Saver Award” level in economy class. There is limited seating at this award level, so you would want to book far ahead, but doing so would save you 10,000 points.
Those with the best chance of qualifying for Chase Sapphire ReserveSM will have a credit score of 700 or above without a history of chronically late payments. Those with a credit score below 650 are unlikely to qualify.
This card is only for people with excellent credit. In general, that means your score should be above 700. In addition, Chase (and other credit card issuers) have been cracking down on people who go from one bonus offer to the next. If you apply for a lot of credit cards, don’t be surprised if you are declined.
What we like about the card
There are a lot of reasons to love Chase Sapphire ReserveSM if you’re big on travel.
The bonus is nothing to laugh at.
Fifty thousand points is on the high end of standard spending bonuses for credit cards, but when you book through the Ultimate Rewards portal, Chase’s offer is even more stellar.
Your annual fee is effectively lowered to $150 every year.
Because you will receive up to $300 in statement credits for travel reimbursements per year, the $450 annual fee is effectively lowered to $150 — as long as you actually spend $300 on travel.
Rewards points are generous on dining and travel purchases.
Three points per dollar is a large multiplier in the world of travel rewards credit cards.
No foreign transaction fees.
When you’re traveling, the last thing you want to deal with is foreign transaction fees. They can quickly eat away at any value you’re getting with your rewards points, so we’re glad to see that this card doesn’t have any.
Additional $100 statement credit specifically for Global Entry or TSA PreCheck.
Both of these programs can save you a ton of time and hassle, especially if you travel frequently. The $100 statement credit reduces or even eliminates the application fees, depending on which product you pursue.
Plentiful travel protection benefits. When you book your travel with your Chase Sapphire ReserveSM card, you automatically have a lot of coverage as long as 100% of the purchase goes on the card. Coverage includes:
Auto rental collision damage waiver. You won’t have to purchase collision insurance from your rental company as physical damages to the vehicle will be covered by this waiver provided via Chase.
Roadside assistance. You’re covered up to $50, four times per year. Covered services include locksmiths, tows, tire changes, jump-starts, and gas.
Baggage delay insurance. If the airline has issues locating your luggage at your destination airport for six hours or more, this insurance policy will reimburse you for essential purchases, like shampoo or slacks. The policy maxes out at $100 per day over the course of five days.
Lost luggage reimbursement. What if the airport never finds your bag? Or damages your belongings? Chase will reimburse the value of your belongings up to $3,000.
Trip cancellation/interruption insurance. Certain emergencies, such as severe weather or illness, will merit a reimbursement of up to $10,000 if they force you to cancel or cut your trip short.
Trip delay reimbursement. If your flight is delayed for over six hours and the airline is offering little to nothing in the way of reimbursement, Chase will pay you back $500 per ticket to cover things like food and hotel stays.
Emergency coverages. Chase provides coverage for emergency evacuations, emergency medical and dental services, and accidental death or dismemberment while you’re on a trip that you’ve paid for 100% with your Chase Sapphire Rewards card.
What we don’t like about the card
While Chase Sapphire ReserveSM’s rewards are out of this world, they do come at a steep price.
The annual fee is colossal.
A $450 annual fee is huge—especially since it is not waived in the first year. This limits the number of people who will even be able to afford to open a card, nonetheless justify the expense.
Rewards points are scant on everyday purchases.
While this card is generous with rewards points for dining and travel, purchases in every other category only earn 1 point per dollar. Even when you account for the 50% bonus when booking through the Ultimate Rewards portal, it would be wise to put these purchases on one of many other cards on the market that will earn you more points.
Travel hackers will have a hard time qualifying.
Banks (and not just Chase) are making it more difficult for people to jump from bonus offer to bonus offer. If that sounds like you, it will probably be difficult to get approved.
Who the Chase Sapphire ReserveSM best for
Those who travel frequently, spending a good portion of their budget on related purchases including dining, will benefit most from this card. These applicants have a solid credit history and score and are more likely to have a higher income as they have the funds available to front the $450 annual fee without hurting their budget. Their travels enable them to get the most out of not only the rewards points but also the statement credits that make this offer so attractive.
Chase Sapphire ReserveSM vs. Chase Sapphire Preferred® Card
If you have the $450 to spend up front, and know that you will be able to take advantage of the annual $300 travel reimbursement, Chase Sapphire ReserveSM is likely a better card for you than the Chase Sapphire Preferred® Card.
While the Chase Sapphire Preferred® Card’s annual fee of $95 is waived for the first year, in subsequent years its annual fee is only $55 less than the Chase Sapphire ReserveSM’s effective $150 fee after travel reimbursements ($300 Annual Travel Credit – $450 annual fee).
For an additional $55, your Chase Sapphire ReserveSM points are worth 1.5 points each when you book through the Ultimate Rewards portal versus the Chase Sapphire Preferred® Card’s 1.25 points. Let’s look back at our trip from New York City to Tokyo. With the Chase Sapphire ReserveSM, you would need 80,000 points to book your $1,200 flight. With the Chase Sapphire Preferred® Card, you would need 96,000 points. That’s a 16,000-point difference. In order to make up the difference, you’d have to spend $6,400 on travel or dining on your Chase Sapphire Preferred® Card.
Fifty-five dollars starts to look like a deal.
You also earn 3 points instead of the Chase Sapphire Preferred® Card rate of 2 points on each dollar you spend on travel and dining.
Given the increased point values, making up the $55 difference is easy. Having the income to support opening the Chase Sapphire ReserveSM in the first place is the challenge. Not only do you need to have $450 on hand up front, but you’ll also need to have an income that justifies a credit line of $10,000+. If you will have trouble achieving either of these things, the Chase Sapphire Preferred® Card may be a better card for you.
While Chase Sapphire ReserveSM offers fantastic benefits, it’s not for everyone. If you want a credit card that offers travel rewards without such large impositions, you do have other options.
Chase Sapphire Preferred® Card is much like the Chase Sapphire ReserveSM option, except its $95 annual fee is waived for the first year. It doesn’t have all the same perks, but it does offer 2 points per dollar spent on dining and travel while offering 1 point on all other purchases. When you redeem points in the Ultimate Rewards portal, they’ll be worth 25% more instead of Reserve’s 50% incentive.
While the bonus in the Ultimate Rewards portal is attractive, earning 1 point per dollar spent on everyday purchases is not. The Barclaycard Arrival Plus® World Elite Mastercard® offers 2 miles per dollar spent on any purchase, which may make it more valuable for those planning one or two trips per year rather than getting away every other month for work or leisure. The annual fee is waived in the first year, and it currently comes with a 40,000-mile bonus when you spend $3,000 in the first 90 days. The Barclaycard Arrival Plus® World Elite Mastercard® also gives you back 5% of the miles you redeem. For example, if you redeem 40,000 miles, you’ll get 2,000 back.
Similar to the Barclaycard Arrival Plus® World Elite Mastercard®, the Capital One® Venture® Rewards Credit Card offers 2 miles per dollar spent on any purchase, with each mile worth one cent when redeemed against a past travel purchase. The annual fee is waived in the first year, and the current sign-up bonus is 50,000 miles when you spend $3,000 on purchases within the first three months.
Yes, though you should keep in mind the credit requirements above. If you currently have Chase Ultimate Rewards points, it’s wise to transfer them to the Reserve so you can take full advantage of the 1.5-point redemption rate in the Ultimate Rewards portal.
Yes. As long as you share the same address, you will be able to transfer points one to another instantaneously. You cannot combine or share points with a family member who lives at a different address.
No. Once you transfer points to another program, you cannot convert them back to Ultimate Rewards points. Be sure you understand the redemption process for each program before you transfer to ensure you’re getting the maximum value for your points.
No. As long as you keep your account open, your points will not expire. If you have other Chase cards that are eligible for the Ultimate Rewards program, you could close your Chase Sapphire ReserveSM account and transfer them to your other card, but as of today Chase Sapphire ReserveSM offers the best redemption rate in the Ultimate Rewards portal, so this may not be the best move.
Taking out a federal Direct PLUS Loan for grad school may not be a bad idea if you need to borrow money for your education. Federal repayment options such as Income-Based Repayment, Revised Pay As You Earn, and Public Service Loan Forgiveness can make Direct PLUS Loans an attractive option for student borrowers.
However, these loans currently come with a high interest rate of 7%. On top of that, you will have to pay an origination fee between 4.264% and 4.267% just to take out the loan in the first place.
Recently, Sallie Mae put a new line of loans on the market that may outperform what is available to grad students through the federal government. While there are some negatives, like not qualifying for the aforementioned repayment programs, there are some major positives, like no origination fees and potentially lower interest rates, which could save students a lot of money over the long haul.
In this review, we’ll see how Sallie Mae grad school loans compare to federal Direct PLUS loans.
Sallie Mae vs. Direct PLUS Loan
Sallie Mae’s recent releases include three classes of loans: one for MBA programs, one for dental and medical school students, and a separate loan program for other health care professionals.
In order to qualify for any one of these loan programs, you must be enrolled in a program at a degree-granting institution with the intent of getting a degree. These loans are not for certificate programs or continuing education.
It is worth noting that you do not have to be enrolled half-time to qualify, which differs from the standards for federal PLUS loans.
Interest rates and terms
With any one of these loans, you can borrow between $1,000 and the maximum your school charges for your degree — as long as you qualify either on your own or with a co-signer. Interest rates and loan terms will vary depending on which loan you take out, though.
In the table below, we’ve compared rates for Sallie Mae’s grad school loans against the current rates for the Direct PLUS Loan program.
Keep in mind that variable rates may be lower at first, but have the potential to change significantly over the course of repayment. Fixed rates, on the other hand, tend to start out higher, but will stay stable and predictable for the course of your loan.
None of the loans come with origination fees, and you can pay them off early without incurring a penalty.
3 options to repay your Sallie Mae grad school loan
When you take out any one of these three loans, you can pick how you’ll repay. You have three options:
Deferred Repayment. With this option, you make zero payments while you’re in school and during the six months following graduation — the time frame known as the “grace period.” While it’s nice that you won’t have to shell out any money while you’re focused on your studies, you will accrue interest to be paid later. This option also gives you the highest interest rate of the three options.
Fixed Repayment. Maybe you can’t afford to make full monthly payments while you’re in school, but you can afford to throw a little bit of money at the interest. During your education and grace period, you’ll make nominal, interest-only payments. You will still have back interest applied to your account when your grace period is over, but the amount will be less than if you chose the Deferred Repayment plan.
Interest Repayment. When you choose this plan, you’ll get the lowest interest rate that your credit history and income qualify you for, but you’ll have to make full, interest-only payments while you’re in school through your grace period. After that, you’ll start making interest-plus-principal payments just like the other two options, but your payments will be smaller as there won’t be any back interest to tack on.
Graduated Repayment Period
Worried that you’ll struggle to find a job immediately after graduation? Sallie Mae does offer a principal deferment option called Graduated Repayment Period. For the first 12 months following graduation, you have the option of making interest-only payments, but it’s not automatic. You have to opt in, and there is only a small time frame where you’ll be allowed to do so. Your monthly billing statement will alert you when you’re eligible. Start looking for the notification beginning two months before your grace period is over.
Residency and internship deferment
If you have a Dental and Medical School Loan or a Health Professions Graduate Loan, you may qualify for deferment for the entirety of your residency or internship. If you chose Deferred Repayment, you won’t have to pay anything during this time, though interest will still accrue. If you chose Fixed Repayment, you’ll continue making nominal interest payments, and if you chose Interest Repayment, you’ll continue to make full interest payments while you’re completing this necessary step.
In order to qualify for this deferment option, your residency or internship must meet one of the following three criteria:
Require a bachelor’s degree.
Be a supervised program that leads to a degree or certificate.
Be a supervised program that is required for entry into your field.
How to qualify for a Sallie Mae grad school loan
To qualify for one of Sallie Mae’s graduate-level student loans, you must be a U.S. citizen or permanent resident, or be a nonresident with an American co-signer. U.S. citizens and permanent residents can use the loan to study abroad, but all studies for nonresidents must be completed in the U.S. at American institutions.
If you have any other Sallie Mae loans, you must be current on them in order to qualify. That includes not being in forbearance or deferment. You won’t meet this requirement if you’re on a modified payment plan.
Sallie Mae grad school loans vs. federal PLUS loans
Pros and cons of Sallie Mae grad school loans
This new set of graduate school loans from Sallie Mae has a lot of good things going on, but as with any financial product, there are both pros and cons.
You could potentially score a lower interest rate than federal PLUS loans.
No origination fees.
Ability to pay back early without penalty.
Quite a few options for repayment — including deferment options after graduation.
The 20-year repayment term on the Dental and Medical School Loan gives you a more realistic timeline for paying back your debt.
You can take out a loan even if you’re taking a credit-by-credit approach. Federal student loans require you to attend at least half-time.
There is the potential of getting an even higher interest rate than you’d find on a PLUS loan, though you’d still have no origination fees. This is most likely to impact those with a spotty credit history — especially if they opt for the Deferred Repayment option.
Dental and medical school students should take note that while a 20-year term is attractive, you will end up paying more over the course of your loan than if you had a shorter repayment term. Take advantage of the fact that there is no early repayment penalty, if at all possible.
Because these are private loans, you will not qualify for advantaged repayment options like the Department of Education’s REPAYE, IBR, or PSLF. Direct PLUS Loans do qualify for these programs.
The window for enrolling in Graduated Repayment is short. You may miss it if you’re not paying attention.
How to apply
You can complete the application process online. Before you start, make sure you’re armed with this information:
Your Social Security number
The name of your school
Your enrollment status
Your intended degree/course of study
How much money you want to borrow
Information on any other financial aid you’re receiving
Current employer information
Current salary information
Bank account information
Monthly mortgage/rent payments
Contact information of two personal references
If you’re a permanent resident, you’ll have to furnish some additional paperwork. Be prepared with either your Alien Registration Receipt Card, or its conditional counterpart accompanied by INS Form I-751. If you don’t have either of those, you can also furnish an unexpired foreign passport with an unexpired stamp certifying employment, or a Permanent Resident card.
If you’re a nonresident, you’ll need to provide an unexpired passport, an unexpired student visa, or an Employment Authorization card. You’ll also need all of the above bulleted information for your co-signer.
Who are Sallie Mae’s new grad school loans best for?
Sallie Mae’s new student loans have an extremely targeted audience. If you’re studying in one of the specified fields, they can be a good option for you if you have a good credit history and can qualify for an interest rate lower than the one offered on PLUS loans. Just be mindful that while the repayment options are plentiful, they’re not quite as generous as some federal student loan programs that allow you to repay based on your income or even forgive a large portion of your debt after dedicating a portion of your career to public service.