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Banking

How to Pay for Uber and Lyft Rides with Commuter Benefits

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

You may have more options than you think when it comes to getting your employer to foot the bill for your commute. Some commuter benefits packages include ride-share options, and both Lyft and Uber have hopped on board the trend.

Lyft and Uber commuter benefits can be used when riders select a shared Lyft ride or uberPOOL, the apps’ carpooling options. If you’re curious about this benefit and whether or not it’s worth linking your Uber or Lyft account to your commuter benefit account, we’ve got you covered.

What are commuter benefits?

Commuter benefits are an employer-provided benefits program that lets you set aside pre-tax dollars in an account to be used for your commute costs. Employees can use these benefits to pay for public transportation — trains, subways, buses, even parking passes — used on their daily commute with pre-tax dollars. The amount of money you set aside to pay for your commute doesn’t count as income, so you’re not taxed on it.

Which benefits programs are included for Uber and Lyft?

Each ride-hailing service has partnered with select benefits programs; there is significant overlap, though Lyft has a slightly more robust list of partners.

For example, if your company’s benefits package is with Zenefits, Wageworks, Igoe or Pension Dynamics, you can use your commuter benefits with Lyft as well as with Uber. On the other hand, if you use the Benny Prepaid Benefits Card, the Discovery Benefits Visa Prepaid Debit Card or the EBPA Benefits Debit MasterCard, you can only use Lyft.

You can see a full list of the supported commuter benefits programs for Lyft here and for Uber here.

How do I sign up for commuter benefits?

Workers have to sign up for commuter benefits in order to receive them. When you sign up, you will be asked to select how much money you want to set aside from your paycheck each month to cover your transportation costs.

Once you’re enrolled, you may receive a benefits card (it can be used like a regular debit or credit card) to make transportation purchases. Otherwise, you may be able to cover transportation expenses using your regular credit or debit card and then submit a claim to be reimbursed through your benefit provider.

Reach out to your employer’s human resources department to find out how to take advantage of your commuter benefits program.

How much can I really save?

Depending on your current tax bracket, you could save as much as 37% on your commute by using commuter benefits. For example, if you’re in the 35% tax bracket and contribute $200 each month to your commuter benefits account, you’re getting an extra $70 to spend on your commute each month. That’s an extra $840 per year.

But here’s the catch: Commuter benefits contributions are capped at $270 per month. So if you are already relying on your benefits to finance your monthly subway pass or parking garage expenses, you may not have much left over for Uber or Lyft commuter benefits.

What are Lyft’s shared rides and uberPOOL?

To use commuter benefits to pay for Lyft or Uber rides, you have to select the apps’ carpooling options — either Lyft’s shared rides or uberPOOL.

Carpool vehicles seat six or more passengers, whether you’re using Lyft or Uber. Both Uber and Lyft use algorithms to place riders going toward the same area in the car together. Because you’re carpooling, however, you may or may not have a longer commute, depending on traffic in your city and how many other riders get picked up or dropped off during your trip.

Where are these benefits available?

Whether Lyft or Uber commuter benefits are available in your location depends on which rideshare option you want to use.

If you prefer Lyft, you’re in luck: As long as the company offers shared rides in your area, you can use your commuter benefits to fund your rides, assuming, of course, your company uses a partner benefits program. Here is a full list of cities where Lyft offers shared rides.

Uber users, on the other hand, can use the commuter benefits everywhere that uberPOOL is available, with the exception of Nashville, Tenn. and Portland, Ore.

How to use commuter benefits on Lyft

If you’re interested in using commuter benefits on Lyft, here’s how to set it up:

  1. First, you need to add your commuter benefits card to your profile. When you open the Lyft app, tap “Payment” in the left-hand side menu to see your payment options.
  2. Select “Add card,” enter your commuter benefits card information and press save.
  3. Next, set the card as your default payment method. There are two ways to do this:
    • Select the card as your default payment method for your personal profile under the “payment defaults” section in the “Payment” menu.
    • When you open the app, set your location and destination. You’ll then see the last four digits of the card that’s being used to pay for the trip. Tap the numbers to change your payment method to your commuter benefits card. You should see a rectangular icon with a diamond in its center when using your benefits card.
  4. To use your commuter benefits on a ride, select “Shared.” You can only use your benefits to pay for carpools under the “Shared” ride option, located under the “Economy” tab.

How to use commuter benefits on Uber

Prefer to use Uber? Here’s how you can set up Uber commuter benefits:

  1. Add your commuter benefits card to your profile by going to the left-hand menu and adding your commuter benefits card under “Payment” (it may also be listed as “Wallet.”) You can also add the card after setting your location and destination under uberPOOL, shown below.
  2. Tap on your card information to set or add your commuter card as a payment option.
  3. Your benefits can only be used to pay for carpools under uberPOOL. Select the pooling option to be matched with a car with six or more seats, and you’ll be good to go.

Pros of using Uber and Lyft commuter benefits

  • Use pre-tax dollars to save: The most obvious perk of using your commuter benefit is that you’re using pre-tax dollars, so your dollar can go up to 37% further. If you’re already paying out of pocket for your commute, this could be a huge benefit, freeing you up to use that cash on something else.
  • Cut back on driving: According to the latest available five-year estimates from the U.S. Census Bureau, the average commute takes about 27 minutes — though if you live outside of a larger, more congested city, it could be significantly longer. If it’s more affordable for you to use a ride-sharing app, you can use that time to read, catch up on work or take a nap while you ride, instead of letting the stress of navigating from point A to point B get the best of you.
  • Reduce your carbon footprint: Since these benefits are restricted to carpooling with at least six or more passengers, taking advantage of it means contributing to a smaller carbon footprint, and that’s especially true if you usually drive to work solo. Using a ride-sharing app takes the hassle out of organizing a carpool.

Cons of using Uber and Lyft commuter benefits

  • Only shared rides are eligible: You may want to put your pre-tax dollars elsewhere if you’re not into making new friends each morning. You’ll be placed in a vehicle that seats six or more people when you use your benefits card, and other riders may have various personality types that may not mesh so well with yours, if, for example, you tend to be in zombie-mode before your coffee kicks in and prefer to sit in silence.
  • Contributions are limited: Your contribution is limited to $270 a month, which may or may not be a month’s worth of commuting, depending on how much your commute costs. For example, an analysis by LendingTree, the parent company of MagnifyMoney, found the average monthly cost of commuting with Uber’s non-pool service UberX in New York City is more than $700. Still, $270 pre-tax will help cut down on your monthly spending for the trip to work.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at [email protected]

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Banking

Review of Mvelopes Budgeting App

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The Mvelopes app helps you make a budget and stick to it. The app mimics the envelope budgeting system — where you place actual cash in physical envelopes — on your mobile device. Placing cash in paper envelopes every month is a budget strategy that’s been around for a long time, and Mvelopes virtualizes this tried-and-true method. If you like the idea of budgeting via envelopes but find it a hassle to use actual physical envelopes and cold, hard cash, Mvelopes may be a budgeting solution for you.

What is the Mvelopes app?

With Mvelopes, you trade the physical cash and paper envelopes of the envelope budgeting system for a website and a mobile app. You synch up bank accounts with Mvelopes, which lets you create virtual envelopes and then assign different amounts to place in each envelope. Mvelopes offers a 30-day free trial, after which you’ll need to decide how many features you’d like to pay for.

Mvelopes has three levels of service: Basic for $6 a month, Plus for $19 a month, and Complete for $59 a month. Choosing to pay annually gives you a discount equal to two months of fees. At the Complete level, Mvelopes gives you a 60-day money-back guarantee, no questions asked.

Features of Mvelopes

The Mvelopes Basic account offers the following features:

  • Digital envelope budgeting
  • Automatic importing/syncing of transactions
  • Monitoring of account balances
  • Interactive reporting
  • Live chat support
  • Weekly webinar

After you open your Mvelopes account, you’ll see a dashboard with six broad budget categories (bills, everyday, giving, goals, periodic, system), each populated with budgeting envelopes. You can add or remove envelopes from these budget categories at any time.

Under each category, Mvelopes provides envelopes for items like auto maintenance, home maintenance, gifts, auto insurance, electricity, phone and so on. You’re free to change these envelopes at any time to match up with your own personal budget categories.

Add financial account to sync transactions

After opening your account, you’ll be asked to sync one or more financial accounts to Mvelopes, like a checking or savings account, or a credit card account. Mvelopes will automatically import your transactions from each account. Imported transactions are automatically assigned to your Mvelopes inbox. From there, you are responsible for categorizing your deposits and purchases into the correct envelope.

The Mvelopes dashboard and reporting features allow you to see at a glance all of the information regarding your funding and spending transactions, along with your budgets and the amounts remaining in each envelope.

Interactive reporting

You can generate three types of interactive reports that help you understand your spending and plan your budget: envelope reports, account reports or spending plan reports. Within these broad categories, you can track envelope transactions and balances, create summary reports and show details of accounts and envelopes.

Live chat support & weekly webinars

Live chat is available at all tier levels Monday to Friday from 9 AM MST to 7 PM MST, but not on Saturday or Sunday.
Mvelopes likes to stress the educational component of its services, and in addition to extensive educational information you can find online, Mvelopes hosts weekly webinars on various financial topics.

Mvelopes Plus features

At the Plus level, you get the features above plus:

  • Quarterly checkup from an Mvelopes Personal Finance Trainer
  • Debt reduction tools
  • Access to educational resources
  • 1-on-1 assistance with setting up your account
  • Priority support

The big advantage of the Plus tier is a quarterly check-in with a personal finance trainer, who helps guides you and provide feedback on your budgeting process. In addition, Mvelopes will custom-design a rapid debt reduction plan that is personally tailored to your financial needs. You can discuss your progress on this plan every three months with your personal finance trainer session.

Mvelopes also offers an interactive learning center to help Plus-tier customers understand the keys to financial success across a broad range of topics.

The Plus tier also entitles you to one-on-one startup support to help you establish your account and set up your envelope budgeting program. It also gives you priority when it comes to support issues.

Mvelopes Complete features

Complete is Mvelopes’ top tier of service, giving customers the following additional benefits:

  • Monthly sessions with a personal finance trainer
  • A customized Mvelopes budget plan
  • Financial education guided by a trainer
  • Accountability and motivation tools

Top-tier Mvelopes clients get monthly access to a personal finance trainer to help keep them motivated and on track toward their budgeting goals. Working in conjunction with their trainer, Complete-tier customers create a customized financial plan tailored to their personal situation.

In addition to the Plus-tier educational resources, Complete-tier customers can learn additional financial planning techniques and strategies, including financial goal tracking, via trainer-guided education.

Advantages of Mvelopes

  • Automatically imports all of your financial transactions
  • Multiple levels of service to meet varying customer needs
  • 60-day money-back guarantee at Complete, its top-tier level
  • Options for unlimited envelopes and personal financial coaching

Downsides of Mvelopes

  • Not completely automated: You still have to categorize your imported transactions
  • Interface is not entirely intuitive or easy-to-use
  • After the 30-day introductory trial, there is no free option available
  • No 24/7 live chat

Mvelopes vs. other budget apps

Mvelopes is uniquely focused on making the envelope-budgeting system easy to use in an online or mobile format. If you’re already familiar with this type of budgeting, the app may be a perfect fit for you. However, there are other options worth examining.

Mvelopes vs. Goodbudget

Goodbudget is one of the few competitor apps to Mvelopes that focuses on the same envelope budgeting system. The apps are very similar, with the main difference in their interfaces and pricing.

Unlike Mvelopes, Goodbudget offers a free option. However, users are only allowed to link a single account. Goodbudget’s paid account costs $6 per month — the same cost as Mvelopes’ Basic account — and offers broadly similar functionality at that level. However, Mvelopes’ premium service tiers give you quarterly or monthly access (for higher fees) to personal financial specialists, something Goodbudget doesn’t offer at any price level.

Mvelopes vs. EveryDollar

EveryDollar is a budgeting app without the envelopes. As the name implies, EveryDollar allows you to track every dollar that comes into or goes out of your linked financial accounts. Like Mvelopes, you’ll start by setting up your budget categories, such as groceries, restaurants, clothing and health care, and assigning your transactions to each segment. Although the categories are not specifically called “envelopes,” they serve the same purpose as with Mvelopes.

EveryDollar has a free version and a paid version that costs $129.99 per year. The free version includes a personal budget planner and an expense tracker. Access to service and savings experts, such as insurance, real estate and tax professionals, comes with the paid version.

Is Mvelopes right for you?

If you’re already familiar with the envelope system of budgeting, Mvelopes might be your go-to budgeting app. However, even at the Basic level, you’ll be paying $6 per month just to digitize your envelopes. Meanwhile, the top tier costs a very steep $59 per month to add monthly financial coaching. The Mvelopes requires you to regularly allocate your funds to individual envelopes, which could be helpful for some users, but cumbersome for others. Whether you stick with Mvelopes depends on your comfort with frequently interacting with your envelopes.

Fees mentioned in the article are accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

John Csiszar
John Csiszar |

John Csiszar is a writer at MagnifyMoney. You can email John here

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Banking

How to Beat Inflation

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Inflation is the general upward movement of the price of goods and services in an economy. With inflation, everything from a gallon of milk to a gallon of gas costs more tomorrow than it does today — and it gradually erodes the purchasing power of your savings.

Beating inflation isn’t hard, but you need a strategy in place to do the job. Currently, the annual rate of inflation is 2.1%, according to the latest Consumer Price Index (CPI). At time of writing, the national rate for a savings account held at a deposit institution is 0.09% APY, while the average return on certificates of deposit (CDs) is around .13% to .98%, according to the FDIC. Let’s take a look at the tools you’ll need to beat inflation.

Strategies to beat inflation

“The best inflation hedges are actually buying assets which might increase in value with inflation,” said David J. Haas, a certified financial planner with Cereus Financial Advisors in Franklin Lakes, N.J. This means buying things today that will increase in value at a rate that is equal to or higher than the rate of inflation.

Invest in the stock market to beat inflation

The stock market is an excellent long-term inflation hedge, according to Haas. Investment products like individual stocks, exchange traded funds (ETFs), and mutual funds, have the potential to outearn inflation.

“When you own stock, you own part of a corporation which has price-setting power. That means corporate book-value as well as revenues rise with inflation,” said Haas.

The broad stock market over the long-term has provided average annual returns of 6% to 7% above the rate of inflation, said certified financial planner Randy Bruns, founder of Model Wealth in Naperville, Ill.

“Diversified portfolios of stocks and bonds have earned inflation-adjusted (or real) returns of between 3% and 6% over the long-term, depending on the makeup of the portfolio,” said Bruns.

What about stock market volatility?

Financial planners caution that investors must consider that market volatility can affect your return.

“In years like 2019, a portfolio of stocks beat inflation by double digits, but that won’t persist as a long-term average,” said Bruns. “Nor should major stock market losses ultimately change your ability to outpace inflation over many years. It’s reasonable to begin with an assumption that your portfolio might earn historical inflation-adjusted returns of 3% to 6%, but to then reduce those returns by a percentage point or two to be conservative.”

Beat inflation by investing in bonds

Another inflation-beating option is bonds, loans where you give a government or a corporation your money, in exchange for a promised return over time. But the type you purchase is vital — bond prices and interest rates typically move in opposite directions, and during high-inflation periods, interest rates rise which means bond rates decline.

“The entity pays you back over time, but inflation erodes the value of the currency being paid back,” said Haas. “So bonds are typically a poor investment in inflationary times. You are being paid back something which is less valuable than what you loaned out.”

Bonds diversify your investments

However, purchasing some types of bonds to diversify your investments can be a smart overall strategy. For example, short-term bonds, which mature in one to four years, can do well in an economy where the interest rate is rising.

Longer term bonds, however, offer a trickier scenario as investors can’t accurately predict the change in interest rates and inflation over a longer time period. Higher inflation can reduce the value of payments, causing bond prices to fall.

Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities (TIPS) are bonds that are designed to do well during inflationary periods. The government-backed bond was introduced in 1997, and offer an adjustable principal that’s linked to the CPI. As inflation rises or falls, the value of the investment adjusts with it.

Investors can also purchase bond funds, which are similar to mutual funds but are invested in bonds instead of stocks. Managers of bond funds often buy and sell according to market conditions, and investors receive monthly income payments, which may vary from month to month.

“Investing in high quality bonds — through a broad market bond index fund, for example — has historically provided average annualized returns of 2% to 3% over inflation,” said Bruns.

Buy annuities to beat inflation

Annuities are complex investment contracts typically offered by insurance companies to provide investors with an income stream for retirement. While they can be another answer on how to beat inflation, you have to choose wisely. Some annuity products pay the investor a fixed monthly income that isn’t adjusted for inflation, but others have features designed to address inflation head-on.

One tool is a cost-of-living adjustment (COLA) rider that will increase your annuity income payment by a percentage you choose. For example, if you choose 3%, which is higher than the current rate of inflation, your monthly payments will grow by 3% every year. The average inflation rate, tracked since 1913, is 3.1%.

Another feature is a CPI-rider that automatically adjusts your monthly payment based on the current rate of inflation. During times of high inflation, your income payment will go up and when inflation is stagnant, your payments will stay the same.

Build a CD ladder

While the average CD rate won’t help you beat inflation, building a CD ladder can help you meet or beat the inflation challenge. A CD ladder is a portfolio of CDs with staggered certificate terms to take advantage of higher APYs offered by some banks and credit unions.

You start by purchasing CDs once a month or every few months to lock in rising rates, with the newest CD likely earning the highest rate. With a CD ladder, each certificate will complete its term at regular intervals, giving you steady access to cash at higher rates than you would receive in a regular savings or checking account.

Once interest rates start to stabilize, you can consider holding CDs for longer terms. While owning CDs can be a safer approach than some of the market-tied investments, in higher inflationary periods, your CD may simply match the current rate of inflation instead of beating it.

“CD ladders are a great idea for those assets folks would like to keep FDIC insured,” said certified financial planner Dennis R. Nolte, vice president of Seacoast Investment Services in Oviedo, Fla.

Real estate can help you beat inflation

As inflation rises, investing in real estate can become an attractive option for beating inflation. When interest rates are low, the cost of getting a mortgage is often lower, as well. Low inflation generally brings down mortgage rates, which will reduce your payment, making it more affordable to buy a home.

Inflation can reduce the value of your debt because it reduces the value of money. Purchasing real estate by incurring debt allows you to realize the benefit of the money when it could go farther. As long as your wages keep up with the pace of inflation, you will pay back the loan with an interest rate that is effectively lower thanks to inflation.

“Real estate can be a good inflation hedge because it has value which may increase with inflation,” said Haas.

However, inflation can negatively affect housing prices, causing them to fall in the short term. Real estate should be considered a long-term investment, added certified financial planner Jon L. Ten Haagen with Ten Haagen Financial Group in Huntington, N.Y.

“Real estate, if it is an open-ended position, could be a good investment if you have the time horizon,” he said. “Time is your friend when investing.”

Delay claiming social security benefits

If you’re nearing the age of retirement, delaying your Social Security retirement benefits can help you beat inflation. You earn an 8% increase in your benefit amount each year you wait to collect, up to age 70. If you retire at 65, for example, you have the potential of increasing your monthly benefit check by as much as 40%.

“Social Security provides at least some ability to offset inflation, though increases in Medicare-related costs often chip into annual increases,” said Sean M. Pearson, certified financial planner with Ameriprise Financial Services in Conshohocken, Pa. “The longer you can wait to collect Social Security, the more protection you will have against inflation during retirement.”

If you collect Social Security before age 70, your future cost-of-living increases will be based on a lower monthly amount. For most people, the difference in collecting Social Security at age 62 means earning less than half as much than if that same person waits until age 70.

If you’re married, you can adopt strategies to make the most of your benefits. For example, the higher-earning spouse might delay benefits until age 70, while the younger spouse could collect payments sooner to create income.

“Beating inflation is typically a long-term mindset, as in saving for retirement,” said Bruns. “An inflation-beating investment matters because the more you can outpace the rising cost of your retirement, the less you’ll have to contribute out of pocket.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Stephanie Vozza
Stephanie Vozza |

Stephanie Vozza is a writer at MagnifyMoney. You can email Stephanie here