Advertiser Disclosure

News

Here’s the Right Way to Close Your Expensive Rewards Credit Card

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 credit card issuer. This site may be compensated through a credit card issuer partnership.

Springtime is almost like the second coming of the new year — the weather is warmer, resolutions are renewed with new vigor and every other article is sharing advice with you about decluttering your life. Purging unneeded or expensive credit cards is common advice when spring cleaning your finances. Some credit cards, like rewards cards, involve a little more care and tact than closing any old regular credit card.

Rewards credit cards are, generally speaking, the most expensive credit cards to keep open, so they may be on your purge list if you’re not using them enough to make the associated costs worth it.

As a recent MagnifyMoney study found, the sign-up bonuses many reward cards offer come at a steep cost to consumers. The average annual fee on a card with a bonus offer is $120, up 62% from 2008. However, in the lenders’ defense, they’ve also bulked up rewards offerings on new credit cards in the time. A separate 2017 MagnifyMoney study found, since 2010, what banks spend to support credit card rewards has more than doubled, from $10.6 billion to $22.6 billion.

If you’re ready to ditch your rewards card, you’ll want to make sure it’s done with your best interest in mind — a minimal loss of rewards and a minimal change to your credit score. Here are a few tips on the right way to close a rewards card when the cost isn’t worth the benefit.

When it makes sense to cancel a rewards credit card

When the rewards stop being worth the fee. Generally speaking, you should do a cost-benefit analysis in any situation to determine if keeping a credit card open is worth the fees associated if it charges any.

Todd Ossenfort, chief operating officer of Rapid City, S.D.-based Pioneer Credit Counseling, says to cancel the rewards card if it’s not getting used and you don’t take advantage of the rewards they offer. Most rewards cards charge a fee, so check to see if you’re paying one before you ditch your bank.

If you like earning rewards, sans the annual fee, there are rewards cards that don’t charge an annual fee but offer lucrative cash back rewards like the Citi® Double Cash Card – 18 month BT offer. You Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay. or the Uber Visa Card which rewards spending in certain categories. The Uber cards award cardholders 5% back in Uber Cash on Uber, Uber Eats, and JUMP, 3% back in Uber Cash on dining, hotels, and airfare and 1% back in Uber Cash on all other purchases

If rewards are reduced or terms are changed by the issuer. Another thing that may alert you to close a rewards card is changing terms that may reduce the overall benefit of keeping the card open.

“Look for things like a sharp increase in the card’s interest rate, cutting back on benefits like auto insurance or trip protection or downgrades of ways you can earn points and miles,” says Benet J. Wilson, associate credit cards editor for CompareCards.com, another LendingTree-owned site.

Remember, companies generally reserve the right to alter the card’s terms at any point.

“Credit card holders always have boilerplate language that covers them if or when they decide to change benefits, but when it happens, it should always serve as a warning flag,” says Wilson.

Follow these tips to close a rewards card the right way

Closing a rewards credit card can be a bit more nuanced than closing any regular old credit card. Here are a few tips you can use to make sure the process is smooth sailing.

Reach out to the bank before they charge your annual fee

Plan to close the card a few months ahead of the date the annual fee will be charged to the account. Otherwise, you may find yourself paying for another year of rewards you may not benefit from.

“Be proactive and call the creditor,” says Ossenfort. “Don’t put the card in the drawer and forget about it until they charge the annual fee and then try to cancel. More than likely they will cancel the card and still have you pay the fee.”

Still carrying a fee? Pay it down or transfer the balance to a new card

You’ll need to zero out any balance on the account before you’ll be permitted to close the card. To do this, you’ll need to pay any balance in full or have it transferred to another card.

If you transfer, you’ll ideally want to move the balance to a card that won’t charge you a higher interest rate on the balance you transfer. Here are some balance transfer options to consider in case you need to use one.

Use your rewards before you lose them

Use up any existing rewards you’ve accumulated on the card before you close the account if you can — after all, you’ve earned them.

You may decide to cash out any cash back rewards to your bank account or choose to apply them to your statement credit. If you can apply rewards to purchase gift cards or other items in a marketplace, that may also be an option. If you have a partner who is enrolled in the same rewards program with the bank, you may have the option to transfer your points to your partner’s account before you close the card.

If the card is co-branded with an airline, hotel or another company, like Uber, and you’ve accumulated miles or points in an associated account, those will likely stay available to you to use after closing until the miles or points expire. However, if it’s a bank, like Chase or Capital One, you’ll generally lose the points if you close the account and have no other cards linked to the program.

One big thing to watch out for here is not incurring extra debt in the process, says Ossenfort.

“I wouldn’t recommend using 5,000 points towards any trip if it’s going to cost you another $1,000 just because [you don’t want to lose the points],” says Ossenfort.

Prepare for a drop in your credit score for 30-90 days

A common warning you’ll get if you talk about closing a credit card is that it can hurt your credit. Sometimes, that ding to your score could be worth the temporary pain if it means saving you money in the long run.

Closing a credit card could reduce your overall available credit limit, resulting in an increase in your utilization ratio — a factor that contributes to about 30% of your credit score. The ratio is your total used credit in relation to your total available credit. The higher your utilization ratio, the more it can negatively affect your FICO score.

Don’t close a card and think that it will help your credit score, because it doesn’t,” at least in the short term, says Wilson. “By closing an old or unused card, you are essentially wiping away some of your available credit and thereby increasing your credit [utilization ratio].”

She recommends you check the total balances on all your credit cards and run the numbers before you decide to close one down. Use a credit score simulator tool like this one from Credit Karma or this one from Chase (for Chase customers) to estimate the damage to your score if you close a certain card.

The age of the card is also a major factor to consider, as closing a credit card with a long history or could drop your score by a few points. The effect could be more severe if your other cards are significantly younger than the card you’re looking to close. You can see the possible impact, again, by using one of the credit score simulator tools we linked to above.

“If it’s the oldest credit line and it’s closed your credit score will take a hit,” says Ossenfort. However, he says most can expect the dip to be minor and temporary, about 30 to 90 days.

Consider downgrading the card rather than closing it to avoid credit score damage

You may be able to preserve your rewards — and your credit limit — and simply ask your credit issuer you can downgrade to a card that doesn’t charge as high of an annual fee. If you can’t afford the $550 annual fee on the Chase Sapphire Reserve®, for example, you may choose to downgrade to the Chase Sapphire Preferred® Card, that charges a lower annual fee of $95.

Monitor the card for at least two months to avoid fees after closing

After you cancel the rewards card, Oliver recommends you keep an eye on the account for about two months, in case any fees are charged to the account after closing.

“A fee may have come between the closing of the billing cycle and when you closed the account,” says Oliver. This may be in the form of an interest charge for purchases made during your last month the card was open. You may have paid the balance down, but the interest won’t be charged to the card until the next billing cycle.

Part of that due diligence is getting it in writing that you’ve closed the account, in case you aren’t aware of any fees charged and it shows up later in collections.

You can ask the representative to send you an email or letter to your address confirming the account has been closed. If issues arise later, its best to try to resolve them directly with the creditor, says Oliver. But if that doesn’t work, you’ll already have the account closing in writing so that you can file a stronger dispute.

Unlink bills and autopay accounts

You don’t run into any hiccups with your bills, so you want to make sure the newly-canceled card account is no longer linked to any current bills.

Follow up on any of the accounts or bills the card was linked to and unlink the canceled card. While you’re there, don’t forget to update your billing information to a new card or alternative payment option.

Be firm with sales representatives if they try to keep your business

The Federal Reserve reports that total outstanding revolving consumer debt stands at $1.03 trillion as of January 2018.

“That’s a lot of money on the table, and companies are understandably reluctant to lose it,” says Wilson.

If you’ve considered other credit options with the same card issuer ahead of time, prepare yourself by researching your options to know what’s available.

“They will try anything, including raising your credit limit, waiving annual fees and offering bonus points/miles to get you to stay,” says Wilson. She adds you may use the opportunity to negotiate better terms for your credit card — if they can’t make it worth your while, go ahead and walk away.

If the salesperson is particularly aggressive, advises Wilson, be firm and persistent. If they are particularly pushy, ask to speak with a supervisor. If they refuse, end the call, then call back and immediately ask to speak to a supervisor.

“It may take some persistence, but it can be done,” says Wilson.

The information related to Uber Visa Card, the Chase Sapphire Preferred® Card, the Chase Sapphire Reserve® and the Citi® Double Cash Card – 18 month BT offer has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

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.

Advertiser Disclosure

News

10 Great Free Checking Accounts

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 credit card issuer. This site may be compensated through a credit card issuer partnership.

The humble checking account may not offer rewards, cash back or many of the other perks offered by ritzy credit cards, but it remains the cornerstone of your financial life. Nobody likes paying monthly maintenance fees, so why not pick a free checking account that does away with them altogether?

Below, we’ve selected nine of the best free checking accounts by scouring our database for products meeting the following criteria:

  • No monthly maintenance fee
  • A low initial deposit amount (between $0-$50) needed to open the account
  • No minimum balance requirement
  • Minimal third-party ATM fees
  • Available nationwide

10 bests free checking accounts of March 2020

Account Name

Minimum needed to open

APY

Consumers Credit Union (IL) Free Rewards Checking$05.09% (applies to balances up to $10,000)
TAB Bank Free Kasasa Cash Checking$04.00% (applies to balances up to $50,000)
T-Mobile Money$04.00%(applies to balances up to $3,000)
One American Bank Kasasa Cash Account$503.50%(applies to balances up to $10,000)
Evansville Teachers FCU Vertical Checking$30 ($25 if you're already a member of this credit union)3.30% (applies to balances up to $20,000)
Lake Michigan Credit Union Max Checking$03.00%(applies to balances up to $15,000)
Andigo Credit Union High-Yield Checking$03.00% (applies to balances up to $10,000)
Simple Account$00% to 1.55% on balances in Protected Goals
Axos Bank$501.25% (applies to balances up to $150,000)
SoFi Money$01.10%

Consumers Credit Union (IL) Free Rewards Checking

The Consumers Credit Union provides an online-only Free Rewards Checking account to anyone in the nation who becomes a member. You can qualify for membership with a one-time $5 payment to Consumers Cooperative Association. Perks of the account, which charges no monthly maintenance fees and requires no minimum balance, include unlimited third-party ATM fee refunds.

However you do have to meet some requirements in order to get all of the benefits of the account (including the high APY). The APY for this account is divided into three tiers, with the lowest earning 3.09%, the middle 4.09% and the highest tier 5.09%. The requirements for each of these tiers are:

To earn 3.09%

  • Receive eStatements
  • Make at least 12 debit card purchases a month
  • Post direct deposits or ACH payments of at least $500 each month

To earn 4.09%

  • Meet all the requirements of the previous tier
  • Have a Consumers Credit Union Visa credit card and spend at least $500 a month on it

To earn 5.09%

  • Meet all the requirements of the previous tier
  • Spend at least $1,000 a month on your Consumers Credit Union Visa credit card

Keep in mind these high APYs only apply to balances up to $10,000. The portion of any balance between $10,000.01 and $25,000 earn 0.20% APY, and balances greater than $25,000 earn an APY of 0.10%.

SEE DETAILS Secured

on Consumers Credit Union (IL)’s secure website

NCUA Insured

TAB Bank Free Kasasa Cash Checking

Headquartered in Ogden, Utah, TAB Bank offers a great rate on its Free Kasasa Cash Checking account. Developed by the Kasasa Corporation, a Texas-based financial services and marketing organization, Kasasa accounts help smaller banks compete against larger rivals by providing higher rates.

TAB’s account charges no fees for using third-party ATMs, and reimburses up to $15 in third-party ATM fees per month. There are no fees and no minimum balance requirement for this account, but to earn 4.00% APY reward rate, every month you must:

  • Deposit at least one ACH payment or direct deposit, or make one bill pay transaction
  • Make at least 15 signature-based debit card purchases of at least $5 each

If you don’t qualify in any given month, your balance earns 0.05% APY, and third-party ATM fees are not refunded. You can earn the reward rate APY on balances up to $50,000, which is well above the other maximum balances on this roundup. Balances greater than $50,000 earn an APY of 0.25%.

SEE DETAILS Secured

on TAB Bank’s secure website

Member FDIC

T-Mobile Money

Wireless carrier T-Mobile is venturing out into new territory with a financial product – a competitive one, too. T-Mobile Money is a new checking account that pays a 4.00% APY on balances up to $3,000. Balances over $3,000 earn an APY of 1.00%. There are no monthly fees, overdraft fees, transfer fees, ATM fees or minimum balance requirements.

In order to receive the 4.00% APY, though, T-Mobile Money does require the following:

  • Enroll in a qualifying T-Mobile wireless plan
  • Register for Perks with your T-Mobile ID
  • Make at least $200 in qualifying deposits to your checking account in the calendar month

Balances that do not meet these requirements, or balances over $3,000, will earn 1.00% APY.

SEE DETAILS Secured

on T-Mobile Money’s secure website

Member FDIC

One American Bank Kasasa Cash Account

This small community bank, based in Sioux Falls, SD, offers a nationally available Kasasa Cash checking account that earns a decent 3.50% APY on balances up to $10,000. You need a minimum of $50 to open the account, but after that all you need to do to earn the very competitive APY of 3.50% is:

  • Make at least 12 debit card purchase transactions a month of at least $5.00 each
  • Receive electronic bank statements, account notices and disclosures
  • Log in to online banking at least one time a month

If you meet these qualifications, One American Bank also refunds up $25 in third-party ATM funds per month.

SEE DETAILS Secured

on One American Bank’s secure website

Member FDIC

Evansville Teachers Federal Credit Union Vertical Checking

Don’t let the name of this credit union fool you—anyone can become a member if they open a $5 savings account, which then allows you to open a Vertical Checking account.

This free checking account doesn’t charge a monthly service fee or require you to maintain a minimum balance, and in return gives you an APY of as high as 3.30% on balances up to $20,000, provided you fulfill the below requirements:

  • Make at least 15 debit purchases each month
  • Make at least one direct deposit into the account each month
  • Login to your mobile or online banking at least once each month
  • Opt in to receive eStatements
  • In addition to the high APY, meeting these requirements entitles you to $15 a month for reimbursing third-party ATM fees.

In addition to the high APY, meeting these requirements entitles you to $15 a month for reimbursing third-party ATM fees.

SEE DETAILS Secured

on Evansville Teachers Federal Credit Union’s secure website

NCUA Insured

Lake Michigan Credit Union Max Checking

Despite its name, the Lake Michigan Credit Union is open to anyone who makes a $5 donation to the ALS Foundation. That small donation can pay off tenfold with the credit union’s Max Checking account, which features a 3.00% APY on balances up to $15,000. The account also has no minimum balance requirements and no monthly fees.

In order to receive the 3.00% APY, you must:

  • Direct deposit into any LMCU account
  • Make a minimum of 10 debit or credit card transactions per month
  • Make 4 logins to home banking per month
  • Sign up for e-statements

The Lake Michigan Credit Union’s Max Checking account also offers up to $10 in monthly reimbursements for non-LMCU ATM fees.

SEE DETAILS Secured

on Lake Michigan Credit Union’s secure website

NCUA Insured

Andigo Credit Union High Yield Checking

Another credit union with a competitive checking account is the Andigo Credit Union High Yield Checking account. With a handful of physical branches in Illinois and mobile banking services, Andigo Credit Union is open to anyone who makes a $15 donation to ConnectVETS.

Andigo’s High Yield Checking account features a 3.00% APY on balances up to $10,000, has no monthly fees, no minimum balance requirements and $12 a month in ATM surcharge rebates. However, to take advantage of the 3.00% APY, you must:

  • Have $500 or more in total direct deposit
  • Make 15 or more debit card purchases per month

Accounts that do not meet those qualifications earn a 0.06% APY. Balances above $10,000 earn 0.10% APY.

SEE DETAILS Secured

on Andigo’s secure website

NCUA Insured

Simple Account

Another online-only account, Simple is owned and backed by regional bank BBVA Compass and offers customers a checking account that’s intertwined with the app’s Protected Goals savings account, and additional budgeting tools. Simple doesn’t charge any fees, meaning users enjoy:

  • No monthly maintenance fee
  • No minimum balance needed
  • No account closing fee
  • No stop payment fees
  • No debit card replacement fee
  • No ATM fee if using Simple’s network, but users can be charged a fee by other banks if using a non-network ATM

One fee you do have to pay is a foreign transaction fee when using your Simple card internationally, which can be up to 1% of the transaction.

As a cash management product, the Simple Account automatically comes with a savings account feature. While the checking balance in a Simple Account earns a token 0.01% APY, Simple’s Protected Goals savings balances earn an APY of 1.55%.

SEE DETAILS Secured

on Simple’s secure website

Axos Rewards Checking

With a generous APY and no fees, online bank Axos offers a checking account that stands apart from the pack. Axos’ Rewards Checking account boasts an APY ranging from 0.4166% to 1.25%, depending on your balance and how many monthly transactions you make with your debit card. The account has no maintenance fees and no monthly minimum balance requirements, however there is a required $50 to open an account.

Axos says it does not charge overdraft or NSF fees for customers of its Rewards Checking account. The bank also offers overdraft protection, and will transfer available funds from a linked account, up to a maximum of six times per month.

The Axos Rewards Checking account’s other standout features include:

  • Unlimited domestic ATM fee reimbursement
  • No overdraft or NSF fees plus overdraft protection

SEE DETAILS Secured

on Axos Bank’s secure website

Member FDIC

SoFi Money

SoFi may be better known for its personal loan products, but its SoFi Money cash management account offers a great free checking experience. This account earns a decent 1.10% APY with fees and no minimum balance requirements. SoFi charges no ATM fees of its own, and it will reimburse you for any third-party ATM fees you are charged anywhere in the world. If you need physical checks, you can request them from SoFI.

SoFi partners with multiple banks to hold your money in FDIC-insured accounts. This means that SoFi Money accounts are FDIC insured on balances up to $1.5 million in total, well above the standard $250,000 FDIC insurance level available with conventional accounts.

SEE DETAILS Secured

on SoFi’s secure website

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.

Advertiser Disclosure

News

38% of Investors Are Worried They’ll Lose Retirement Savings Amid the Coronavirus Pandemic

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.

As the coronavirus (COVID-19) pandemic brings the world to a screeching halt, one of its many detrimental effects is its impact on the stock market. With businesses shuttering, unemployment spiking and economic fears rising, the stock market has been hit hard, with multiple indexes plunging to new, multi-year lows in March.

Such a significant decline has taken a toll on individual investors, too. According to a new survey of over 1,000 respondents by MagnifyMoney, 38% of investors fear they’ll lose all of their retirement savings due to the economic turmoil caused by the pandemic. Already, the coronavirus outbreak has caused investors to lose money and alter their investing behavior, our survey found.

Key findings

  • Our survey found that 38% of investors are worried they’ll lose all of their retirement savings because of the coronavirus outbreak.
  • About 59% of investors said they’ve already lost money from investments during the pandemic (this does not include the 26% of respondents who weren’t sure if they had lost money).
  • The majority of the investors surveyed (39%) said they’re avoiding looking at their investment portfolio amid the coronavirus pandemic. On the other hand, 26% said they are “constantly” checking their investments.
  • Roughly 45% of surveyed investors said they had made changes to their portfolio in the last two weeks, as the coronavirus spread throughout the U.S. and across the world.
  • More than 1 in 10 investors said they’ll never feel comfortable with the stock market again, though 29% said they still feel comfortable. Other investors said they’d need to see some positive signs before they felt comfortable again.
  • When asked how the coronavirus will affect their future investing decisions, 55% of investors said it would impact them in some way (this percentage does not include the 13% who weren’t sure). Most notably, 29% will decrease their level of risk, 23% will make sure they have plenty of money outside the market and 21% will further diversify their portfolio.
  • Still, the vast majority of investors (78%) are confident the stock market will recover from the decline associated with the coronavirus. Only 8% don’t think the stock market will recover in their lifetime.

How much investors have lost amid the coronavirus pandemic

With markets swinging wildly and diving to new lows, investors have understandably lost money in the wake of the coronavirus pandemic. In fact, our survey reveals that the majority of investors (59%) have lost money — a figure that did not include the 26% of investors who were not sure if they had.

The bulk of investors who have lost money during the coronavirus outbreak, though, have lost less than $50,000, with 26% saying they lost less than $10,000, 12% saying they lost between $10,000 and $24,999 and 8% saying they lost between $25,000 and $49,999. However, some investors are reporting hefty losses, with 4% losing between $50,000 and $74,999 and 10% losing a staggering $75,000 or more. Meanwhile, our survey found that 15% of investors haven’t lost any money and 26% don’t know how much they have lost.

What’s arguably more alarming, though, is the sheer amount of investors (38%) who said they fear they have lost all of their retirement savings as fallout from the coronavirus pandemic continues to ravage the markets. While that percentage was fairly consistent across generations, it was highest among those in Generation Z. Nearly half (47%) of Gen Z worried their retirement savings would be completely wiped out, compared to 40% of millennials, 45% of Gen Xers and 30% of baby boomers.

One potential reason for the gap in concern between Gen Zers and baby boomers is that younger generations likely have far smaller nest eggs than their boomer counterparts, meaning it wouldn’t take as much market volatility to wipe out their retirement savings.

How the coronavirus pandemic is impacting investor behavior

As the coronavirus pandemic continues to batter the economy, our survey found that many investors (39%) are choosing to avoid checking their portfolios altogether. Meanwhile, 35% of respondents said they are looking at their portfolios occasionally, while 26% said they are checking in constantly.

Of those who are shielding themselves from watching their portfolios plummet, many are baby boomers. Our survey revealed that almost half of baby boomers (48%) are steering clear of checking their portfolio right now, compared to 37% of Gen Xers, 35% of millennials and 27% of Gen Z.

Despite the fact that many investors are opting against looking at their portfolios during this turbulent time, some are still making changes to their investing behavior in response to the coronavirus outbreak. Our survey found that while the majority of investors (55%) have not made any changes in the last two weeks, 19% have taken some money out of the stock market, 18% have reduced their level of risk, 9% have changed the type of stocks they’re investing in and a surprising 8% have taken all of their money out of the stock market.

How the coronavirus pandemic will influence future investing decisions

Stock market ups and downs are par for the course when it comes to investing, and our survey suggests that even the coronavirus pandemic’s impact on the stock market isn’t enough to have a lasting effect on the confidence of many investors. In fact, we found that the majority of investors (78%) think that the stock market will recover from the drop associated with the coronavirus pandemic.

Still, 8% of investors said they don’t think the stock market will ever recover in their lifetime, while 15% investors said they didn’t know if it would. It’s worth highlighting, too, that Gen Zers were far more likely (18%) than any other generation to not have faith that the stock market will make a recovery in their lifetime.

While we did find that most investors are confident that the market will recover from the drop associated with the pandemic, that confidence doesn’t necessarily translate to comfort. In fact, our survey found that 11% of respondents said they will never again feel comfortable with the stock market, which could impact how — and whether — they invest again in the future.

Meanwhile, 29% of investors said they still feel comfortable with the stock market during these turbulent times, though most investors said they’d need to see the following major changes to feel comfortable again:

  • 32% said that the Dow Jones would need to show positive growth
  • 29% said that the number of COVID-19 cases would need to significantly decrease
  • 20% said that news coverage of the stock market would need to turn more positive
  • 19% said the government would need to inject a stimulus into the stock market
  • 10% said they would need their financial advisor to tell them it’s okay

Aside from rattling investor confidence, our survey reveals the coronavirus outbreak could have lingering effects on investor behavior in the future. Only 32% of investors said their future investing decisions won’t be impacted by the coronavirus pandemic. Meanwhile, 29% said it will cause them to decrease their level of risk, 23% said that it would cause them to make sure they have enough money outside of the stock market and 21% said it will cause them to diversify their portfolio more. A striking 4% said they may not invest anymore.

What you should do when the stock market is dropping

When the stock market is taking multiple nose-dives as it has been recently, it’s understandable to feel uneasy. It’s important to remember, though, that investing is a critical component of building a healthy financial life, and stock market declines are par for the course.

In fact, market corrections — which is when the stock market drops 10% or more from its most recent high — happen every few years. Factoring in all corrections, the S&P 500 still has an average annual rate of return of around 10% over the longer term.

During times of turbulence, money moves you can make include:

  • Keeping your emotions in check when looking at your investment portfolio
  • Avoid pulling your money out of a declining market on impulse
  • Making sure you have a solid emergency fund in a liquid savings account
  • Considering a more conservative portfolio allocation if you’re closer to retirement and therefore have a shorter timeline

Methodology

MagnifyMoney conducted an online survey of 1,010 investors, with the sample base proportioned to represent the overall population. We defined generations as the following ages in 2020:

  • Gen Z are ages 18 to 23
  • Millennials are ages 24 to 39
  • Gen X are ages 40 to 54
  • Baby boomers are ages 55 to 74
  • Silent generation are age 75 and older

The survey was fielded through Qualtrics from March 18-19, 2020.

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.