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Amex Wins Big With Supreme Court Ruling in Antitrust Case

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American Express scored a big legal victory on this week. In a 5-4 decision, the Supreme Court upheld a lower court ruling in Amex’s favor, allowing it to keep provisions in contracts that prevent merchants from dissuading cardholders from using American Express credit cards by offering them discounts or promotions. This practice by merchants is known as “steering” and it’s often a result of merchants wanting to avoid the higher merchant fees associated with Amex credit cards.

In the case — Ohio v. American Express Co. — the U.S. Department of Justice had argued American Express’ anti-steering provision, which it included in contracts with merchants, hurt competition among card issuers in violation of antitrust laws. The removal of these provisions would have allowed merchants to steer cardholders toward using other credit cards that charged lower merchant fees, like those issued by Visa and Mastercard.

The court ruled there wasn’t sufficient evidence that Amex’s anti-steering provisions hurt competition. On the contrary, the court found that competition increased while the provisions were in place, with credit card transactions increasing 30% from 2008-2013.

“The Court’s decision is a major victory for consumers and for American Express,” company chairman and CEO Stephen J. Squeri said in a statement. “This was a long battle, but well worth the fight because important issues were at stake: consumer choice, fair market competition, and the ability to deliver innovative products and services to our customers, both consumers and merchants.”

Here’s a breakdown of the court’s opinion on the ruling and what it means for American Express:

The court threw its support behind Amex’s higher merchant fees, citing the cost of the company’s rewards program and the value it offers cardholders:

“Amex’s increased merchant fees reflect increases in the value of its services and the cost of its transactions, not an ability to charge above a competitive price. It uses higher merchant fees to offer its cardholders a more robust rewards program, which is necessary to maintain cardholder loyalty and encourage the level of spending that makes it valuable to merchants.”

The states tried to argue that Amex’s higher merchant fees were a result of their anti-steering provisions, but the court found the opposite. While American Express’ merchant fees are high, the fees charged by Visa and Mastercard also continued to rise.

“Visa and MasterCard’s merchant fees have continued to increase, even at merchant locations where Amex is not accepted.”

The states tried to argue that Amex’s 0.09% merchant fee increase from 2005-2010 was not solely used toward cardholder rewards and that resulted in Amex charging anti-competitive prices. But, the court found no evidence to prove the states’ argument.

“The plaintiffs’ evidence that Amex’s merchant-fee increases between 2005 and 2010 were not entirely spent on cardholder rewards does not prove that Amex’s anti-steering provisions gave it the power to charge anti-competitive prices […] Output of credit-card transactions increased during the relevant period, and the plaintiffs did not show that Amex charged more than its competitors.”

The anti-steering provisions were thought to hinder competition among credit card companies and networks, but the court found that the provisions actually promoted competition and the market improved. Competing networks Visa, Mastercard and Discover were also cited as exploiting Amex’s higher merchant fees for their benefit, citing their lower merchant fees and broader merchant acceptance — nearly 3 million more locations — compared with Amex.

“The plaintiffs also failed to prove that Amex’s anti-steering provisions have stifled competition among credit-card companies. To the contrary, while they have been in place, the market experienced expanding output and improved quality. Nor have Amex’s anti-steering provisions ended competition between credit-card networks with respect to merchant fees. Amex’s competitors have exploited its higher merchant fees to their advantage.”

An interesting point the court mentioned was that merchant steering practices harm Amex more than you may expect:

“When merchants steer cardholders away from Amex at the point of sale, it undermines the cardholder’s expectation of “welcome acceptance”—the promise of a frictionless transaction.”

After being steered toward a non-Amex card, the cardholder may be less likely to use an Amex card in the future since merchants may not “welcome” it as much as other cards. This harms Amex since their cards aren’t used as frequently, and this can create a ripple effect, harming cardholders and merchants, the court said. Amex cardholders may lose out on robust rewards and merchants may not receive the typically higher transactions that Amex cards provide.

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

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Alexandria White is a writer at MagnifyMoney. You can email Alexandria at alexandria@magnifymoney.com

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10 Places You Can Earn Six Figures and Still Feel Broke in 2018

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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A six-figure income may not go as far as you think depending on where you live. After factoring in taxes, debt payment and living expenses like child care and transportation, a family earning $100,000 in certain cities could still find themselves struggling to get by. Last year, MagnifyMoney published “The Best and Worst Cities to Live on Six Figures.” This year, we’re back for the 2018 edition to uncover the metro areas where a household income of $100,000 can still leave you strapped for cash.

For this study, we created a hypothetical, but fairly typical, couple with one child who earns a combined gross income of $100,000 (or $8,333 monthly). We estimated monthly expenses, debt payments and tax obligations to calculate what the family’s disposable income would be in various metro areas based on the average lifestyle of a six-figure earner in the corresponding metro area. Then, we ranked the locations from places where they would have the most and least disposable income.

The order in this year’s ranking has changed from last year due to changes in living costs like housing, transportation and child care. But you’ll notice many usual suspects on the worst list and some familiar faces on the best list.

Places Where You Can Earn 6 Figures and Still Be Broke

How the study — and our findings — evolved in 2018

There are a few changes to the methodology in our 2018 study. We focused on the largest 100 metros this time around as opposed to some 381 metros last year. We also took a more detailed approach to calculating variables that impact a family’s disposable income. Here are the updates we made:

We based our case study on a family earning a gross income of $8,333 per month. Then we subtracted their monthly expenses, debt obligations and savings to come up with an estimate of how much cash they’d have left over at the end of the month.

Savings. We assumed the family contributed $500 monthly to their 401(k). Last year, we assumed the family set aside 5% of their savings in a regular savings account. This year, we changed the savings to 401(k) contributions because it’s something of a bastion of corporate middle-class personal finance, and it offers a tax benefit.

Tax assumptions. Our study assumes the couple will file jointly for 2018. They took the standard federal deduction and received a federal $2,000 credit for their one child. They also took the standard deductions and credits offered by their state, and took advantage of the pretax DCFSA child savings plan to deduct the $5,000 maximum from their taxable income by their employer. The couple had insurance premiums paid from their pretax income by their employer and their 401(k) contributions paid from their pretax income by their employer.

Debt: We assume the family had a monthly student loan payment of $222, which is the median student loan payment according to the Federal Reserve. Housing and auto debt are bundled in with the housing and transportation cost budget line items in monthly expenses.

Monthly expenses. We based monthly expenses — housing, transportation, food, utilities, household operations, child care and entertainment — for each location on data taken from the Bureau of Labor Statistics, the Department of Housing and Urban Development, Care.com, Kaiser Family Foundation and the Federal Reserve. We calculated an average for these expenses taking into account the lifestyle costs of a six-figure earner.

Compared with last year, we beefed up the monthly necessity expenses — although by no means hit them all — by adding costs like household operations costs and utilities to get a more realistic sense of how much people would have left over after paying their basic bills. We also added health insurance since it’s one of the most basic expenses.

Read the full methodology here.

Key takeaways:

  • In San Jose, Calif. (the seat of Silicon Valley), a joint income of $100,000 with a preschool-aged child means a couple would have to run up their credit cards $454 a month just to make monthly bills on the basics (not including compounded interest on that credit card debt)
  • In McAllen, Texas, a couple earning $100,000 can expect to have around $2,267 left over every month after paying bills.
  • In fact, the five places where couples can expect the most in disposable income are in Texas and Tennessee, where there’s no state income tax, and metros in Florida (also without state income tax) tend to have six-figure earners with plenty of money left over.
  • Regionally, with the exception of Minneapolis — a perennial on our list of most prosperous places — the most expensive cities lie on the coasts and Hawaii, and the most affordable cities are in Southern states without a state income tax.

Worst Places to Make Six Figures

1. San Jose/Sunnyvale/Santa Clara, Calif.

San Jose, Calif., moves up to the top spot replacing Washington D.C. from last year’s study. San Jose is the location where a combined income of $100,000 is going to offer the least amount of security for our hypothetical family of three.

To make ends meet, they would need to either dip into savings or rely on credit cards to cover the $454 budget deficit. Housing in this area decreased compared with last year ($2,916 in 2017 versus $2,520 in 2018). However, an 84% increase on child care costs and 30% increase on transportation costs takes the location to the no. 1 spot. This year, we used a different source for child care costs, which could also contribute to the increase in cost.

  • Monthly income minus taxes and FICA — $7,087
  • Monthly paycheck minus taxes, FICA, 401(k), health insurance, DCFSA child savings — $5,768

2. Washington/Arlington/Alexandria, DC-VA-MD

Washington D.C. comes in at a close second leaving the family $360 in the hole each month. Housing costs increased to $2,597 compared with $2,274 in 2017. This is the most expensive metro area to find living arrangements. The general rule of thumb is to not spend more than 30% of your gross income on housing, but this recommendation could leave you house poor since it doesn’t consider your net income.

In this case, housing takes up about 31% of the couple’s gross income ($8,333 per month). However, housing takes up 47% of the family’s actual paycheck after subtracting taxes, FICA, 401(k), health insurance and the pre-tax child care saving incentive. Couple the housing costs with the transportation expense ($1,302), and a six-figure earning family can really struggle to live comfortably in and around the nation’s capital.

  • Monthly income minus taxes and FICA — $6,932
  • Monthly paycheck minus taxes, FICA, 401(k), health insurance, DCFSA child savings — $5,560

3. San Francisco/Oakland/Hayward, CA

San Francisco is about 50 miles away from San Jose (no. 1 on the list), but offers slightly lower living costs, which makes the $100,000 income go a bit further. The two cities share almost the exact same monthly expenses. It’s the $320 total saved on housing and transportation that makes San Francisco slightly more affordable than the San Jose metro area. San Francisco made it to no. 4 last year, so it’s no surprise we’re seeing it again this year taking one of the top spots.

  • Monthly income minus taxes and FICA — $7,086
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,768

4. Bridgeport/Stamford/Norwalk, Conn.

The Bridgeport, Conn., area offers some opportunity for savings in food and child care costs, but estimated utilities and transportation costs come in higher than even the top three worst places for six-figure earners. Our hypothetical family would spend almost 29%* of their paycheck on transportation and utilities alone.

  • Monthly income minus taxes and FICA — $7,035
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,678

5. Boston/Cambridge/Newton, MA-NH

Boston has the third highest cost of child care to make the list. Child care could take up a whopping 15%* of a family’s paycheck after subtracting taxes and savings contributions. Just like last year, housing is another budget buster in the Boston area eating away another 37% of their paycheck.

  • Monthly income minus taxes and FICA — $6,932
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,595

6. Oxnard/Thousand Oaks/Ventura, Calif.

Oxnard, Calif., is a new addition to the list this year, and the first metro area that doesn’t leave a $100,000 earning household in the red each month after taxes, investment contributions and expenses.

With that said, disposable income of just $138 isn’t much to write home about. An unexpected expense could easily wipe out their spare cash. Like the other California locales above, housing takes a huge bite out of their budget — almost 38% of net income.

  • Monthly income minus taxes and FICA — $7,086
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings— $5,768

7. Urban Honolulu, Hawaii

Honolulu gives the family more disposable income than Oxnard, Calif., but just barely. When all expenses are covered, the family has $140 left over to spare, which is less than last year’s disposable income of $302. Year over year, child care and transportation costs increased by 30% and 23% respectively, but housing decreased by almost 18%.

  • Monthly income minus taxes and FICA — $6,805
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,527

8. Minneapolis/St. Paul/Bloomington, MN-WI**

State income tax is one of several reasons the Minneapolis area makes the list. The estimated state tax here ($506) is higher than the top two worst places — San Jose ($206 state tax) and Washington, D.C. ($366 state tax). Housing takes up about 37% of the family’s paycheck, which isn’t ideal but less than other locations.

  • Monthly income minus taxes and FICA — $6,785
  • Monthly paycheck minus taxes, FICA, 401(k), health insurance, DCFSA child savings — $5,470**

9. Hartford/West Hartford/East Hartford, Conn.

Hartford, Conn., is another new addition to the list. Hartford offers $339 in disposable income which is more than double that of Honolulu. Housing in Hartford is the second lowest of this list taking up just 33% of the family’s paycheck.

  • Monthly income minus taxes and FICA — $7,035
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,678

10. New York/Newark/Jersey City/NY-NJ-PA

The New York metro area came in no. 5 last year, but takes spot no. 10 for 2018. It may come as a shock that it’s not closer to the top, but major savings in transportation contributes to a disposable income of $505 after bills and other responsibilities.

For a comparison, the other “worst places to live” have monthly transportation costs ranging from $1,200 to $1,400. The estimate for transportation costs in the New York area is just $997 per month.

  • Monthly income minus taxes and FICA — $6,934
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,629

Best Places to Make Six Figures

100. McAllen/Edinburg/Mission, Texas

It’s no surprise that states without state income tax make the top of the list for best places to make six-figures. McAllen also has a remarkably low monthly housing cost ($889). Last year, housing costs for McAllen were sitting at $1,086 contributing to its no. 5 ranking on the best list.

Here, the family has a nice $2,267 per month in disposable income. This surplus in cash can offer plenty of flexibility to save, invest or tackle lingering debt. Overall, household bills take up just 62%* of the paycheck in McAllen. In comparison, for San Jose, the worst metro area for six-figure earners, bills take up 108%* of the paycheck.

  • Monthly income minus taxes and FICA — $7,300
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, childcare savings — $5,913

99. El Paso, Texas

El Paso, Texas, has a slightly higher housing cost than McAllen ($1,060 versus McAllen’s $889). In El Paso, the hypothetical family gets a disposable income of $2,135, again, enough to comfortably stash some cash away for a rainy day while keeping current on bills.

  • Monthly income minus taxes and FICA — $7,301
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,913

98. Chattanooga, TN-GA

Chattanooga, Tenn., offers low child care and health insurance, but comes in third with a disposable income of $2,048 thanks to the higher housing cost ($1,116) and transportation cost ($1,186) . These two major living expenses are higher than McAllen and El Paso, but when combined still only take up 39% of net income.

  • Monthly income minus taxes and FICA — $7,290
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,894

97. Memphis, TN-MS-AR

Memphis has higher housing costs than the locations above but more affordable child care. Child care ($622 per month) is lower than even the two best metro areas — McAllen and El Paso (both $686 per month). The family gets a disposable income of $1,970, which is a respectable sum.

  • Monthly income minus taxes and FICA — $7,290
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,984

96. Knoxville, Tenn.

Knoxville, Tenn., is yet another southern metro area in a state with no income tax. Housing and child care costs put Knoxville behind Chattanooga and Memphis. But together, housing and child care costs, two big ticket budget line items, only eat up about 31% of the household’s paycheck.

  • Monthly income minus taxes and FICA — $7,290
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,984

95. Lakeland-Winter Haven, Fla.

The monthly disposable income at Lakeland-Winter Haven, Fla., clocks in at $1,850. The health care costs ($525) are considerably higher here when compared with other cities even the most expensive places for six-figure earners. San Jose, Calif., and Washington, D.C., have health care costs of $402 and $456, respectively.

  • Monthly income minus taxes and FICA — $7,306
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,866

94. Jackson, Miss.

Jackson, Miss., is the first locale on the best places to live list that has a state income tax. Jackson offers a disposable income that’s just two dollars shy of Lakeland-Winter Haven, Fla. at $1,848. Despite the state tax, housing ($1,082 per month) and child care ($514 per month), it’s still an affordable place to call home for six-figure earners.

  • Monthly income minus taxes and FICA — $6,993
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,627

93. Youngstown/Warren/Boardman, OH-PA

Youngstown, Pa., is the only location representing the Northeastern states in this list. Child care is high ($694) compared with other states that have affordable living. But housing and transportation costs are comparable with other locales, and health care is noticeably lower at $331 per month.

  • Monthly income minus taxes and FICA — $7,069
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,823

92. Deltona/Daytona Beach/Ormond Beach, Fla.

Daytona Beach, Fla., is in a no-income tax state but has high housing, transportation and food costs, which takes it down a few pegs even below two states that have state taxes. Bills take up 70%* of net income.

  • Monthly income minus taxes and FICA — $7,306
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,866

91. Toledo, Ohio

Toledo, Ohio, rounds out the top ten best places for six-figure income households. Like, Youngstown, Pa., Toledo has high child care costs ($694 per month) when compared with the other affordable locations. Food and entertainment costs can also put some pressure on the purse strings. But overall, the household will pay just 70%* of their paycheck on household expenses.

  • Monthly income minus taxes and FICA — $7,069
  • Monthly paycheck minus taxes, FICA 401(k), health insurance, DCFSA child savings — $5,823

*These numbers have been corrected due to an editing error.

**Due to a data collection error, the health insurance costs for Minneapolis were incorrectly calculated. We have updated the ranking for Minneapolis from #5 to #8. 

Additional Findings:

  • Residents of the New York metro (10th on the list) get a bit of a reprieve, thanks to low cost public transportation. They’ll have $505 left over every month for things like clothes, toys, and co-pays for their kid.
  • Other states with no income tax include Nevada, Vermont and Washington, but expenses there are high enough to eat up most of the savings (Seattle is the 13th brokest metro).

Background & methodology:

The hypothetical family we created is a typical one that earns a combined income of $100,000 (the median income for a married-couple family in 2016 was $81,917, and 39% of such couples earned at least $100,000 that same year).

We were pretty conservative about the couple’s financial and debt obligations by making the following assumptions:

  • Both have corporate-style employers who offer typical benefits.
  • They have one child currently in day care.
  • Between them, they contribute 6% of their income to their 401(k)’s, which is considerably less than the median rate of 5% from an employee in a matching plan (page 40; assumes the employee is contributing half of the 10% median).
  • Only one of them has student loans and is making the median payment of $222 a month.
  • The entire household is on one person’s group insurance plan.
  • The family has average spending habits and expenses for where they live.

To calculate federal and state taxes, we assumed the following:

  • The couple will file jointly for 2018;
  • Took the standard federal deduction;
  • Received a federal $2,000 credit for their one child
  • Took the standard deductions and credits offered by their state;
  • Took advantage of the pre-tax DCFSA child savings plan to deduct the $5,000 maximum from their taxable income by their employer;
  • Had insurance premiums paid from their pre-tax income by their employer;
  • Had their 401(k) contributions paid from their pre-tax income by their employer.

The following variables were used to create their hypothetical expenses (each is the average cost for the geography indicated in parentheses):

  • Federal tax contribution (national, but adjusted for state average health care premiums)
  • State tax contribution (state)
  • FICA contribution (national)
  • 401(k) contribution (national; see notes on assumptions)
  • Insurance premiums (state)
  • Housing costs (MSA)
  • Transportation costs (MSA)
  • Food costs (regional)
  • Utilities cost (regional)
  • Household operations costs (regional)
  • Child care costs (MSAs where available (half of the MSAs), and state averages where not)
  • Student loan payments (national)
  • Entertainment costs (regional)

Sources include the Bureau of Labor Statistics; the Department of Housing and Urban Development; the Tax Foundation; Care.com; the Kaiser Family Foundation; the U.S. Federal Reserve; and the U.S. Census Bureau.

Full ranking:

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

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Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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How Fed Rate Hikes Change Borrowing and Savings Rates

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Since late 2015, the Federal Reserve has raised the upper limit of its target federal funds rate by 1.50 percentage points, from 0.25% to 1.75%, and is on track to raise it another 0.25 points this month.

Fed rate changes have wide ranging implications for consumers and MagnifyMoney analyzed Federal Reserve rate data to illustrate how the rates consumers pay for loans and earn on deposits have changed since the Fed started raising rates two and a half years ago.

  • According to our analysis, credit card rates are most sensitive to changes in the federal funds rate, almost directly matching the rate change with a 1.41 point increase since December, 2015. Credit card rates will continue to rise in line with the Fed’s rate increases, and if the Fed raises rates again the average household that carries credit card debt month to month will pay over $150 in extra interest per year compared to before the rate hikes began. MagnifyMoney estimates 122 million Americans carry credit card debt month to month.
  • Student loan and auto loan rates have also risen sharply, but only half as much as credit card rates, in part because they are longer term forms of lending that are less reliant on the short-term federal funds rate. Federal student loan rates are set based on the 10-year Treasury note rate each May.
  • Savers at big banks have seen little change, with the average savings and CD account passing through only a fraction of the rate increase, but that masks a big opportunity for savers who shop around and move deposits to online banks. Online banks have aggressively raised rates, and now offer rates in the 2% range, versus just 1% in 2015. That’s over 20 times what typical accounts pay.

Credit cards

Most credit cards have a rate that’s directly based on the prime rate, for example the prime rate plus 9.99%. As a result, card rates tend to move almost immediately in line with Fed rate changes. In the current cycle, the rates on all credit card accounts tracked by the Federal Reserve have increased 1.41 points, in line with the Fed’s increase of 1.50 points.

That said, consumers can still find attractive introductory rate offers.

For example 0% balance transfer offers have continued to remain long even as the Fed has hiked rates, with offers still available for nearly 2 years at 0%.

Credit card issuers make up for the rate hike by the automatic rise in variable backend rates, as well the increasing spread between the prime rate and what consumers pay on new accounts. They can also increase other fees, like late payment fees or balance transfer fees to keep long 0% deals viable.

The Federal Reserve tends to hike up interest rates gradually over time. And people in credit card debt will barely notice the rate increase in their monthly statement. When rates are increased by 0.25%, the monthly minimum due on a credit card will increase $2 for every $10,000 of debt.

The danger of such a small increase in the monthly payment is complacency. Remember that by paying the minimum due, you could be in debt for more than 20 years.

Rates are expected to keep rising, so it make sense for consumers to lock in a low rate today. The best ways to lock in lower rates are by leveraging long 0% balance transfer deals or by consolidating into fixed rate personal loans.

Savings accounts

On average, savings account rates haven’t changed much since the Fed started raising rates. That’s largely because big banks with the biggest deposits and large branch networks have less incentive to offer higher rates, and this skews national data on rates earned because most savers don’t shop around to find higher rates at online banks and credit unions.

Consumers who shop around can find much higher savings account rates than three years ago, and shopping around for a better rate on your deposits is one of the best ways to make the Fed’s rate hikes work in your favor.

Back in 2015, it was rare to see savings accounts pay 1% interest.

Today, many online banks are competing for deposits by offering savings account rates approaching 2%, flowing through about half of the Fed’s rate hike into increased rates for depositors. These rates will continue to rise as the Fed hikes rates.

CDs

CD rates have moved faster than savings rates, up 0.11 points for 12-month CDs since the Fed started raising rates. That’s in part because they are a more competitive product that forces consumers to rate shop when they expire at the end of their 6-month, 12-month or longer term.

But that rate rise doesn’t fully reflect what some smaller banks are passing through, as the banks with the largest deposits have been slow to raise rates.

The rates on 1 and 2 year CDs at online banks have been increasing rapidly, and are now well over 2%, reflecting much of the Fed’s rate increases since 2015.

The rates on 5-year CDs have not been increasing as quickly. As a result, the rate curve has been flattening.

A reasonable strategy would be to invest in short-term (1 and 2 year) CDs. If competition at the short end continues, you can get the benefit in a year on renewal.

And if long-term rates start to rise, you can redeploy or build a ladder in a year.

Student loans

Federal student loan rates are set based on a May auction of 10-year Treasury notes, plus a defined add-on to the rate. As of July 1st, rates for new undergraduate Stafford loans are expected to increase to 5.04%, up from 4.29% before the federal funds target rate began to rise.

Since student loan rates are determined by the 10-year Treasury rate, rather than a short-term rate, they are less directly related to changes in the federal funds rate than some shorter term forms of borrowing like credit cards. Instead, future market views of inflation and economic growth play a role. Federal student loan rates are capped at 8.25% for undergraduates and 9.5% for graduate students.

For private refinancing options, rates depend on secondary markets that tend to follow longer term rates, rather than the current federal funds rate, but in general, a rising rate environment could mean less attractive refinancing options.

Personal loans

Personal loan rates tend to be driven by many factors, including an individual lender’s view of the lifetime value of a customer, funding availability, and credit appetite. Most personal loans offer fixed rates, and in a rising rate environment overall, we expect these rates will go up, making new loans more expensive, so consumers on the fence should consider shopping for a good rate sooner rather than later. Since the end of 2015, rates on 2-year personal loans tracked by the Federal Reserve have increased by 0.56 points.

Auto loans

Prime consumers who shop around for an auto loan can still find very low rates, especially when manufacturers are offering special financing deals to move certain car models.

But the overall rates across the credit spectrum have gone up since the Fed raised rates, in part due to the rate hikes, and in part due to recent greater than expected delinquencies in some parts of the auto lending market.

Mortgages

Since the Fed started raising rates in late 2015, 30-year fixed-rate mortgages have increased from approximately 3.9% to 4.5%, or about half the increase of the Fed funds rate.

The mortgage market tends to follow trends in longer term bond markets, like the 10-year Treasury, since mortgages are a longer term form of borrowing. That shields them from some of the impact of Fed rate increases, and it’s not unusual for mortgage rates to decline during some periods when the Fed is raising rates.

What can consumers do

Rates are only going to go up. That means life is going to get more expensive for debtors, and more rewarding for savers.

If you are in debt, now is the time to lock in the lowest rate possible. There are still plenty of options at this point in the credit cycle for people to lock in lower interest rates.

If you are a saver, ignore your traditional bank and look online. Take advantage of online savings accounts and CDs to earn 20 times the rate of typical big bank rates.

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

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The Best Places to Spend Your Golden Years (and Age in Place)

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Retirement doesn’t have to mean moving away from a city you love or giving up the cultural opportunities bigger metros provide that can make your retirement years golden. Aging in place is a growing phenomenon, as many seniors plan to stay in their own homes and remain active members of their communities rather than move elsewhere. But other retirees may still feel the urge for new scenery and a new zip code, whether to lower their cost of living as they adjust to life on a fixed income, or to find a new home that better fits their lifestyle or health care needs.

At MagnifyMoney, we decided to look at which of the 50 largest metros offer the best opportunities for senior citizens in terms of lifestyle, cost of living, medical care and — when the time comes — both in-home and residential assisted care.

Key takeaways

  • Portland, Ore., Salt Lake City and Denver top the list of best places to spend your golden years.
  • Retirement life isn’t so golden in New York, Houston and Miami, which earned spots in the bottom three of our list.
  • Surprisingly, metros in the iconic retiree destination Florida didn’t do well on our list, with Jacksonville ranking 32 out of 50, Orlando ranking 40, and Miami ranking 48.
  • Midwestern metros did well, however, thanks to a relatively low cost of living.

Aging in place

Aging in place simply means living in one’s own home (possibly in a continuing care retirement community) independently for as long as possible. In a 2017 AARP survey, senior citizens consistently expressed a preference for living “in their homes and community-at-large”.

As the monumental baby-boomer generation tips into old age, communities, policy makers and other institutions have started to focus their attention on creating environments to increase the likelihood of successfully aging in place.

One big bright spot is the availability of technology to assist people with certain vital tasks, such as taking medicines, keeping track of lists and contacting medical providers for nonemergency consultations.

Seniors can access transportation from anywhere with apps like Uber and Lyft, shop for groceries from their computers and use smart speakers if the keypads on their phones become challenging, access smart-home features (like changing the thermostat) or even call for help in an emergency.  Wearable health monitors including fall alerts, mean that family and medical professionals can be immediately alerted if any concerns arise.

With that in mind, we were especially mindful of local metrics that would help people age in place, such as lower costs of living, community engagement and the availability and quality of assisted care.

How we ranked metros

We used four major categories to make our determinations of which of the biggest 50 US metros were the best places to spend one’s golden years.

Lifestyle:

  • Volunteer rates for those ages 55 and older to get a sense of where senior citizens had the opportunities to be most engaged with the community-at-large
  • Rate of physical activity in each metro to get a sense of which communities offer the most opportunities for activity
  • Percentage of residents ages 65 and over who moved into the metro that year so we could see how desirable seniors find these metros

Cost of living:

  • Median monthly housing costs because whether renting or owning, retirees are on fixed incomes and the ability to afford housing is crucial to aging in place
  • Regional prices for goods and services because the salary bumps of living in more expensive places no longer apply to those who are no longer working

Medical quality and cost:

  • The percentage of hospital discharges of Medicare enrollees that were for conditions considered preventable with adequate primary care
  • The average cost that Medicare pays per enrollee in a given metro
  • The percentage of people aged 65 or older who are up-to-date on their core preventive services, such as flu shots and cancer screenings

The availability and quality of different kinds of assisted care:

  • We looked at the number of home nursing service providers registered with Medicare per 100,000 residents because the availability of home nursing may be essential to those who age in place
  • The average Medicare rating of registered home nursing service providers
  • The number of nursing home beds registered with Medicare per 100,000 residents because sometimes people do require temporary or permanent intensive residential care and sometimes on very short notice
  • The number of continuing care retirement communities registered with Medicare per 100,000 residents because these communities (a subset of nursing homes) offer a bridge between independent living in private apartments (with some community and medical amenities such as dining rooms, group activities, physical therapy) and more intensive nursing care in the same facility
  • The average Medicare rating of registered nursing homes

The top places to spend your golden years

1 – Portland, Ore.

Final score: 62.6
About 6% of Portland’s population ages 65 and older moved there from somewhere else in 2016, the highest rate of any metro on our list, which implies that retirees who have ability to move find Portland highly desirable. The metro boasts an 82.6% activity rate, and while housings costs are higher than average at $1,236 per month, costs for goods and services are a smidgen below the nation’s average. Seattle was the only metro on our list to get a medical quality and cost score higher than Portland’s score of 79.8. Portland falls short in the availability of assisted care services, however, with fewer than one home nursing provider per 100,000 residents, and they’re not rated particularly well by Medicare. A lack of nursing homes and continuing care retirement communities leaves Portland with an assisted care quality and availability score of 21.1; the average among metros we reviewed was 38.4.

2 – Salt Lake City

Final score: 61.3
Salt Lake City seems to have the most engaged senior community, with 40.3% of people over the age of 55 volunteering, far in excess of the 24.7% average among the 50 metros we reviewed. Residents in the metro are also a bit more active than many other places, and at 27.6%, the metro has the lowest rate of preventable hospital stays. That may explain why, at $8,914, the average healthcare cost per Medicare patient is lower than the $9,627 average for the 50 metros. The metro could use a boost in their assisted care and quality availability, earning a score of 35.4, which is lower than the average of all metros we reviewed. Interestingly, Salt Lake City does not appear to be a draw for seniors, as only 1.5% of them moved there from elsewhere.

3 – Denver

Final score: 61.1
Residents in only two other metros (San Francisco and San Diego) get more physical activity than in Denver, where 83.3% do, and that combined with the fourth highest percentage of seniors who moved into the metro from elsewhere brings Denver’s lifestyle score to 75.5 – drastically higher than 50 metro average of 43.8. At just 29%, the Mile High City has the third lowest rate of hospitalizations of Medicare recipients are for preventable causes, and the medical quality and cost score is 75.9, compared with the average of 48.3 across all 50 metros. On the downside, median housing is quite expensive at $1,285 per month, higher than the national average, and the metro could use some additional assisted care options.

The worst places to spend your golden years

50 – New York

Final score: 30.8
Those who always dreamed of moving to New York City sometime in the future may be disappointed to know that senior citizens don’t fare very well there. Community engagement is low, with only 16.2% of seniors volunteering, although locals do get a respectable amount of physical activity. The big issue for the Big Apple is the high cost of living: The metro has the highest costs for good and services, and median monthly housing costs for the metro are $1,528. Health care also isn’t as good as it could be, with the metro earning a score of 34.0, compared with the 50 metro average of 48.3. The upside is that assisted care availability score just bumps over the metro average at 39.0.

49 – Houston

Final score: 33.7
Houston needs to improve in several areas, but where it does worst is in the availability of assisted care. The metro has fewer than one home nursing service provider for every 100,000 residents, and fewer than 295 beds per 100,000 residents (compared with the 50 metro average of 463.3). What’s more, the average Medicare ratings for nursing homes is the lowest of any metro we reviewed, at 2.3. All of these things combined to give the metro the lowest assisted care availability and quality score by a considerable margin (19.3). The metro also performed very poorly for medical care quality and cost, earning a score of 24.5, compared with the 50 metro average of 48.3.

48 – Miami

Final score 39.1
Surprisingly for a place we often think of as a mecca for retirees, Miami isn’t the ideal destination we saw in “The Golden Girls” TV series. Senior volunteer rates of just 12.1% are the lowest of any metro we reviewed, the average cost per Medicare enrollee is the highest ($11,582) and it has the fourth lowest rate of seniors being up-to-date on preventative care (26.3%). Miami runs on the low end of the middle of the pack for cost of living, but it does much better in assisted care availability and quality, earning a score of 46.9, compared with the 50 metro average of 38.4.

Metros often perform well in some areas and poorly in others

It stands to reason that with so many elements to consider, no metro can beat the others in every single area, and some metros that rise to the top in one area we measured sink to the bottom in others.

  • Cleveland has the lowest rate of seniors who are up-to-date on their core preventative services, but it has the most continuing care retirement communities per capita of any of the metros we reviewed.
  • Conversely, Raleigh, N.C., has the highest rate of seniors who are up-to-date on preventative care, but the fourth fewest continuing care retirement communities.
  • Washington, D.C., has the fourth highest senior volunteer rate, but also has the third highest housing costs.
  • Buffalo, N.Y., has the second cheapest housing, but also has the second worst rate of seniors up-to-date on core preventative services.

It’s important for individuals and couples to decide which elements are most important for their later years and make their choices accordingly.

It’s also essential for communities to make improvements in their weakest areas as the number of retirees continues to skyrocket.

Here’s How All 50 Metros Compare With Each Other

Methodology:

Data was grouped into four categories:

Lifestyle

  • Percent of people aged 55 and over who volunteered (Corporation for National & Community Service “Volunteering and Civic Life in America” database, available here.)
  • Percentage of people who reported getting physical activity (The Robert Wood Foundation and University of Wisconsin Population Health Institute “2018 County Health Rankings” database, available here.)
  • Percentage of the population, aged 65 and older, who moved into the metro in 2016 (U.S. Census Bureau “Geographic Mobility by Selected Characteristics in the United States” 2016 American Community Survey 5-Year Estimates, available here.)

Cost of living

  • Median Monthly Housing Costs (U.S. Census Bureau “Median Monthly Housing Costs (Dollars)” 2016 American Community Survey 5-Year Estimates, available here.)
  • Regional Price Parities, excluding housing costs (U.S. Bureau of Economic Analysis Real Personal Income and Regional Price Parities for 2016, available here.)

Medical quality and cost

  • Percentage of hospital admissions of Medicare enrollees that are for preventable conditions (The Robert Wood Foundation and University of Wisconsin Population Health Institute “2018 County Health Rankings” database, available here.)
  • Health care costs per Medicare enrollee (The Robert Wood Foundation and University of Wisconsin Population Health Institute “2018 County Health Rankings” database, available here.)
  • Percentage of the population, aged 65 and older, who are up-to-date on core preventative services (Centers for Disease Control and Prevention “500 Cities: Local Data for Better Health, 2017 release,” available here.)

Assisted care availability and quality

  • Number of home nursing service providers per 100,000 residents (Medicare “Home Health Care Agencies” database, available here.)
  • Average rating of home nursing service providers (Medicare “Home Health Care Agencies” database, available here.)
  • Nursing home beds per 100,000 residents (Medicare, “Nursing Home Compare” dataset, available here.)
  • Continuing care retirement communities per 100,000 residents (Medicare, “Nursing Home Compare” dataset, available here.)
  • Average nursing home ratings (Medicare, “Nursing Home Compare” dataset, available here.)

The data was aggregated to the metropolitan statistical area level (“MSA”) and limited to the 50 largest MSAs by population.  Where necessary, statistics were derived using the 2016 population data from the “Comparative Demographic Estimates” table for 2016 from the US Census Bureau’s American Community Survey 5-year estimates (available here.)

Each category was scored individually by created a relative value for each component, summing them together, and then dividing by the number of components, for a highest possible score of 100 and a lowest possible score of zero.  The sum of these four categorical scores were then divided by four to create the final score, with a highest possible score of 100 and a lowest of zero.

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It Will Soon Be Free to Freeze Your Credit Report

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Eight months after it happened, Congress tangibly responded to the major data breach at Equifax that exposed the sensitive information of more than 146 million consumers. On May 24, President Donald Trump signed into law a bipartisan bill that makes freezing a credit report free for everyone in the U.S. and simultaneously fulfilled his early-term promise to “do a big number” on Dodd-Frank.

The provision for free credit freezes was included in the larger Economic Growth, Regulatory Relief, and Consumer Protection Act, which effectively rolls back major parts of the Obama-era Dodd-Frank Act.

What’s changing?

The new law affects a wide variety of consumer finance issues, but as far as credit freezes go, it makes placing, lifting and permanently removing a freeze on your credit report free, no matter where you live.

Before the law, each state had its own laws regulating the prices consumers pay to the big three reporting agencies — Experian, Equifax and TransUnion — to freeze and unfreeze credit reports. Previously, only three states (Indiana, Maine and South Carolina) allowed any resident to freeze or unfreeze their credit reports for free.

In addition, the new law requires credit reporting agencies to fulfill a request to freeze, thaw or permanently lift a freeze within one business day if the request is placed online or over the phone, and three business days if the request was made via snail mail. These new provisions will go into effect four months after they became law.

What’s a credit freeze again?

A credit freeze is a consumer protection tool that restricts access to your credit report. It can be used to prevent fraudsters from using your information to commit financial identity fraud.

Placing a freeze on your credit report prevents creditors from seeing your file when you or someone else applies for new credit, so no one will be able to open a new credit account in your name without your knowledge. If you want to apply for credit, you’ll need to lift, or thaw, the freeze.

A credit freeze doesn’t completely prevent identity theft, as it only pertains to transactions that involve credit report requests. The freeze doesn’t impact your credit score, restrict your existing creditors’ access to your credit report or stop you from receiving prescreened credit offers (lenders generally pre-qualify new consumers using a soft pull).

How to freeze your credit report:

You can freeze your credit report online, or by phone or mail with all three major credit reporting bureaus. You must go through a separate process with each credit bureau. We explain the steps in detail here, but here are the basics:

Each credit bureau allows you to request a credit freeze online, by phone or by mail.

Online

Equifax

Experian

TransUnion

Phone

Equifax: 1-800-685-1111 (1-800-349-9960 for New York residents)

Experian: 1-888-EXPERIAN (1-888-397-3742). Press 2.

TransUnion: 1-888-909-8872

Mail

Send a letter to each credit bureau by certified mail requesting the freeze. Here are the addresses.

Equifax: Equifax Security Freeze/P.O. Box 105788/Atlanta, GA 30348

Experian: Experian Security Freeze/P.O. Box 9554/Allen, TX 75013

TransUnion: TransUnion LLC/P.O. Box 2000/Chester, PA 19016

There are mobile options, too.

TransUnion offers a free TrueIdentity mobile app for those enrolled in its free True Identity service that provides the ability to lock and unlock credit reports instantly. And, in the aftermath of the data breach, Equifax released its free Lock & Alert app, which allows consumers to freeze and thaw their credit reports with a swipe. Experian has a free credit freeze app, IdentityWorks, to lock and unlock your credit report, but only for people with memberships to Experian IdentityWorks Premium or Experian CreditWorks? Premium, which charge fees.

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7 Foods That Are Getting More Expensive in 2018

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The new year can bring a tightening of budgets after the holidays, so the last thing many consumers want to hear is that food staples may cost more.

But retail food prices are forecasted in 2018 to rise between 1 percent to 2 percent, according to the U.S. Department of Agriculture.

Be prepared to see a possible difference on your grocery receipts and restaurant bills for these items:

  • Eggs: Expected to increase 4 percent to 5 percent in 2018, following a drop in 2017 and 2016.
  • Cereal and bakery products: Expected to increase 3 percent to 4 percent.
  • Fresh fruit: Expected to increase 3 percent to 4 percent.
  • Dairy products: Expected to increase 1.5 percent to 2.5 percent.
  • Beef and veal: Expected to increase 1.5 to 2.5 percent in 2018, following a drop in 2017.
  • Pork: Expected to increase 0.75 percent to 1.75 percent.
  • Poultry: Expected to increase 0.25 percent to 1.25 percent, potentially impacting popular bar fare like chicken wings.

The price increases can be particularly alarming considering an average family spends approximately 6.6 percent of their household income on food and 43 percent of those expenditures on food away from the home, according to the U.S. Department of Agriculture. Rising food prices can affect families from all demographics but especially those in low-income situations.

Why food prices rise

There are many reasons behind price changes that may not seem obvious.

“The biggest drivers of rapid increases in prices tends to be weather-related events,” says Greg Colson, associate professor of agriculture and applied economics at the University of Georgia. “So it’s droughts, it’s floods, particularly droughts recently, that tend to drive very rapid increases.”

Another important thing to note is that food prices on average, including the price of eggs and poultry, actually dropped back in 2016, by an average of 1.3 percent. Also in 2016, retail egg prices declined 21.1 percent as egg-laying flocks recovered from the Highly Pathogenic Avian Influenza (HPAI) outbreak.

The number of animals in both dairy and poultry sectors also increased, leading to decreasing prices in 2016. These trends continued into 2017, which makes the rising food prices of 2018 seem surprising. But it may just be the market leveling out.

“There’s a seasonality, a cycle to all this, it’s tough (to forecast) because in general forecasting we’re looking at averages, or we’ve got trends or cycles, it’s easy, but forecasting shocks is very hard,” says Colson. “Nor can you predict, is it going to be a minor or a major drought next year?”

When experts forecast prices, they look at averages and use trends or cycles, but forecasting shocks is tough to do, Colson said. Experts can’t predict if there will be a drought next year, and if there is a drought, they also can’t predict how severe it would be.

Food-at-home prices are typically more volatile than food-away-from-home prices, according to the USDA, because the cost of dining out reflects more than the price of food. In fact, food-away-from-home prices rose an average of 2.6 percent in 2016, while food-at-home prices fell 1.3 percent — the first time such prices have declined since 1967. While eating at home has long been considered a more affordable choice, that was especially true in 2016.

Costs associated with food service, wages and benefits have been increasing and are potentially partially responsible for the percentage differences in rising costs. For example, when Dunkin’ Donuts’ store prices rose in 2016, Dunkin’ CEO Nigel Travis told investors this was due more to changes in minimum wage requirements than commodity pricing.

How outside factors affect food prices

Being aware of what and how external factors affect food prices can help you make sense of how and when you’ll see these changes.

For example, fuel prices and commodity costs can affect what you see on the price tag. Lower fuel prices don’t just affect your gas tank, they also make food prices lower, as transportation costs for commodity goods as well as for distribution make it cheaper for producers. And in 2017, the USDA said there were more egg-laying birds, which helped drive down the cost of eggs.

“There’s a lot of moving parts,” Colson says. “And so even if there’s no magical events in the U.S. if there’s positive/negative shocks elsewhere around the world, it can leave a big impact on the market.”

In the third quarter of 2017, spending at restaurants and other eateries increased 2 percent from the same time last year, according to NDP Group, a market research company. NDP Group attributed most of that increase to rising menu prices.

Although food prices are expected to rise in 2018 because of numerous variables, there’s no need to panic when planning out the monthly grocery budget. Due to the deflation in 2016 and the first half of 2017, 2018 prices are expected to stay below 2015 prices, according to the USDA.

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The Supreme Court Made it Much Harder to Sue Your Employer as a Group

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This week’s U.S. Supreme Court decision holding that private-sector employees may no longer unite to bring class or collective actions against an employer has shaken the historical ground that workers’ rights stand on.

Some of the nation’s 126 million private-sector workers fear what they see as a reversion to 1920’s and ‘30s “yellow dog” contracts that offered take-it-or-leave-it arbitration agreements during one of our nation’s toughest times for the working class.

Differing views on decision

The decision came on Monday, the vote 5-4, with Justice Neil Gorsuch, who joined the Supreme Court last year, writing for the majority.

While some view the decision as a victory for employers, others see it as a further weakening of the ability to fight for fair employment standards in an economic climate where many Americans are living paycheck to paycheck.

In her dissent, Justice Ruth Bader Ginsburg called the decision “egregiously wrong.”

This ruling comes a year after the 10 largest settlements in employment-related categories reached a record high $2.72 billion, according to the 14th annual edition of the Workplace Class Action Litigation Report by Seyfarth Shaw LLP, a Chicago-based law firm. The aggregate settlements of the top 10 are almost $1 billion more than they were in 2016, despite 2017 being a more favorable year overall for employer rather than employee victories, the 2018 report notes.

“I think it’s going to potentially reduce a lot of very costly litigation for employers,” said

Suzanne Boy, an employment law attorney with Henderson Franklin Attorneys at Law in Fort Myers, Fla. “While it certainly does not erase the employees right to bring a claim, it just limits the potential for them to bring them as a group essentially.”

Attorney Benjamin Yormak, who represents employees and is a board-certified expert in labor and employment law, noted that the point of a class or collective action is to streamline the litigation for consistency in the results and to save on costs.

“But the ruling from the Supreme Court does the exact opposite,” said Yormak, an attorney based in Bonita Springs, Fla., who often represents employees with wage and hour disputes.

While Yormak said he believes wage and hour litigation will be the hardest hit, other workplace conditions could become more difficult to fight as well.

Some members of Congress and candidates for office voiced their concerns this week on social media.

What’s changed?

The Federal Arbitration Act, enacted in 1925, specifies that agreed-upon individual arbitration contracts must be enforced, unless that agreement violates another federal law, which, according to those on the dissenting side, is the National Labor Relations Act, which was enacted 10 years later.

The NLRA provides “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

In what Yormak calls an “epic case,” the problem is that the NLRA and the FAA “are not in harmony with one another on this issue.”

Both sides were looking for direction from the Supreme Court, but the outcome was not what he and employees such as those he represents had hoped for, Yormak says.

Who’s affected by the ruling?

Expect a dramatic increase in the number of employers who require arbitration agreements to be signed by their employees, both Boy and Yormak said.

The Economic Policy Institute, a Washington, D.C., nonprofit think tank, notes: “For over eighty years, the National Labor Relations Act has guaranteed workers’ right to stand together for ‘mutual aid and protection’ when seeking to improve their wages and working conditions. However, today’s decision clears the way for employers to require workers to waive that right as a condition of employment.”

According to the EPI, 56.2 percent of private sector employees are already subject to arbitration proceedings that are laid out by their employer, and of those employers, 30 percent include a class-action waiver.

With this new ruling and the number of employers who require such agreements projected to rise sharply, the ways they might implement them could be less-than-transparent, such as the blanket take-it-or-leave-it policies emailed to employees that sparked the three cases that were consolidated by the Court and that served as the basis for the decision.

What you can do

The EPI is asking Congress to ban mandatory arbitration agreements and class and collective action waivers.

“Workers depend on collective and class actions to combat race and sex discrimination and enforce wage and hour standards,”Celine McNicholas, Director of Labor Law and Policy for the EPI said in a statement. “It is essential to both our democracy and a fair economy that workers have the right to engage in collective action.”

For employees, attorneys recommend having awareness and taking a few steps, such as these:

  • Watch out for class-action waiver. “If an employee is presented with an arbitration agreement, he or she should certainly look closely as to whether or not one of these waivers is in there, because they may not be,” said Boy. She adds that if an employee refuses to sign it, an employer can rescind the job offer.
  • Find out the financial ramifications. Boy advises employees to look at the ramifications from a cost perspective, such as how the cost shifting is defined and if it’s split in half between employer and employee.
  • Pay attention to other provisions. Determine if there is a jury trial waiver or what kind of confidentiality is included in the arbitration agreement.

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Survey: Nearly 40 Percent of Students with Loans Consider Dropping Out of College

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What To Do if a Student Loan Refinancer Rejects You

Today’s college student bears the weight of trying to succeed academically as well as his growing debt from student loans.

According to a new MagnifyMoney.com survey, nearly 40% of current students with loans have considered dropping out to avoid racking up more student loan debt. And of the students who thought about leaving before earning their degree, over half were more than $20,000 in debt.

It’s no secret that student debt is causing many individuals to consider whether their degree is even worth the financial stress. An analysis by The Hechinger Report revealed that 3.9 million people with student loan debt dropped out of college during the 2015 and 2016 fiscal years alone.

For fall 2017, total undergraduate enrollment dropped by nearly 224,000 students from a year ago, according to the National Student Clearinghouse Research Center. The center said it’s the sixth consecutive year of total enrollment declines and does not cite reasons, but our survey found financial concerns seem to play a role in student enrollments and dropouts.

The survey was conducted via Google Consumer Surveys’ online student panel from April 23-May 7, 2018. It included responses from 3,069 college students. Approximately 2,000 of respondents had at least some student loan debt.

Key findings: Work, kids add to financial strain

In our survey, 39% of our respondents with student debt said they have considered stopping college before graduating so their financial situation wouldn’t get worse. For those students, balancing school with part-time work was also a major worry, with more than half citing the juggling act as a main reason they considered quitting.

Nearly 45% of those who contemplated dropping out said they worked 20 hours or more per week, with 20% saying they worked more than 40.

Still, 35% of the students in our study who had thought about leaving weren’t working at all, signifying that loan debt is still a major stress for those who don’t earn extra money while in college.

Concerns such as children and expected income seemed to play a large role in these anxieties as well: 30% of students listed balancing work and family as a main reason they had thought about quitting, while 26% said they considered quitting because they were worried about not making enough in their chosen career field.

Debt amounts hit $50,000 and up

In addition to the 52% of our in-debt respondents who owed $20,000 or more, nearly 25% were facing at least $50,000 in total loans. Additionally, almost 10% owed $100,000 or more.

Loan structure varies widely among these students. Based on our survey, 48% of our respondents said they had at least some private loans, while 52% were exclusively using federal aid.

No one-size-fits-all plan for paying off debt

There was no clear favorite strategy for paying off debt. While 39% of people said they would use an income-based plan to manage their loans, 25% said they would use a standard repayment plan. Still, another 26% weren’t yet sure how they would deal with the debt.

Despite the stress caused by student loans, most of our respondents were generally positive about their job prospects after school.

Nearly half said they thought they would make at least $20,000 extra per year as a result of their degree, with 34% of them saying they expected to earn at least $30,000 extra.

Tips for dealing with student debt

Student loans don’t have to be such a headache, though. With the proper planning and preparation, students can work around the overwhelming costs of loan debt and keep the stress of repayment at bay from their daily lives.

Jeremy Wine, supervisor of student loan counseling services for Take Charge America, a Phoenix-based nonprofit credit consulting agency, shared tips for approaching the repayment process.

    • Think ahead. As our survey shows, worrying about loans during college can be a major source of anxiety among students. Still, Wine said it’s best to set up a plan of action long before you put on your cap and gown. “Realize that it’s there and that it’s something you have to pay back,” he said. He added that a nonprofit loan counselor can help you lay out a set of repayment goals and a budget that fits your financial situation.
    • Look at repayment options. If you have federal student loans, there are a number of flexible repayment options available to you. Contact your loan servicer to enroll.
    • Don’t waste money. It may be tempting to use the loan funds on items such as a new computer or a car payment. Wine said it’s best to only use the money for tuition and fees, even if that means getting a part-time job to pay for the rest.
    • Consider consolidation carefully. Student loan consolidation or refinance involves paying off each of your loans with a new loan. Refinancing your debt can help lower your interest payments and make your loans easier to manage. Typically, you’d take out the new loan with a private lender. Just know that if you refinance federal student debt with a private loan, you’ll lose access to flexible repayment programs offered to federal borrowers. There is a consolidation program available for federal loans specifically, however, which is another option.

 

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Dillon Thompson
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Dillon Thompson is a writer at MagnifyMoney. You can email Dillon here

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3 Online Alternatives to Warehouse Clubs

Editorial Note: The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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With a 2-year-old daughter and a full-time job, life is hectic for Dallas mom and marketing professional Amanda Tavackoli. Often, there’s not enough time to think about or run to the store to pick up a pack of diapers, baby wipes or paper towels.

“Both my husband and I work full time, so it’s sometimes difficult for us to schedule everything that needs to happen,” says Tavackoli, 37.

Instead of squeezing a grocery run into her busy schedule, Tavackoli opens the Amazon Prime app on her phone, orders her household supplies, and within two days, they arrive at her doorstep.

Convenience, especially for families, is a factor in the popularity of purchasing household goods through subscriptions like Amazon Prime, says Paul Farris, a marketing professor at the Darden School of Business at the University of Virginia.

Amazon Prime reached 90 million U.S. subscribers, according to 2017 data from Consumer Intelligence Research Partners, a Chicago-based research firm. Almost 95 percent of these members said they will “definitely” or “probably” renew their subscription, according to a July to September 2017 survey by the firm.

At the same time, some of Amazon’s brick-and-mortar competitors are struggling to keep up.

Although Costco Wholesale has about 91.5 million cardholders as of November 2017 — 1.5 million more than Amazon Prime subscribers — the membership warehouse had only a 90 percent renewal rate in 2017, according to its annual report.

And Sam’s Club, the membership warehouse owned by Walmart, recently announced plans to close 63 of its clubs throughout the country and is converting as many as 12 of these facilities into e-commerce fulfillment centers. These closures reduced the company’s number of clubs to 597.

In recent years, Sam’s Club has also experienced low membership renewals. At the beginning of 2016, the renewal rate for its Plus members was only about 35 percent, from 2015 to 2016.

Farris says in addition to Amazon’s convenience factor, its free two-day shipping has helped the company dominate the playing field.

“Everybody in the world is trying to figure out how to handle free shipping,” he said. “Amazon has the (sales) volumes to make that work in a way that is much more difficult for other operations to generate.”

And Farris says Amazon’s ability to transcend local supply shortages has also made it and other e-commerce options more popular in comparison with traditional wholesale clubs.

One factor that favors brick-and-mortar Costco is price. In two separate price comparison studies conducted by investing news magazine Barrons in June 2017 and the San Francisco Chronicle in May 2017, Costco’s prices for a basket of top common household items were often cheaper than on Amazon.

However, the price difference doesn’t bother Tavackoli.

“It’s probably a little bit more expensive to go with something like Amazon, as opposed to running over to Sam’s Club,” she said. “But the convenience outweighs the cost for us, hands down.”

These online options for buying bulk are three alternatives to shopping at brick-and-mortar warehouse clubs.

1. Amazon Prime Pantry

One of the most popular perks of Amazon’s Prime membership ($99 a year) is its free two-day shipping. Amazon Prime also offers members in select cities free same-day delivery and same-day delivery for orders $35 and over. For some household essentials, subscription holders can have orders delivered within one to two hours.

Members have access to Prime Pantry, which ships bulky items like paper goods, trash bags, and oversized boxes and bags of snacks, such as chips and granola bars, that people traditionally purchase at warehouse clubs. Delivery boxes hold up to 45 pounds, and there’s a flat $5.99 fee per box.

“My own family’s use of Prime is that it’s so much more convenient,” Farris said. “You don’t have to worry about hauling it back home.”

Prime also gives its members much more than just fast delivery. Prime members can stream music, movies, and TV shows and gain access to Audible channels. There are also deals and exclusive opportunities for Prime members when shopping.

2. Boxed.com

Boxed.com was founded in 2013 by a group of tech entrepreneurs.

Boxed.com gives consumers another way to buy a large variety of brands in bulk online. In addition to simply buying in bulk, Boxed.com customers are offered curated boxes of products. For example, Boxed.com packages a wide range of snack options, like Cheez-Its, peanuts and Pop-Tarts, and ships them together in one box to customers.

With each order, Boxed.com users can choose to receive free samples, much like when shoppers walk down the aisle of a wholesale store like Costco.

And unlike Amazon, Boxed does not charge customers a subscription fee. Orders that meet a minimum price of $19.99 are shipped for free and ship within one business day.

3. Jet.com

Jet.com is another online one-stop shop that offers everything from household essentials to jewelry and patio furniture.

But Jet’s standout perk is its “real-time savings engine.” This tool allows Jet.com to pack specially marked items in boxes with other products, which the company says lowers the shipping costs for Jet.com and, in turn, lowers the price tag for its customers.

Farris says options like Jet.com could provide specific goods that local stores may not carry or have in stock when shoppers are there in person.

Jet.com, which does not charge a subscription fee, also gives users who know they won’t be returning an item the option to save money by opting out of the ability to return that item for free. Also, for orders over $35, Jet.com ships for free with delivery within two to five days.

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

Lindsey Conway
Lindsey Conway |

Lindsey Conway is a writer at MagnifyMoney. You can email Lindsey here

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