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The Ultimate Guide to Budgeting

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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In a consumer culture where we are bombarded with opportunities to spend money, whether it’s picking up a latte on the way to work, or splurging on a favorite retailer’s online sale, it’s easy to lose track of our money.

While creating and maintaining a budget is rarely how anyone wants to spend their free time, it is foundational to managing money.

“Everyone, no matter their financial situation, should have a budget in place,” said Rachel Kampersal, a marketing communications and program associate with American Consumer Credit Counseling.

Budgeting your monthly income can help you with everything from setting financial goals to making sure that you pay your bills on time and in full.

When you don’t budget your money, you are likely to overspend, said Melinda Opperman, executive vice president of Credit.org.

“A lot of people feel they simply don’t have enough money and think budgeting would be a waste of time, but budgeting helps people break even or even come up with extra money for savings and goals,” she said.

Those savings goals could be long-term, such as retirement, or for upcoming expenditures such as a new kitchen appliance, a down payment on a house, or a big vacation.

Budgets don’t have to be complicated, and there are plenty of tools to help you get started. The key is to find a budgeting strategy that works for you and stick with it.

5 budgeting tools to keep handy

An important component of any budgeting system is planning and keeping track of your expenditures, whether you are entering them into an app or spreadsheet, writing them on a paper calendar, or saving your receipts in a shoebox and tallying them on the weekend.
“Be sure to write a ‘receipt’ for everything you spend, including things like vending machines,” Opperman said.

“This is an individual process, so it’s important to try multiple tools until you come up with something that works for you,” she added. “A lot of people today might benefit from specialized budgeting apps, but there are still many who might prefer to keep track of their spending in a written journal.”

One convenient way to keep track of your budget is through an app or online budgeting tool that can help you manage your earnings and spending. Here are five to consider:

1. Mint

This free app, which is owned by Intuit, provides users with a comprehensive overview of their finances. Like many budgeting tools, Mint allows you to connect to your bank account from your mobile device and manage bills, build a budget with detailed categories, track spending, and analyze cash flow.

One of Mint’s best features is that it allows users to pay their bills — including credit card and utility bills — directly from the app. This adds another level of organization to a budget, as users can see what they owe, pay it, and see how the payment has affected their cash flow, all in a few clicks. For those who like a detailed analysis of their monthly spending and saving, Mint also provides charts and graphs and additional financial information, such as the current value of your house and your credit score.

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2. Pocketguard

This app, which is free, is marketed as a simpler approach to budgeting, and it does a lot of the initial set-up work for you. After you provide information for PocketGuard to sync up with your bank accounts, it analyzes your transactions and divides them into “pockets” based on repeated bills and charges it finds (you can manually correct any miscategorized items). After you enter spending limits for each category, the app lets you know how much money you have left in each category — a helpful feature when you need to know whether a purchase is within your budget.

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on PocketGuard Budget’s secure website

3. You Need a Budget (YNAB)

While this app is fee-based, many find it worth the price — it’s one of the most highly rated budgeting apps on the market. It asks users to set up a budget by “giving every dollar a job,” or assigning all of your income into categories that you create. YNAB encourages users to be intentional with their money and create categories for recurring and occasional large expenses. That way, when a large bill comes in for a car repair or a vacation, the money already has been allocated for it.

You can try YNAB for 34 days for free, and after that it costs about $5 per month, or $50 per year. Along with the app, the fee will give you access to helpful personal finance videos and resources, as well as an online community.

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4. HomeBudget

When budgeting is a family affair, HomeBudget is a great app to keep track of an entire household’s spending. Through its unique Family Sync feature, each family member’s income and expense transactions can be synced from their devices into one budget.

The app also allows you to track bills and payments due and correlate categorized transactions with your bank and credit card accounts. As of the date of publishing, the app currently costs $5.99 on Amazon App Store and has a monthly fee of about $1.66. You also can download a trial version before committing.

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on HomeBudget’s secure website

5. Spendee

This easy-to-use app keeps it simple. It connects with your bank accounts to automatically enter expenditures into your budget (you can enter transactions manually, too), and then it creates infographics to help you understand and keep track of your spending and income.

The app costs $1.99 per month as of the date of publishing.

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on Spendee ’s secure website

How to create a budget in 5 simple steps

You do not have to have a college degree in accounting to set up a personal budget. You’ll need to collect some personal financial information first, and then figure out which budgeting strategy is best for you.

1. Determine your monthly income

This first step is short simple: Find out how much money you bring in each month. Track down your paychecks from the past few months for a more accurate picture.

If you are married or sharing expenses with a partner, you’ll need to work together to figure out your joint income.

2. Track your expenses for a month

This should include everything from big expenses, such as your mortgage or rent payment, to your “fun” money for eating out or spur-of-the-moment purchases.

“If you sit down today and start planning your spending, you will miss all sorts of small expenses and you will be frustrated when your budget doesn’t line up,” Opperman said. “But if you diligently track all of your spending for a full month, then you will know all of the monthly expenses you can expect to face, and your budget will be more realistic.”

There are many ways to track spending;choose what fits with your lifestyle. Anything from a spreadsheet to a notebook will work.

3. Decide how much you want to save each month

Savings shouldn’t be only for known expenses, such as a wedding or planned home improvement. You’ll want to consider incorporating other “emergency” expenses into your savings calculations, such as replacing appliances or costly car repairs — that way, when the expense comes, you’ll be prepared.

There are several ways to figure out how much you’d like to save. You can decide on a percentage of your income or a dollar amount that you’d like to put aside each month.

4. Work in some ‘wiggle room’

No matter how carefully you track and forecast your spending, you will never spend the same amount each month — and you need to be prepared. “You might have particular months where you always spend more, like holiday gift shopping or back-to-school expenses,” Opperman said. “You have to plan for those variances in advance.”

In these situations, you may need to make sure that your budget is flexible enough to allow for extra expenditures when needed.

5. Choose a budgeting strategy

Once you’ve compiled your income and spending data and thought through your saving goals, it’s time to choose a budget style. Keep in mind that there is no right way to budget — any method that helps you manage your spending and save money will benefit you financially.

“A budget should be personalized and tailored to fit an individual’s or family’s needs,” Kampernal said.

Here are some strategies for budgeting:

Penny tracking

While the most detailed (and the most eye-opening), this method will show you exactly how much you are spending and leave no question as to whether you are living within your means.

To start, choose an amount for each category in your monthly budget. You can determine this from your month of tracking your spending or use financial experts’ guidelines. According to Kampernal, professionals’ guidelines include:

  • Transportation: 20%
  • Investments/savings: 20%
  • Housing: 35%
  • Debt: 5%
  • Other expenses: 20%

Once you’ve allocated your income into categories, you can begin entering each expenditure on a spreadsheet or online budget tracker. For example, if you bring home $3,000 every month and allocate $75 for eating out, you’ll mark every restaurant visit expenditure in this category — even that $1.69 soda you bought at the gas station. As the month progresses, you’ll be able to see whether you are on track to overspend or are staying within your “eating out” budget.

This method forces you to be accountable for your spending and provides a real-time picture throughout the month of where you are with your budget. If the consumer above has spent $60 on eating out by the 15th of the month, for example, he knows he’ll need to rein in the restaurant spending for the next two weeks to stay on budget.

Penny tracking can be tedious and doesn’t have to be a lifelong practice, but if done consistently, it will show you where you tend to overspend and how to realistically allocate your money. It can help you pay off debt, build savings, and develop realistic spending habits that could provide a lifetime of financial benefit. And if you ever wondered where all your money went, now you’ll know.

‘Leftovers’ budgeting

This type of budgeting is a little more relaxed than penny tracking, allowing you to lump your discretionary money into one category while still providing enough accountability to keep you from overspending.

Leftovers budgeting requires you to first pay your essential bills. Here’s an example of a budget for someone with a monthly take-home income of $2,700 (this is after taxes and a 401(k) contribution):

  • Rent/mortgage: $850
  • Utilities (power/water/sewer): $120
  • Cell phone: $75
  • Student loans: $250
  • Vehicle (monthly payment/insurance/gas): $250
  • Groceries: $400
  • Savings: $300

Your total monthly bills are $2,245. When expenses are subtracted from your income of $2,700, that leaves $455 for eating out, clothing purchases and any other spending you choose. Any discretionary funds leftover at the end of the month can be rolled into savings.

The envelope method

With this system, consumers assigned expenses to three categories of their budget following a 50/20/30 rule: Fixed bills (50%), savings and other financial goals (20%), and flexible spending (30%). You then monitor your spending within those categories.

For someone with a $2,700 monthly take-home income, that means fixed bills should total no more than $1,350 and savings and other financial goals should be allocated $540, leaving $810 for flexible spending — including groceries, entertainment and purchases.

The idea is that “when the money runs out, spending should stop,” Kampernal said. While you don’t have to literally put cash in envelopes for each category every month (the practice this style of budget is named after), you can imagine that when you’ve spent down a category to $0, the envelope is empty until it’s replenished next month.

Staying on track with your budget

No budget system will work if you cheat or stop paying attention to your spending — even for a few days. Here is some advice from budgeting experts on how to stick to your budget.

Keep it flexible: Unexpected expenses will crop up, which likely means you’ll need to re-evaluate your budget. Or, you may find yourself spending more in one category than you anticipated, and you’ll need to reduce another category to make up for it. “Stick to the process for a few months, making adjustments until you get the budget into a comfortable place for you,” Oppenheimer said.

Pay your debts off first: Debt payment can command a lot of your budget, and the faster you pay them off, the more quickly you’ll free up room in your budget for other spending.

Focus on paying off your debts up front. As you eliminate those obligations, you’ll have an easier time with the rest of your budget.

Automate your payments: Setting up automatic bill payments through your bank’s website for as many monthly payments as you can will ensure that those bills are paid on time and keep that part of your budget on track.

Consider going cash-only: Opperman said that many Credit.org clients benefit from living on a cash basis. “If people are struggling to stick to their budget, we suggest leaving the debit card at home,” she said. “This takes away the ability to afford unplanned purchases.” If you really want to buy something, you’ll be forced to think about it until you can return with your card.

An alternative strategy to limit impulse buying is to give yourself a pre-paid credit card or gift card with a small limit, Opperman said.

Be careful with credit cards: Credit card spending can sink even the most well-intentioned budget, especially if you are paying off debts.

Oppenheimer recommends making it a priority to end borrowing with credit cards, as you’ll only accumulate more debt — and throw off your budget.

“If you do use credit cards, you have to make it part of your budget that you pay off the balance in full every month — before the grace period, so you don’t add interest charges to your spending plan,” Opperman said.

Knowing how you are spending your money eliminates risk and allows you to take charge of your finances. Keep the long-term game in mind — disciplined spending now equates to more savings, and, thus, more financial freedom, in the future.

Give yourself a little freedom: If you stray from your budget, don’t give up or punish yourself, Kampernal said.

“Sometimes, life happens,” she said. “Allow yourself to make mistakes and aim to do better in the future. Budgeting is now an ‘all or nothing’ mentality.”

Give yourself a reward if you have a little space in your budget at times. Get that take-out meal or buy that small item you’ve had your eye on.

“That way, you don’t feel trapped within your budget, but know that discretionary spending is accounted for,” Kampernal said.

The most important factor in budgeting is that you do it. Take the time to organize your financial information, track your spending, and personalize a budget style to fit you or your family’s needs.

“No two budgets are equal, so make yours realistic and livable so you are more likely to follow it,” Kampernal said.

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.

Marty Minchin
Marty Minchin |

Marty Minchin is a writer at MagnifyMoney. You can email Marty here

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Couponing 101: How to Get Started So You Can Eliminate Debt

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Think couponing is a waste of time? Think again. Taking a moment to clip a coupon or ask for a deal can go a long way toward getting out of debt.

The Federal Reserve’s most recent Survey of Consumer Finances shows that 77% of Americans have some form of debt, with credit card debt being the most common. And, according to financial attorney Leslie H. Tayne, founder of Tayne Law Group P.C., there is no downward trend in sight. With the cost of goods on the rise, and income levels not keeping pace, the Melville, N.Y., lawyer says that people become trapped in the paycheck to paycheck cycle. Their debt severely limits their opportunities — both financially and in life.

Lauren Greutman, Syracuse, N.Y.-based consumer savings expert and founder of That Lady Media, once knew that struggle. With $40,000 in debt and an underwater mortgage, she turned to couponing to slash her grocery bill from $2,000 to $200 per month, allocating those savings to her debt. She coupled her couponing strategies with some side hustles and eliminated that burden in three years.

“By couponing, you can give yourself a $5,000-a-year raise that you can use to pay down debt or put towards your other financial goals,” Greutman said.

Here’s how to get your start.

How to start couponing

Greutman said that it’s important for you to first learn when to use a coupon and when not to. For example, she pointed out, buying a generic good may still be cheaper than buying a name brand good with a coupon. She adds that you should hold on to coupons until the items are on sale to increase your savings. Consumer.gov takes it a step further and advises you to avoid buying things just because you have a coupon. It’s not a good deal if you don’t want or need the item.

Next, Greutman encourages you to learn the couponing policies of your favorite stores. Do they let you double up on coupons? At one point, she was getting $500 worth of groceries for $40 by taking advantage of triple coupon sales that her preferred grocer ran once per month.

Greutman’s go-to strategy to get coupons? She emails her favorite manufacturers directly, who, nine times out of 10, send her free products or a high-value coupon. Tayne concurs and often asks companies what deals they have running. If it’s quick and simple, she “loves the idea of trying to pay less.” Consumer.gov says that coupons can also be found in newspapers, magazines, on manufacturer’s websites, or on websites specifically dedicated to coupons.

Couponing strategies from the pros

Greutman offers the following pro couponing tips:

  • Stack savings by pairing a store coupon with a manufacturer’s coupon to purchase a sale item that has a mail-in rebate.
  • Learn the sales cycles of your favorite brands (competitors will never have their goods on sale at the same time).
  • Meal plan around deals to feed your family for super cheap.

Tayne also likes the planning aspect of couponing. She said that the process helps you stick to a budget because you’re thinking about your purchases before you get to the store. This can prevent overspending and taking on additional debt. The Consumer Financial Protection Bureau (CFPB) encourages you to make frugal shopping a family endeavor and teach your children about the value of using coupons early on.

On her website, Greutman urges you to realize that couponing is a skill that takes time to hone. She encourages you to not give up just because you’re not scoring the mega deals right out of the gate. With patience, couponing, and meal planning, the whole frugal shopping experience can eventually become automatic to you.

A word of caution on couponing

On couponing, Greutman said that “short term sacrifice will give you long term gain.” However, both she and Tayne agree that extreme couponing may not be cost effective due to the time commitment. If the process is quick and simple, it absolutely makes sense to try and pay less, Tayne said. But, she cautioned, “don’t let [couponing] take over your life and impact your ability to earn money, which may be more valuable than couponing.”

Once Greutman mastered couponing, she started her business to help other women get out of debt using the tools that she learned. By doing this, she increased her household’s income, further hastening the process of becoming debt free. The moral? Your best way to get out of debt appears to be a two-pronged approach of saving money (through coupons or other means) and earning more of it.

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.

Laura Gariepy |

Laura Gariepy is a writer at MagnifyMoney. You can email Laura here

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7 Best Options to Refinance Student Loans –Get Your Lowest Rate

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Updated: December 2, 2018

Are you tired of paying a high interest rate on your student loan debt? You may be looking for ways to refinance your student loans at a lower interest rate, but don’t know where to turn. We have created the most complete list of lenders currently willing to refinance student loan debt. We recommend you start here and check rates from the top 7 national lenders offering the best student loan refinance products. All of these lenders (except Discover) also allow you to check your rate without impacting your score (using a soft credit pull), and offer the best rates of 2018:

LenderTransparency ScoreMax TermFixed APRVariable APRMax Loan Amount 
SoFiA+

20


Years

3.90% - 8.02%


Fixed Rate*

2.56% - 7.30%


Variable Rate*

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on SoFi’s secure website

EarnestA+

20


Years

3.89% - 7.89%


Fixed Rate

2.47% - 6.97%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on Earnest’s secure website

CommonBondA+

20


Years

3.67% - 7.25%


Fixed Rate

2.70% - 7.44%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on CommonBond’s secure website

LendKeyA+

20


Years

5.10% - 8.93%


Fixed Rate

2.68% - 8.96%


Variable Rate

$125k / $175k


Undergrad/Grad
Max Loan
Learn more Secured

on LendKey’s secure website

Laurel Road BankA+

20


Years

3.50% - 7.02%


Fixed Rate

3.23% - 6.65%


Variable Rate

No Max


Undergrad/Grad
Max Loan
Learn more Secured

on Laurel Road Bank’s secure website

Citizens BankA+

20


Years

3.90% - 9.99%


Fixed Rate

3.00% - 9.74%


Variable Rate

$90k / $350k


Undergraduate /
Graduate
Learn more Secured

on Citizens Bank (RI)’s secure website

Discover Student LoansA+

20


Years

5.74% - 8.49%


Fixed Rate

4.99% - 7.99%


Variable Rate

$150k


Undergraduate /
Graduate
Learn more Secured

on Discover Bank’s secure website

You should always shop around for the best rate. Don’t worry about the impact on your credit score of applying to multiple lenders: so long as you complete all of your applications within 14 days, it will only count as one inquiry on your credit score.

We have also created:

But before you refinance, read on to see if you are ready to refinance your student loans.

Can I get approved?

Loan approval rules vary by lender. However, all of the lenders will want:

  • Proof that you can afford your payments. That means you have a job with income that is sufficient to cover your student loans and all of your other expenses.
  • Proof that you are a responsible borrower, with a demonstrated record of on-time payments. For some lenders, that means that they use the traditional FICO, requiring a good score. For other lenders, they may just have some basic rules, like no missed payments, or a certain number of on-time payments required to prove that you are responsible.
LenderMinimum credit scoreEligible degreesEligible loansAnnual income
requirements
Employment
requirement
 
SoFi

Good or Excellent
score needed

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

None

Yes


(or signed job offer)
Learn more Secured

on SoFi’s secure website

Earnest

660

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

None

Yes


(or signed job offer)
Learn more Secured

on Earnest’s secure website

CommonBond

660

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

None

Yes


(or signed job offer)
Learn more Secured

on CommonBond’s secure website

LendKey

680

Undergraduate
& Graduate

Private & Federal

$24K

Yes

Learn more Secured

on LendKey’s secure website

Laurel Road Bank

Not published

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

None

Yes


(or signed job offer)
Learn more Secured

on Laurel Road Bank’s secure website

Citizens Bank

680

Undergraduate
& Graduate

Private, Federal,
& Parent PLUS

$24K

Yes

Learn more Secured

on Citizens Bank (RI)’s secure website

Discover Student Loans

Not published

Undergraduate
& Graduate

Private & Federal

None

Yes

Learn more Secured

on Discover Bank’s secure website

Diving Deeper: The best places to consider a refinance

If you go to other sites they may claim to compare several student loan offers in one step. Just beware that they might only show you deals that pay them a referral fee, so you could miss out on lenders ready to give you better terms. Below is what we believe is the most comprehensive list of current student loan refinancing lenders.

You should take the time to shop around. FICO says there is little to no impact on your credit score for rate shopping as many providers as you’d like in a single shopping period (which can be between 14-30 days, depending upon the version of FICO). So set aside a day and apply to as many as you feel comfortable with to get a sense of who is ready to give you the best terms.

Here are more details on the 7 lenders offering the lowest interest rates:

1. SoFi

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on SoFi’s secure website

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SoFi : Variable rates from 2.56% and Fixed Rates from 3.90% (with AutoPay)*

SoFi was one of the first lenders to start offering student loan refinancing products. More MagnifyMoney readers have chosen SoFi than any other lender. The only requirement is that you graduated from a Title IV school. In order to qualify, you need to have a degree, a good job and good income.

Pros Pros

  • Borrowers can refinance private, federal and Parent PLUS loans together: Through SoFi, borrowers have the ability to combine all of their student loans (private, federal and Parent PLUS) when refinancing. Along with the ability to refinance Parent PLUS loans, parents can also transfer the PLUS loans into their child’s name.
  • Access to career coaches: SoFi offers their borrowers access to their Career Advisory Group who work one-on-one with borrowers to help plan their career paths and futures.
  • Unemployment protection: SoFi offers some help if you lose your job. During the period of unemployment they will pause your payments (for up to 12 months) and work with you to find a new job. However, just remember that any unemployment protection offered by SoFi would be weaker than the income-driven repayment options of federal loans.

Cons Cons

  • No cosigner release: While they offer you the opportunity to refinance with a cosigner, it is important to know that SoFi does not offer borrowers the opportunity to release a cosigner later on down the road.
  • You lose certain protections if you refinance a federal loan: This con is not unique to SoFi (and you will find it with all other private lenders). Federal loans come with certain protections, including robust income-driven payment protection options. You will forfeit those protections if you refinance a federal loan to a private loan.

Bottom line

Bottom line

SoFi is really the original student loan refinance company, and is now certainly the largest. SoFi has consistently offered low interest rates and has received good reviews for service. In addition, SoFi invests heavily in building a “community” – which means you can start to get other benefits once you are a SoFi member.

SoFi has taken a radical new approach when it comes to the online finance industry, not only with student loans but in the personal loan, wealth management and mortgage markets as well. With their career development programs and networking events, SoFi shows that they have a lot to offer, not only in the lending space but in other aspects of their customers lives as well.

2. Earnest

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on Earnest’s secure website

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Earnest : Variable Rates from 2.47% and Fixed Rates from 3.89% (with AutoPay)

Earnest focuses on lending to borrowers who show promise of being financially responsible borrowers. Because of this, they offer merit-based loans versus credit-based ones. 

Pros Pros

  • Flexible repayment options: Earnest offers some of the most flexible options when it comes to repayment. They allow you to choose any term length between 5-20 years. You can choose your own monthly payment, based upon what you can afford (to the penny). Earnest also offers bi-weekly payments and “skip a payment” if you run into difficulty.
  • Ability to switch between variable and fixed rates: With Earnest, you can switch between fixed and variable rates throughout the life of your loan. You can do that one time every six months until the loan is paid off. That means you can take advantage of the low variable interest rates now, and then lock in a higher fixed rate later.
  • Loans serviced in-house: Earnest is one of just a few lenders that provides in-house loan servicing versus using a third-party servicer.

Cons Cons

  • Cannot apply with a cosigner: Unlike many of the other lenders, Earnest does not allow borrowers to apply for student loan refinancing with a cosigner.
  • No option to transfer Parent PLUS loans to Child: If you are a parent that is looking to refinance your Parent PLUS loan into your child’s name, it is important to note that this cannot be done through refinancing with Earnest.
  • You lose certain protections if you refinance a federal loan: When refinancing with any private lender, you will give up certain protections if you refinance a federal loan to a private loan.

Bottom line

Bottom line

Earnest, who was recently acquired by Navient, is making a name for themselves within the student refinancing space. With their flexible repayment options and low rates, they are definitely an option worth exploring.

3. CommonBond

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on CommonBond’s secure website

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CommonBond : Variable Rates from 2.70% and Fixed Rates from 3.67% (with AutoPay)

CommonBond started out lending exclusively to graduate students. They initially targeted doctors with more than $100,000 of debt. Over time, CommonBond has expanded and now offers student loan refinancing options to graduates of almost any university (graduate and undergraduate).

Pros Pros

  • Hybrid loan option: CommonBond offers a unique “Hybrid” rate option in which rates are fixed for five years and then become variable for five years. This option can be a good choice for borrowers who intend to make extra payments and plan on paying off their student loans within the first five years. If you can a better interest rate on the Hybrid loan than the Fixed-rate option, you may end up paying less over the life of the loan.
  • Social promise: CommonBond will fund the education of someone in need in an emerging market for every loan that closes. So not only will you save money, but someone in need will get access to an education.
  • “CommonBridge” unemployment protection program: CommonBond is here to help if you lose your job. Similar to SoFi, they will pause your payments and assist you in finding a new job.

Cons Cons

  • Does not offer refinancing in the following states: Idaho, Louisiana, Mississippi, Nevada, South Dakota and Vermont.
  • You lose certain protections if you refinance a federal loan: When refinancing with any private lender, you will give up certain protections if you refinance a federal loan to a private loan.

Bottom line

Bottom line

CommonBond not only offers low rates but is also making a social impact along the way. Consider checking out everything that CommonBond has to offer in term of student loan refinancing.

4. LendKey

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on LendKey’s secure website

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LendKey : Variable Rates from 2.68% and Fixed Rates from 5.10% (with AutoPay)

LendKey works with community banks and credit unions across the country. Although you apply with LendKey, your loan will be with a community bank. Over the past year, LendKey has become increasingly competitive on pricing, and frequently has a better rate than some of the more famous marketplace lenders.

Pros Pros

  • Opportunity to work with local banks and credit unions: LendKey is a platform of community banks and credit unions, which are known for providing a more personalized customer experience and competitive interest rates.
  • Offers interest-only payment repayment: Many of the lenders on LendKey offer the option to make interest-only payments for the first four years of repayment.

Cons Cons

  • Rates can vary depending on where you live: The rate that is advertised on LendKey is the lowest possible rate among all of its lenders, and some of these lenders are only available to residents of specific areas. So even if you have an excellent credit report, there is still a possibility that you will not receive the lowest rate, depending on geographic location.
  • No Parent PLUS refinancing available: Unlike several of the other student loan refinancing companies, borrowers do not have the ability to refinance Parent PLUS loans with LendKey.
  • You lose certain protections if you refinance a federal loan: As when refinancing federal loans with any private lender, you will give up your federal protections if you refinance your federal loan to a private one.

Bottom line

Bottom line

LendKey is a good option to keep in mind if you are looking for an alternative to big bank lending. If you prefer working with a credit union or community bank, LendKey may be the route to uncovering your best offer.

5. Laurel Road Bank

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Laurel Road Bank : Variable Rates from 3.23% and Fixed Rates from 3.50% (with AutoPay)

Laurel Road Bank offers a highly competitive product when it comes to student loan refinancing.

Pros Pros

  • Forgiveness in the case of death or disability: They may forgive the total student loan amount owed if the borrower dies before paying off their debt. In the case that the borrower suffers a permanent disability that results in a significant reduction to their income,Laurel Road Bank may forgive some, if not all of the amount owed.
  • Offers good perks for Residents and Fellows: Laurel Road Bank allows medical and dental students to pay only $100 per month throughout their residency or fellowship and up to six months after training. It is important for borrowers to keep in mind that the interest that accrues during this time will be added on to the total loan balance.

Cons Cons

  • Higher late fees: While many lenders charge late fees,Laurel Road Bank’s late fee can be slightly steeper than most at 5% or $28 (whichever is less) for a payment that is over 15 days late.
  • You lose certain protections if you refinance a federal loan: While not specific to Laurel Road Bank, it is important to keep in mind that you will give up certain protections when refinancing a federal loan with any private lender.

Bottom line

Bottom line

As a lender,Laurel Road Bank prides itself on offering personalized service while leveraging technology to make the student loan refinancing process a quick and simple one. Consider checking out their low-rate student loan refinancing product, which is offered in all 50 states.

6. Citizens Bank

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Citizens Bank (RI) : Variable Rates from 3.00% and Fixed Rates from 3.90% (with AutoPay)

Citizens Bank offers student loan refinancing for both private and federal loans through its Education Refinance Loan.

Pros Pros

No degree is required to refinance: If you are a borrower who did not graduate, with Citizens Bank, you are still eligible to refinance the loans that you accumulated over the period you did attend. In order to do so, borrowers much no longer be enrolled in school.

Loyalty discount: Citizens Bank offers a 0.25% discount if you already have an account with Citizens.

Cons Cons

Cannot transfer Parent PLUS loans to Child: If you are looking to refinance your Parent PLUS loan into your child’s name, this cannot be done through Citizens Bank.

You lose certain protections if you refinance a federal loan: Any time that you refinance a federal loan to a private loan, you will give up the protections, forgiveness programs and repayment plans that come with the federal loan.

Bottom line

Bottom line

The Education Refinance Loan offered by Citizens Bank is a good one to consider, especially if you are looking to stick with a traditional banking option. Consider looking into the competitive rates that Citizens Bank has to offer.

7. Discover

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Discover Student Loans : Variable Rates from 4.99% and Fixed Rates from 5.74% (with AutoPay)

Discover, with an array of competitive financial products, offers student loan refinancing for both private and federal loans through their private consolidation loan product.

Pros Pros

  • In-house loan servicing: When refinancing with Discover, they service their loans in-house versus using a third-party servicer.
  • Offer a variety of deferment options: Discover offers four different deferment options for borrowers. If you decide to go back to school, you may be eligible for in-school deferment as long as you are enrolled for at least half-time. In addition to in-school deferment, Discover offers deferment to borrowers on active military duty (up to 3 years), in eligible public service careers (up to 3 years) and those in a health professions residency program (up to 5 years).

Cons Cons

  • Performs a hard credit pull: While most lenders do a soft credit check, Discover does perform a hard pull on your credit.
  • No Parent PLUS refinancing available: Discover does not offer borrowers the option of refinancing their Parent PLUS loans.
  • You lose certain protections if you refinance a federal loan: Be careful when deciding to refinance your federal student loans because when doing so, you will lose access federal protections, forgiveness programs and repayment plans.

Bottom line

Bottom line

If you’re looking for a well-established bank to refinance your student loans, Discover may be the way to go. Just keep in mind that if you apply for a student loan refinance with Discover, they will do a hard pull on your credit.

 

Additional Student Loan Refinance Companies

In addition to the Top 7, there are many more lenders offering to refinance student loans. Below is a listing of all providers we have found so far. This list includes credit unions that may have limited membership. We will continue to update this list as we find more lenders:

Traditional Banks

  • First Republic Eagle Gold. The interest rates are great, but this option is not for everyone. Fixed rates range from 1.95% – 4.45% APR. You need to visit a branch and open a checking account (which has a $3,500 minimum balance to avoid fees). Branches are located in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland (Oregon), Boston, Palm Beach (Florida), Greenwich or New York City. Loans must be $60,000 – $300,000. First Republic wants to recruit their future high net worth clients with this product.
  • Wells Fargo: As a traditional lender, Wells Fargo will look at credit score and debt burden. They offer both fixed and variable loans, with variable rates starting at 4.74% and fixed rates starting at 5.24%. You would likely get much lower interest rates from some of the new Silicon Valley lenders or the credit unions.

Credit Unions

  • Alliant Credit Union: Anyone can join this credit union. Interest rates start as low as 3.75% APR. You can borrow up to $100,000 for up to 25 years.
  • Eastman Credit Union: Credit union membership is restricted (see eligibility here). Fixed rates start at 6.50% and go up to 8% APR.
  • Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve (or have served), the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 4.07% and fixed rates start at 4.70%.
  • Thrivent: Partnered with Thrivent Federal Credit Union, Thrivent Student Loan Resources offers variable rates starting at 4.13% APR and fixed rates starting at 3.99% APR. It is important to note that in order to qualify for refinancing through Thrivent, you must be a member of the Thrivent Federal Credit Union. If not already a member, borrowers can apply for membership during the student refinance application process.
  • UW Credit Union: This credit union has limited membership (you can find out who can join here, but you had better be in Wisconsin). You can borrow from $5,000 to $150,000 and rates start as low as 4.29% (variable) and 3.99% APR (fixed).

Online Lending Institutions

  • Education Loan Finance:This is a student loan refinancing option that is offered through SouthEast Bank. They have competitive rates with variable rates ranging from 2.80% – 6.01% APR and fixed rates ranging from 3.39% – 6.69% APR.
  • EdVest: This company is the non-profit student loan program of the state of New Hampshire which has become available more broadly. Rates are very competitive, ranging from 4.53% – 7.20% (fixed) and 4.58% – 7.25% APR (variable).
  • IHelp : This service will find a community bank. Unfortunately, these community banks don’t have the best interest rates. Fixed rates range from 4.00% to 8.00% APR (for loans up to 15 years). If you want to get a loan from a community bank or credit union, we recommend trying LendKey instead.
  • Purefy: Purefy lenders offer variable rates ranging from 2.82%-8.42% APR and fixed interest rates ranging from 3.75% – 9.66% APR. You can borrow up to $150,000 for up to 15 years. Just answer a few questions on their site, and you can get an indication of the rate.
  • RISLA: Just like New Hampshire, the state of Rhode Island wants to help you save. You can get fixed rates starting as low as 3.49%. And you do not need to have lived or studied in Rhode Island to benefit.

Is it worth it to refinance student loans?

If you are in financial difficulty and can’t afford your monthly payments, a refinance is not the solution. Instead, you should look at options to avoid a default on student loan debt.

This is particularly important if you have Federal loans.

Don’t refinance Federal loans unless you are very comfortable with your ability to repay. Think hard about the chances you won’t be able to make payments for a few months. Once you refinance student loans, you may lose flexible Federal payment options that can help you if you genuinely can’t afford the payments you have today. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now.

If you can afford your monthly payment, but you have been a sloppy payer, then you will likely need to demonstrate responsibility before applying for a refinance.

But, if you can afford your current monthly payment and have been responsible with those payments, then a refinance could be possible and help you pay the debt off sooner.

Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan.

If you are able to reduce the interest rate by refinancing, then you should consider the transaction. However, make sure you include the following in any decision:

Is there an origination fee?

Many lenders have no fee, which is great news. If there is an origination fee, you need to make sure that it is worth paying. If you plan on paying off your loan very quickly, then you may not want to pay a fee. But, if you are going to be paying your loan for a long time, a fee may be worth paying.

Is the interest rate fixed or variable?

Variable interest rates will almost always be lower than fixed interest rates. But there is a reason: you end up taking all of the interest rate risk. We are currently at all-time low interest rates. So, we know that interest rates will go up, we just don’t know when.

This is a judgment call. Just remember, when rates go up, so do your payments. And, in a higher rate environment, you will not be able to refinance your student loans to a better option (because all rates will be going up).

We typically recommend fixing the rate as much as possible, unless you know that you can pay off your debt during a short time period. If you think it will take you 20 years to pay off your loan, you don’t want to bet on the next 20 years of interest rates. But, if you think you will pay it off in five years, you may want to take the bet. Some providers with variable rates will cap them, which can help temper some of the risk.

You can also compare all of these loan options in one chart with our comparison tool. It lists the rates, loan amounts, and kinds of loans each lender is willing to refinance. You can also email us with any questions at info@magnifymoney.com.

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.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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