4 Ways the House Tax Bill Could Affect College Affordability

Congress is working around the clock to get a new tax bill to President Trump’s desk before the year is out. In addition to a host of tax cuts, both the Senate and House GOP tax plans include several proposals that could make saving and paying for higher education more costly for families. Considering Americans hold a collective $1.36 trillion in student loan debt and 11.2 percent of that balance is either delinquent or in default that’s not-so-good news for millions of Americans.

Both plans  include proposed ideas that could impact how students and families finance higher education. The House plan, for instance, includes proposed provisions that would affect the benefits parents, students and school employees like graduate students receive, which could ultimately impact the price students pay.

In a Nov. 6 letter to the House Ways and Means Committee opposing the provisions, the American Council on Education and 50 other higher education associations states that  “the committee’s summary of the bill showed that its provisions would increase the cost to students attending college by more than $65 billion between 2018 and 2027.” They reaffirmed their opposition in a Nov.15 letter.

The council and other higher education associations weren’t satisfied with the Senate’s version of the Tax Cuts and Jobs Act, either. In a Nov. 14 letter, the council says it’s pleased the Senate bill retains some student benefits eliminated in the House version, but remains concerned about other positions that it says would ultimately make attaining a college education more expensive and “erode the financial stability of public and private, two-year and four-year colleges and universities.”

Where are the bills now?

The House version of the Tax Cuts and Jobs Act passed by a 227-205 vote on Nov. 16, just before the chamber’s Thanksgiving holiday. No Democrats backed the bill.

The Senate’s bill is still in the revision stage before the Senate Committee on Finance. The proposal still has to be finalized and approved by the committee, then passed by the Senate to move on. The two chambers would need to hash out many differences between the proposed tax plans before sending legislation to the president’s desk.

In its plan, the Senate committee says the goal of tax reform in relation to education is to simplify education tax benefits. MagnifyMoney took a look at a few of the major proposed changes to the tax code that would impact college affordability most.

Streamline tax credits

The House tax bill proposes to repeal the Hope Scholarship Credit and Lifetime Learning Credit while slightly expanding the American Opportunity Tax Credit. The new American Opportunity Tax Credit (AOTC) would credit the first $2,000 of higher education expenses (like tuition, fees and course materials) and offer a 25 percent tax credit for the next $2,000 of higher education expenses. That’s the same as it is now, with one addition: The new AOTC also offers a maximum $500 credit for fifth-year students.

The bigger change is the elimination of the other credits. Currently, if students don’t elect the American Opportunity Tax Credit, they can instead claim the Hope Scholarship Credit for expenses up to $1,500 credit applied to tuition and fees during the first two years of education; or, they may choose the Lifetime Learning Credit that awards up to 20 percent of the first $10,000 of qualified education expenses for an unlimited number of years.

Basically, in creating the new American Opportunity Tax Credit, the House bill eliminates the tax benefit for nontraditional, part-time, or graduate students who may spend longer than five years in the pursuit of a higher-ed degree. According to the Joint Committee on Taxation, consolidating the AOTC would increase tax revenue by $17.5 billion from 2018 to 2027, and increase spending by $0.2 billion over the same period.

The Senate bill does not change any of these credits.

Make tuition reductions taxable

The House bill proposes eliminating a tax exclusion for qualified tuition reductions, which allows college and university employees who receive discounted tuition to omit the reduction from their taxable income.

A repeal would generally increase the taxable income for many campus employees. Most notably, eliminating the exclusion would negatively impact graduate students students who, under the House’s proposed tax bill, would have any waived tuition added to their taxable income.

Many graduate students receive a stipend in exchange for work done for the university, like teaching courses or working on research projects. The stipend offsets student’s overall cost of attendance and may be worth tens of thousands of dollars. As part of the package, many students see all or part of their tuition waived.

Students already pay taxes on the stipend. Under the House tax plan, students would have to report the waived tuition as income, too, although they never actually see the funds. Since a year’s worth of a graduate education can cost tens of thousands of dollars, the addition could move the student up into higher tax brackets and significantly increase the amount of income tax they have to pay.

The Senate bill doesn’t alter the exclusion.

Eliminate the student loan interest deduction

Under the House tax bill, students who made payments on their federal or private student loans during the tax year would no longer be able to deduct interest they paid on the loans.

Current tax code allows those repaying student loans to deduct up to $2,500 of student loan interest paid each year. To claim the deduction, a taxpayer cannot earn more than $80,000 ($160,00 for married couples filing jointly). The deduction is reduced based on income for earners above $65,000, up to an $80,000 limit. (The phaseout is between $130,000 and $160,000 who are married and filing joint returns.)

Nearly 12 million Americans were spared paying an average $1,068 when they were credited with the deduction in 2014, according to the Center for American Progress, an independent nonpartisan policy institute. If a student turns to student loans or other expensive borrowing options to make up for the deduction, he or she could  experience more financial strain after graduation.

The Senate tax bill retains the student loan interest deduction.

Repeal the tax exclusion for employer-provided educational assistance

Some employers provide workers educational assistance to help deflect the cost of earning a degree or completing continuing education courses at the undergraduate or graduate level. Currently, Americans receiving such assistance are able to exclude up to $5,250 of it from their taxable income.

Under the House tax plan, the education-related funds employees receive would be taxed as income, increasing the amount some would pay in taxes if they enroll in such a program.

A spokesperson for American Student Assistance says if the final tax bill includes the repeal, it may point to a bleak future for the spread of student loan repayment assistance benefits, currently offered by only 4 percent of American companies.

Take care not to confuse education assistance with another, growing employer benefit: student loan repayment assistance. The student loan repayment benefit is new and structured differently from company to company, but generally, it grants some employees money to help repay their student loans.

The Senate plan does not repeal the employer-provided educational assistance exclusion.

The post 4 Ways the House Tax Bill Could Affect College Affordability appeared first on MagnifyMoney.

Senate Tax Reform vs. House Tax Reform

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Update: The Senate’s version of the Tax Cuts and Jobs Act is moving on to its next stage. The Senate Committee on Finance approved the Senate’s version of the Tax Cuts and Jobs Act late November 16 with a 14-12 vote along party lines.

The Senate’s bill will go to the full Senate for a vote the week following the Thanksgiving holiday. At least 52 senators must vote in favor of the bill’s passing to move it forward. If no Democrats vote for the bill, Republicans can only stand to lose two votes.

The vote was made only hours after the House version of the tax bill passed by a 227-205 chamber vote, just before the chamber’s Thanksgiving holiday. No Democrats backed the bill.

From the looks of it, the Senate isn’t exactly on the same page with their colleagues in the House of Representatives. The plan bears the same name as the House’s bill, but the Senate’s version of the Tax Cut and Jobs Act diverges from the House’s plan on a number of individual and business tax reforms.

Most notably, the proposed Senate Republican plan would delay cutting the corporate tax rate by one year, include more tax brackets than the House plan and retain the mortgage interest deduction, among a few other popular tax breaks.

The bills do share some things in common. For example, neither version calls for any changes in workers’ 401(k) tax contribution limits. And both tax plans would repeal the alternative minimum tax and maintain the charitable contribution deduction. Both plans also repeal personal exemptions, but double the standard income tax deduction for individuals, married couples and single parents.

Complying with a Senate rule known as the Byrd rule is an issue. Under that rule, during the legislative reconciliation process, senators can move to block legislation if, among other reasons, it would possibly mean a significant increase in the federal deficit beyond a 10-year term.

If the Senate is able to pass its tax bill, the differences between the two plans may lead to clashes over tax policy as a pressured Congress tries to get a single tax reform bill to President Donald Trump’s desk by Christmas.

Here is a quick breakdown of the major differences between the two plans. Read beyond the table for further detail.

Income tax brackets

The Senate’s plan maintains the tax system’s seven tax brackets—10%, 12%, 22.5%, 25%, 32.5%, 35% and 38.5% — as opposed to the House’s four. The senate plan notably maintains the lowest tax rate at 10 percent and modifies all but one other. The proposal also adjusts qualifying income levels.

The Senate plan would reduce the income tax on the nation’s highest earners to 38.5% from the current 39.6%. Individuals and heads of households earning more than $500,000, and married couples earning more than $1 million would pay the highest rate. The proposed income thresholds for the Senate’s plan are pictured below.

Alternatively, the House bill proposes four income brackets of 12%, 25%, 35%, and 39.6%.

The state and local tax deduction

The Senate plan fully eliminates the State and Local Tax, or SALT, deduction. Nearly one third of Americans took the deduction in 2015, according to the Tax Policy Center, so the repeal is likely to ruffle some feathers. While the House tax plan reduced deductions for state and local taxes, it still allowed Americans to deduct up to $10,000 in property taxes. The senate plan would completely get rid of the SALT deduction, including the deduction for property taxes.

Some critics fear eliminating the SALT deduction would disproportionately affect earners in states with high taxes, like New York and California. Across the nation, just six states— California, New York, New Jersey, Illinois, Texas, and Pennsylvania— comprised more than half of the value of all state and local tax deduction claims in 2014.

The mortgage interest deduction

Nothing would change under the Senate’s plan. Americans would still be able to deduct the amount of interest paid on up to the first $1 million of mortgage debt under the Senate tax plan. The House tax plan, on the other hand, had proposed to lower the threshold for the mortgage interest deduction to $500,000.

Only about six percent of new homes are valued at more than $500,000, according to an August 2017 report by the United for Homes campaign. The group argues lowering the cap would have “virtually no effect on homeownership rates.”

Corporate tax rate

The Senate plan still reduces the corporate tax rate from 35% to 20%, but corporations won’t get a break until 2019, when the Senate plan phases in the reduction. On the other hand, the House Plan would have initiated the reduced rate in 2018.

The decision to phase in the cut was likely made because a delayed corporate tax cut would make it easier for the Senate to reach its goal of passing a tax bill that does not increase the deficit by more than $1.5 trillion over the next decade.

The estate tax

The estate tax exemption is doubled from $5.49 million in assets ($10.98 million for married couples) onto heirs under both the Senate and House bills.

The House plan doesn’t get rid of the estate tax immediately. The House’s proposal also doubles the exclusion amount to $10 million, but eliminates the estate tax after 2023. The estate tax affects only the estates of the wealthiest 0.2 percent of Americans, according to the Center of Budget and Policy Priorities.

Adoption and child tax credits

Unlike the initial House tax plan, the Senate plan proposes keep some popular tax breaks. The plan proposes to retain the Adoption Tax Credit, which allows families to receive a tax credit for all qualifying adoption expenses up to $13,570. The Senate plan also slightly bumps up a proposed child tax credit compared to the House plan. While the House plan increased the credit from $1000 to $1600, the Senate plan proposes raising the credit slightly more, to $1650.

Student loan interest and medical expenses deduction

Under Senate plan, students will still be able to deduct interest paid on student loans up to $2500. Furthermore, taxpayers would still be able to claim medical expenses as a deduction if they account for over 7.5 or 10% of their income. This is a departure from the House plan, which would have eliminated both.

Pass through business

The Senate tax plan establishes a 17.4 percent deduction for pass through businesses like sole proprietorships, S corporations, and partnerships.The HIll reports the deduction would lower the effective tax rate on the highest earning small businesses to just over 30 percent, according to a Senate Finance aide. The deduction would only apply to service businesses based in the U.S

The House plan establishes a 25 percent tax rate for pass-through companies. But only 30 percent of the business’s revenue is subject to that rate. The remaining 70 percent would be taxed at the individual tax rate. The House amended the bill Thursday to create a new 9 percent tax rate for the first $75,000 of income of a married active owner with less than $150,000 of pass-through income.

What’s next for GOP tax reform?

The future is unclear for either proposed tax plan. The two chambers will likely need to compromise over differences in the coming weeks to get a bill passed and to the President’s desk by year’s end.

Thursday’s news came just as the House Ways and Means Committee finalized its own bill after announcing two amendments, with a vote expected next week.

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Car Prices Hit an All-Time High — Here’s How to Save When Buying New

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The first Model-T cost as little as $825 in 1908, which is about $18,000 adjusted for inflation. Today, the average car buyer can expect to leave a dealership with a new car for around $35,428. That was the average transaction price for a new vehicle in October — an all-time high — according to auto comparison website Edmunds.com.

The average new-vehicle transaction rose 2 percent from October 2016 and 12 percent over the past five years. The average down payment on a new car also hit a new record: $3,966, which is up $374 from last year and $454 from five years ago.

Why are prices up?

The increase is due in part to a rise in the number of features that come standard with a new car these days, like automatic emergency braking and backup cameras, says Ronald Montoya, senior consumer advice editor for Edmunds. In addition, consumers are moving away from lower-cost, smaller sedans, climbing into higher-priced, larger SUVs and trucks.

Montoya says the general decline in overall gas prices since 2008 is partly responsible for the shift in consumer preferences. Plus, many shoppers favor a higher driving position and having more storage space.

Before we get to how you can find savings on a new car despite the higher price tags, let’s talk about a savings strategy that can backfire.

Looking beyond your monthly payment

Many are opting for longer auto loans to cope with rising car prices, says Matt DeLorenzo, managing editor for kbb.com, the website for vehicle research publisher Kelley Blue Book. Recently, the Consumer Financial Protection Bureau (CFPB) found that 42 percent of auto loans made in the last year were for six-year terms or longer, up from 26 percent in 2009.

Taking out a longer auto loan to pay a lower monthly price isn’t an ideal hack, DeLorenzo tells MagnifyMoney. While a longer term keeps your monthly payments lower, you end up paying more in interest over the life of the loan than you would with a shorter-term product. That makes your new car even pricier, so avoid taking out a longer loan to squeeze an expensive vehicle into your budget..

The CFPB found that six-year auto loans cost more in interest over time, are used by consumers with lower credit scores to finance larger amounts, and have higher rates of default. Here’s a good rule of thumb to keep in mind when you’re reviewing financing options: If you are unable to afford financing an auto purchase over four years, perhaps it’s out of your price range.

DeLorenzo says going with a longer loan is one of two actions people are taking in response to higher prices. The other: leasing.

It is true that leasing a vehicle saves you money on monthly payments in the short run, but there’s more to this financial story. Indeed, if you drive a lot of miles, leasing may be a bad idea. You may be hit with extra mileage and wear-and-tear charges at the end of your lease.

How to save on a new car

So prices are at record highs. The experts we talked to say there are still ways you can save when buying a new vehicle in this market.

Try a compact vehicle

If you’re shopping for a car in 2017, you’re likely looking at a crossover, midsize vehicle or truck. Those larger vehicles are in demand right now, and, according to Edmunds, the shift to the larger vehicles has driven interest rates and prices up. However, automakers are struggling to move less-popular 2017 models like compact sedans off dealership lots.

DeLorenzo, the KBB editor, recommends purchasing a less-in-demand sedan or crossover vehicle to find savings.

Many new compact cars may be sold for up to $10,000 less than a larger SUV or truck by the same manufacturer, he says. By choosing a sedan or other compact vehicle, you trade size for better fuel economy and a more affordable car.

And because dealers are having a hard time selling these models, you might see better discounts, more incentives and improved lease deals on more traditional sedans and family cars, according to DeLorenzo.

Pair a lower down payment with GAP insurance

Common savings advice for car shoppers includes making a down payment of at least 20 percent of the vehicle’s transaction price. This tactic is intended to save you money right away, as a new car loses about 20 percent of its value in its first year of ownership, according to Montoya.

People are putting down closer to 12 percent of the vehicle’s value at signing because it’s tough to save up 20 percent since vehicle prices have gotten more expensive, Montoya tells MagnifyMoney. He says most people tend to go with making a down payment that results in a monthly payment they are comfortable with.

But, since a new vehicle loses about a fifth of its value in its first year of ownership, “if you put down payment of 12 percent, you are already in the red,” Montoya adds. He says you may want to look at GAP insurance if you put down less than 20 percent.

Services like GAP — Guaranteed Auto Protection — insurance and new car replacement insurance will cover the difference between what the vehicle is worth and what is owed on the loan in the event of total loss or accident.

Ask your insurance company if it offers new car replacement insurance or GAP insurance. If your insurance doesn’t offer new car replacement or the monthly cost of the insurance is outside of your budget, Montoya says to consider getting GAP insurance from the dealership.

Adding GAP insurance may tack on another monthly transportation cost, but it can save you from possibly owing thousands on an upside down auto loan in the event you have an accident and lose your vehicle.

On the downside, GAP insurance coverage may vary from insurer to insurer, so be sure to ask what the insurance can apply to. Some policies, for example, may cover collisions but not flooding or theft.

Look out for incentives

A little research can go a long way when you’re car shopping. Keep an eye out for extra savings in the form of incentives from both the dealer and the manufacturer.

Both Montoya and DeLorenzo recommend checking the manufacturer’s website or comparison websites like KelleyBlueBook.com or Edmunds.com for savings before you set foot on a dealer’s lot.

There may be special incentives you qualify for based on your status as a veteran, student or ride-share driver. You may also find a loyalty incentive, reserved for those who already own a car by the same manufacturer, or a conquest incentive, offered to customers willing to trade in a competing brand.

Be sure to enter your ZIP code to find incentives most relevant to you at local dealerships, and to search based on the exact model you’re looking for.

Even if you think you’ve found all you could dig up, you may discover additional savings if you ask the salesperson about any deals or promotional offers the dealer may be running when you come in. Wait until you’re at the negotiating table to bring the deal up, advises DeLorenzo.

“Keep that in your back pocket,” he says. “If they don’t offer them to you. then bring them up.”

Get preapproved for financing

You don’t have to leave the financing to the dealer, and you shouldn’t if you want to ensure you’re getting a good deal. Get preapproved for financing before you show up at a dealership. That way, if the dealership offers you financing at a higher interest rate, you can counter the offer or, at the very least, have a benchmark for offer comparisons. Naturally, you should aim to finance your new vehicle at the lowest interest rate possible.

Compare prices

The first step to saving money on anything is shopping around. Compare prices of the vehicle you want across multiple dealers.

“A lot of people tend to go to the dealership that’s closest to them and they don’t shop around,” says Montoya. He recommends going to at least three different dealerships. “You’ll see three different offers and you’ll get a better idea as far as price,” he says.

Websites like Kelley Blue Book, TrueCar and Edmunds make it fast and simple to compare prices of new and used vehicles online. Use the sites to compare sticker prices before you head out to the dealership. Beyond the physical vehicle, take the time to compare what you can expect to pay for must-haves like auto insurance and vehicle maintenance, as they can fluctuate depending on the vehicle you choose.

Time your purchase just right

Simply walking onto the a dealer’s lot at the right time of the year can save you a chunk of cash. Montoya says the holiday season is a good time to shop for a new vehicle; dealers are looking to clear out their inventory of the outgoing year’s models to make room for new vehicles.

“Look at vehicles on the outgoing year,” says Montoya. “They will have more discounts and there is more incentive for dealers to sell those models.”

You also want to pay attention to when the vehicle came out. The longer a car is out, the more likely it is to have more discounts than newer models, adds Montoya. He recommends going back a model year to save money if you don’t mind getting a used car instead of a new one.

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Why You Should Know About Jerome Powell, Tapped as the Next Fed Chair

After much speculation, President Trump this month nominated Jerome H. Powell, 64, to be the next chairman of the Federal Reserve. Powell, nominated on Nov. 2,  is now next in line for what many consider the second-most-powerful position in the United States government, after the president himself.

If confirmed by the Senate, Powell will replace Janet L. Yellen, 71, who has been chairing the Fed for the last four years. Her term expires Feb 3. The appointment would make Yellen, who was the first female chairman of the federal bank, also the first serving Fed chair in nearly 40 years who was not reappointed by a new president for another term. The last time a first-term president removed the serving Federal Reserve chair was in 1978.

What does the chair do, anyway?

The Federal Reserve chair is the head of the Federal Reserve System, aka the central bank of the United States. The bank is in charge of things like conducting monetary policy in order to promote employment, keep inflation under control and moderate long-term interest rates — all of this in an effort to keep our financial system functional and stable.

Fed chairs serve four-year terms and are nominated by the president. If approved as chair, Powell will be in charge of carrying out the Fed mandate. The chair reports twice a year to Congress to testify on the Fed’s monetary policy and objectives. The chair also meets regularly with the Secretary of the Treasury Department, a member of the President’s cabinet. The chair’s actions influence employment, prices and interest rates.

Here’s another responsibility: The Fed chair is also the chair of the Federal Open Market Committee, which sets the federal funds rate. The funds rate is the benchmark interest rate for the nation, and when the funds rate rises, interest rates on short-term borrowing options like credit cards and personal loans tend to rise, too. For a complete primer on the fed funds rate and how it impacts your wallet, check out this explainer from our parent company, LendingTree.

For seven years following the 2008 financial crisis, the Fed held the funds rate  near zero to help curb inflation and encourage lending during the nation’s recovery. Then, in December 2015 the Fed raised the rate to between 0.25 and 0.50 percent. Since, the Fed has voted to raise interest rates four times as the economy has picked back up. The federal funds rate is now 1.25 percent, as Fed officials voted in June 2017 to again raise rates.

Who is Jerome H. Powell?

Jerome H. Powell is a current member of the Federal Reserve System’s Board of Governors. Powell, a Republican, was appointed to the position by former President Barack Obama, himself a Democrat, in 2012, and his current term was set to end in 2028.

Powell, though not an economist, has a rich background in financial markets. Prior to his appointment, Powell was a visiting scholar at the Bipartisan Policy Center in Washington, D.C. He also served in the George H.W. Bush administration as an assistant secretary and as under secretary of the Treasury.

Between his stints in Washington,  Powell led a career as a lawyer and investment banker in New York City. Powell served as a partner at The Carlyle Group from 1997 to 2005. He will be among the richest people to ever lead the central bank, according to The Washington Post.

According to The Wall Street Journal, White House officials say Trump chose Powell because he liked his combination of monetary policy acumen and business savvy. The president cited Powell’s “real-world perspective” as a positive trait, saying “he understands what it takes for our economy to grow.”

What we can expect from Powell as Fed chair

Powell is reported to be a centrist when it comes to monetary policy. Which is to say that as the next chair of the Federal Reserve System, hel is expected to stick to Yellen’s methodical approach to unwinding financial stimulus policies aimed at continuing recovery from the Great Recession.

Powell voted in favor of every policy decision made by the Board of Governors since he joined the Fed in May 2012. That includes all four federal funds rate increases. He also supported the Fed’s decision in June to begin reducing a $4.2 trillion balance sheet mainly consisting of U.S. Treasury and mortgage-backed securities purchased to lower long-term rates in recovery. Selling the securities takes money out of the market, driving down interest rates and inflation.

Investors expect Powell to keep the FOMC making quarter-percent raises through 2020. According to The New York Times, a survey of 144 investors conducted by Evercore ISI found investors expected that Powell would push rates modestly higher over time than Yellen. He is expected to conduct monetary policy so similarly, some are even referring to Powell as the ‘Republican Yellen.’

The one area where Powell may diverge from a Yellen-like monetary policy is in financial regulation.

The Fed is one of several federal agencies charged with regulating and supervising financial institutions. The Fed-enforced reforms in the wake of the Great Recession , often defended by Yellen, including new financial rules under the 2010 Dodd-Frank law.

“There is certainly a role for regulation, but regulation should always take into account the impact that it has on markets — a balance that must be constantly weighed. More regulation is not the best answer to every problem,” Powell said at an October meeting of the Fed-sponsored private-sector Treasury Market Practices Group.

Trump has stated several times that he he’s in favor of looser financial industry regulation, and the Trump administration further expressed the sentiment when it released plans calling for significant reductions in regulation in June. Just after the plans were released, Powell made clear he didn’t fully agree with the Trump administration’s plans at an appearance before the Senate Banking Committee, according to The Times.

Although Powell acknowledged there were some ideas he would not support, he said there were some ideas that would “enable us to reduce the cost of regulation without affecting safety and soundness.”

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Marcus Personal Loan Review: Goldman Sachs Takes on Online Lenders with Exclusive New Loan

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Updated November 06, 2017

Goldman Sachs officially made its debut in the personal lending market this week with Marcus, its long-awaited online lending platform. With Marcus, the 147-year-old investment bank will offer consolidation loans up to $30,000 to credit-worthy consumers.

Goldman Sachs began to expand its audience from the super-wealthy to the average consumer earlier this year when it launched an online savings account with a super low $1 deposit. Named for founder Marcus Goldman, Marcus will offer the average American a way to “save money over high-interest credit cards,” the company says. If this works for the megabank, it could lead to similar changes in the industry, challenging the dominance of credit card issuers.

Another reason this is a big deal: Goldman has a big advantage over Silicon Valley competitors when it comes to funding. As a deposit-gathering bank, Goldman can raise FDIC-insured deposits. But Goldman also has deep relationships with institutional investors who might want to purchase consumer loans. Companies like Prosper use Goldman to help them fund their loans: now Goldman will be competing with its own customers. Plus it has the power of a well-established brand behind it. Marcus could be a major disrupter for developing online personal loan businesses.

In this Marcus by Goldman Sachs review, we will explain:

  • Who’s eligible for a Marcus loan
  • How to see if you’re prequalified
  • How to apply, how long it will take, and what documents you will need
  • The terms of the loan offers
  • Pros and cons

Who’s Eligible for a Marcus Loan

First you need the “secret” code

Marcus is super exclusive right now. You can only apply if you got a special code in the mail from the firm inviting you to use it. The bank says it’s doing that to get feedback on the service for now, but will offer Marcus to a broader audience in a few months. If you don’t have a code, you can sign up to be the first to know when Marcus expands its service. Also, you can’t apply just yet if you live in Maryland, but the bank says they are working on it.

So, if you received a code in the mail, and you live in one of the qualifying 49 states, you can go to Marcus.com and apply to see your offers for loan amounts and interest rates. The rate you get (6.99% – 23.99%) will depend on your creditworthiness and the length of the term of the loan. The fintech firm bases the amount of your loan offer on your creditworthiness, information in your application, and the company’s review of your ability to pay back the loan.

Healthy credit

Goldman says they are looking to service consumers with “prime” credit scores. That distinction usually lands someone at about 660 or higher on the FICO scale. The higher your credit score, the better your chance of being approved.

Having too many recent credit inquiries on your credit report could raise a red flag to their underwriters. Note: A soft pull, like the one used by Marcus to prequalify, will not count as a hard inquiry on your credit report. Although not reported, we expect that Marcus will have credit policy requirements on top of the credit score minimum. For example, people who have missed payments recently will likely be rejected, regardless of their credit score. Marcus will be a way for people with good credit scores to get a lower interest rate.

Debt-to-income ratio under 40%

You can get denied if your debt-to-income ratio is too high. For example, if your total monthly payments (including rent/mortgage and all items on your credit bureau) are more than 40% of your income, you would likely be denied.

If it’s above 50%, you might have a hard time getting approved for credit by most lenders. The ratio is calculated with the monthly payments that show up on your credit report, and other debt that shows up on your bureau. If your total monthly bills are $500, and your total monthly income is $2,500, you would have a 20% debt-to-income ratio.

A job

You must be employed and be able to verify your income to get approved for a Marcus loan.

Marcus will also consider other factors in your loan application, such as your intended use of the loan, to determine how much you’ll be offered. The bank will likely have its own combination of rules and scoring to determine your final offer.

How to See if You’re Prequalified

If you want to avoid a hard pull on your credit report, see if you prequalify for a Marcus Loan here. It is considered a soft pull on your credit and won’t harm your score. Later on in the process — if you decide to get the loan — you’ll get a hard pull on your credit score.

How to Apply

The Marcus site’s layout makes it super easy to apply for a personal loan. Of course, the first step would be inputting that special code you got in the mail. After that, it’s similar to other loan applications.

Step 1: The basics

First up, fill out the basic information in the online application. You’ll be prompted to fill out basic personal and financial information such as your name, address, income, etc. to determine if you qualify. You’ll also be asked for information about how much you’d like to borrow, what you’ll use the money for, among other questions about the loan. The soft pull occurs after you submit that information.

online application for personal loan

Step 2: Choose from your offers

If you qualify for a Marcus loan based on the information you submitted, you’ll be presented with a list of options for loans, rates, and terms.

Step 3: Submit

If you decide to proceed with the loan, you then have to complete a few more steps. At that point, you’ll add information to verify your identity such as your full Social Security or tax I.D. number or be asked for government-issued photo identification and additional information as necessary. Marcus might also ask for documents to verify your income such as recent pay stubs, bank statements, or a W2. This is when the hard pull happens, which will impact your credit score.

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Terms

Marcus offers debt consolidation and credit consolidation loans up to $30,000 with an annual percentage rate (APR) that can be low as 6.99% and as high as 23.99%.

You can borrow the money for 2 to 6 years.

There are no fees, and your rate will be fixed for the life of the loan.

You can use a debt consolidation loan to pay off credit card debt, medical bills, or financed purchases such as rings, cars, or furniture. You cannot use a Marcus loan to refinance an existing student loan.

Pros & Cons of Marcus

Pros:

No origination fee. Because Marcus forgoes an origination fee — a fee you’d pay to receive the loan— the APR is your interest rate, even if you pay it off before the full term has expired. That’s unlike competitors like Lending Club and others that charge origination fees. If you pay an origination fee and end up paying off the loan ahead of time, your actual APR will be higher than stated.

No late fees. If you miss a payment, you won’t be charged a fee, but you will add on to the life of the loan and add more interest, and your final payment will be larger. This doesn’t save you from hurting your credit score, however. Your late payments will be reported to a credit agency, and will negatively impact your score. Eventually, after missed, partial, or late payments, your loan may default, and that will also impact your credit score.

Defer payments after a year of good behavior. If you’ve made payments on time for a full year, Marcus gives you the option to defer one payment. Marcus will also waive your interest payment for that month. The payment will extend your loan by one month, at which point you’ll pay the interest on it. If you miss a payment or make one late payment, you will lose access to the payment deferral feature for the life of your loan.

Cons:

Marcus is exclusive. At this point, Marcus is extremely exclusive, so you need to be invited to use it to try it out and see if you qualify. You also can’t sign up for it if you live in Maryland.

Lower APR with a balance transfer card. If your goal is to pay down credit card debt, you might be able to find a low or 0% APR balance transfer card and pay less overall. If you don’t have much debt, a balance transfer may be a better option.

Lower APR with [SoFiPL]SoFi[/SoFiPL] and [LightStreamPL]LightStream[/LightStreamPL]. If you want a personal loan without an origination fee, there are other options. SoFi and LightStream do not charge origination fees. They also offer APRs as low as [SoFiAPR]5.49%[/SoFiAPR] and [LightStreamAPR]2.49%[/LightStreamAPR], respectively, and both top out around 15% on the high end compared to 22.9% with Marcus. With SoFi, you can check your rate without hurting your credit score. Just be warned: [LightStreamPL]LightStream[/LightStreamPL] (which is a division of SunTrust Bank) [LightStreamInq]does not offer soft pull functionality[/LightStreamInq].

Make sure to compare your offer from Marcus with offers from SoFi and LightStream, as you could possibly end up with a lower APR overall. The downsides here would be that [LightStreamPL]LightStream[/LightStreamPL] requires a minimum [LightStreamCreditScore]680 FICO score[/LightStreamCreditScore], so it could be a bit more difficult to qualify for a loan. They also use a [LightStreamInq]hard pull[/LightStreamInq] to determine your eligibility. Also, [SoFiPL]SoFi[/SoFiPL] might take longer than the speedy 1-2 business days that Marcus promises to get your money to you since they have to connect you with other individuals.

Don’t get distracted by “no fees.” It’s easy to get pulled in by the promise of “no fees, ever,” but you should definitely still shop around because you might find a lower rate or better terms.

Several alternatives to Marcus exist to apply for a personal loan. We have compiled a list of the best personal loan companies here.

Every personal loan company has its own pricing model, which means you could get very different interest rates from different companies. It is in your best interest to shop around for the best rate before making a decision.

Some of the best alternatives today include [SoFiPL]SoFi[/SoFiPL] and [LightStreamPL]LightStream[/LightStreamPL] because of the many reasons mentioned above. Competitors such as Santander, Discover, and [BesteggPL]Best Egg[/BesteggPL] or credit unions like SAFE Credit Union and Affinity, may give you a better offer as well depending on the information you provide. Some may have an origination fee, but use a lower credit score threshold to qualify applicants, or they might offer you a better APR.

Final verdict:

We believe that the growth of personal loans is great news for consumers. For people drowning in high-interest credit card debt, a low rate on a structured personal loan could offer significant savings. Marcus is good news for consumers. Goldman Sachs is using its access to low-cost funding as a way to challenge the big credit card companies. Their no-fee, low-interest rate loan could be a great way for consumers to consolidate debt. Unfortunately, it’s pretty difficult to gain access to the platform right now since it’s so exclusive, but we expect that to expand over time.

The post Marcus Personal Loan Review: Goldman Sachs Takes on Online Lenders with Exclusive New Loan appeared first on MagnifyMoney.

Uber Visa Card Review: Uber’s First Credit Card Offers a Lot for Millennials to Love

The rumors were true. Uber’s making the leap from the smartphone in your pocket to the wallet in, well, your other pocket.

The ride-hailing company has teamed up with Barclaycard, the credit card division of UK-based Barclays PLC, to launch what is shaping up to be an excellent no-fee rewards credit card for millennials, urbanites and business travelers alike. The new offering, dubbed the Uber Visa Card, will be available nationwide Nov. 2.

Uber’s first branded credit card lets cardholders earn 4% back on dining, 3% on hotels and airfare, 2% on online purchases including Uber, online shopping and video and music streaming services, and 1% on most everything else. Individually, the bonus categories are similar to those of a few existing no-fee cards with special category bonuses. But the Uber Visa Card’s 4-3-2-1 cashback rewards structure makes for a leading bonus category rewards credit card.

And that 4% cashback bonus makes the Uber Visa Card a leader in dining rewards.

Heavy Uber-app users need look no further for a cashback offering. However, to get the best bang for their buck, they should pair the Uber Visa Card with a flat-rate 2% cashback card such as the Citi® Double Cash Card or PayPal Cashback Mastercard®.

Uber Visa Card

Apply Now Secured

on Uber’s secure website

Uber Visa Card

Annual fee
$0 For First Year
$0 Ongoing
Cashback Rate
4% back on dining, 3% back on hotel and airfare, 2% back for online purchases, and 1% on everything else
APR
15.99%-24.74%

variable

Part I: Card benefits: At a glance

The Uber Visa Card boasts an impressive 4-3-2-1 rewards program, as described above, in addition to other bonuses. But those aren’t the only perks this car packs. The company is clearly making a play for millennials, with unique benefits like account credits for digital subscription services (a la Netflix or Hulu) and mobile phone protection.

With its rewards package, the Uber Visa Card might could act as bait to convince some millennials to use credit more often. (Recent research shows the generation favors debit and cash for everyday purchases.)

Cashback rewards

The pros

The cons

  • Unlimited 4% cash back on dining and takeout.
  • Unlimited 3% on hotel and airfare
  • Unlimited 2% back on online purchases including Uber.
  • Unlimited 1% back on all other purchases.
  • No annual fee
  • No foreign transaction fees.
  • 10,000-point bonus, redeemable for $100 cash back, after you spend $500 or more in purchases within the first 90 days after opening an account.
  • Cardholders who spend $5,000 or more per year, are rewarded with a $50 credit to use on digital subscription services.
  • Cardholders who use the card to pay their phone bill each month also get up to $600 for mobile phone supplemental insurance.
  • Cardholders can only redeem up to $500 worth of points per day for Uber Credits and bank deposits.
  • Online limitations to those 2% cash-back rewards.
  • No interest-free balance transfer period.

High rewards for no fee

The Uber Visa Card grants consumers comparatively lucrative ongoing-bonus-category rewards for no annual fee, and the card charges no foreign transaction fees. That’s rare, even in a market where banks are spending more and more on credit rewards to attract consumers.

The card that comes closest to offering a similar level of bonus rewards is the Chase Sapphire Reserve. It earns users an annual $300 travel credit, unlimited triple points on dining and travel, and 1% back on all other purchases. But it charges a hefty $450 annual fee.

If you don’t have an extra $450 in your budget but still want to earn big on dining and travel, the no-fee Uber Visa Card may be the better choice.

Chase Sapphire Reserve altered one cardholder perk in January – the lucrative 100,000-point-bonus signup offer. After less than a year on the market, Chase cut back a 100,000-point Ultimate Rewards bonus after spending $4,000 within three months to just 50,000 points for spending $4,000 in three months.

An Uber spokesperson tells MagnifyMoney that the Uber Visa Card’s rewards are not temporary, and there are no plans afoot to change them.

It’s important to note the Chase Sapphire Reserve does offer other traveler perks like up to $300 in statement credits for travel reimbursements per year, a $100 statement credit for applying for Global Entry or TSA PreCheck, and several travel protection benefits. If you use those perks, it may be worth it to you to pay the beefy annual fee for Sapphire.

4% cash back on dining

The Uber Visa Card awards a whopping 4% unlimited cash back on dining, which includes restaurants, cafes, bars and even takeout like UberEATS. The category’s cashback rate leads the industry, beating the Chase AARP Visa and Costco Anywhere Visa, which award only 3% cash back on dining.

The Uber Visa Card also beats the Chase Sapphire Reserve’s 3x points on dining, since 4% cash back is equivalent to earning 4 points.

As mentioned, the Uber card awards 4% on takeout, too, and millennial cardholders may enjoy this perk the most. According to a recent Bankrate report, the average millennial dines out or orders in five times a week. The average member of the avocado toast generation spends about $233 on both dine in and take out meals, compared to just $182 a month for older generations. If a cardholder spends a weekly $233 on dining, he or she will earn about $9.32 a week, or $484.64 in cash back annually.

3% cash back on hotel and airfare

Cardholders earn 3% cash back on hotel and airfare purchases made using the Uber Visa Card. Another bonus for millennials: Cash back applies to vacation home rental services, like Airbnb.

According to travel website Hipmunk, nearly three-fourths of millennial travelers have used a vacation rental service like Airbnb while traveling for work, compared to only 38% of Gen-Y and 20% of Boomers. And, about 81% of millennial travelers said they would add extra time to business trip to make some room for leisure.

While Uber’s 3% offer on airfare and hotels is a good offer for the average frequent flyer, consumers can find the same deal with some other no-fee cards, like the AAA Member Rewards Visa, Chase Sapphire Reserve and Costco Anywhere Visa.

Beware: Although it offers the same amount of cash back on travel, the Chase Sapphire Reserve technically beats out the Uber Visa Card when cardholders use their points for travel rewards.

With Uber, 1 point = $0.01, but if users redeem points using the Chase Ultimate Rewards portal 1 point = $.015, so your points go about 50% further with Chase, allowing cardholders to purchase more with the same point value. Put another way: A 50,000-point bonus is really worth $750, instead of $500.

Up to $50 streaming credit bonus

Here’s a perk you won’t find on many rewards cards these days.

If a cardholder spends $5,000 or more in a cardmembership year — the 12 consecutive months following your account’s anniversary date — he or she stands to earn up to $50 for digital streaming purchases. Cardholders can earn the subscription credit each year.

The $50 credit is automatically applied as a statement credit for eligible digital subscription services once the cardholder meets the $5,000 spending threshold. If the cardholder hasn’t made $50 worth of eligible purchases by the time he/she spends $5,000, the result is a statement credit for any new eligible digital subscription services charged to the card up to $50.

Cardholders can track their progress toward the annual spending threshold on BarclaycardUS.com.

Up to $600 worth of mobile phone insurance coverage

When cardholders use their Uber Visa Card to pay for their monthly wireless bill, they receive up to $600 for mobile phone damage or theft for each phone listed on the wireless account. Coverage begins one month after the first bill was charged to the Uber Visa Card.

Depending on the kind of coverage a cardholder currently has through a carrier, those who take advantage of this perk could save a good chunk of money. Those under one of the four major carriers could see savings of $7 to $15 a month for a single device or up to $35 a month to cover up to three devices on one account.

There is a $25 deductible to use the protection. After that is paid, the protection covers up to $600 per claim on up to two claims in a 12-month period. If the phone has to be replaced, the protection awards the suggested retail value of the replacement phone, up to the $600 maximum per claim.

2% cash back on online purchases

The Uber Visa Card pays cardholders 2% cash back on online shopping, purchases made through Uber, video and music streaming services and online services like Instacart and TaskRabbit.

The cool thing about this perk is that cardholders can earn cash back on subscription services like Netflix, Amazon Prime and Spotify. Millennials, the leaders of the cord-cutting movement, will likely benefit by simply “setting and forgetting” their Uber Visa Card to pay for their favorite streaming services.

The 2% cash back on online purchases is good, but the bonus category offer isn’t a leading rate. Consumers who don’t do all their shopping online could benefit more from cashback options that earn double points on all purchases, not just those made online, like the Citi® Double Cash Card, Fidelity® Rewards Visa Signature® Card, or PayPal Cashback Mastercard®.

1% cashback on all other purchases

The Uber Visa Card still rewards spending if you don’t purchase in one of the bonus categories,. The card rewards cardholders 1% back on all other purchases, so it’s a good go-to card for everyday purchases, in addition to bonus-category buys. The 1% offer isn’t very competitive, as there are many existing cards that offer 2% on all purchases, but it ensures cardholders earn at least a little something on everything they buy with the Uber Visa Card..

Part II: Applying for the Uber Visa Card

The Uber Visa Card opens for applications Nov. 2. Interested applicants can apply for the unsecured rewards card online or directly through the Uber phone app and see an approval within minutes. The in-app application may be more of a win for Uber than for millennials, but it makes the application process easy for anyone who already has the Uber app, so may appeal to digital natives, too.

Once the application is approved, the card is made available for use immediately on rides and UberEATS purchases made through the Uber application on the cardholder’s mobile device. Cardholders should receive a physical card in the mail within about a week of approval.

What it takes to qualify

The card charges three tiers of variable interest — 15.99%, 21.74% or 24.74% — calculated based on your creditworthiness at the time of your application.

Borrowers with higher credit scores are more likely to qualify for the lower interest rates, while those with lower scores are likely to qualify for the higher APR. At this time, there is not a way for applicants to check to see if they prequalify.

This card is best for …

The Uber Visa Card is best for the regular Uber customer who dines out often, frequently travels for work, handles most shopping and bill paying online, and pays his/her balance in full each month. The unsecured rewards credit card’s features will likely hold the most appeal for traveling business people and city-dwelling millennials.

Consumers who spend heavily on dining, travel and online purchases would have the best shot at maximizing the Uber Visa Card’s rewards offers. However, the benefit is canceled out if a user carries a balance, thanks to a high interest charge on purchases.

Uber loyalists will benefit most from Uber app-centric perks like the ability to manage and redeem point using the app, and redeem rewards for Uber Credits for Uber rides and UberEATS.

Again, millennials may reap the greatest reward here as they more likely to use ride-hailing services like Uber on a regular basis. According to Pew Research, 7% of all 18- to 29-year-olds use ride-hailing on a daily or weekly basis; that figure rises to 10% among 18- to 29-year-olds living in urban areas.

Depending on how much an Uber app user spends and how often Uber gets used.

Those who aren’t frequent users of Uber’s app may benefit from earning cash back on spending in the card’s bonus categories, but may not realize as much value in the various app-centric perks.

Part III: Redeeming rewards

Cardholders can redeem cash back via Uber credits, gift cards, statement credit or direct deposit. Cardholders can start redeeming cash back for Uber credits once their cashback balance reaches $5, or 500 points.

As long as the account is active and in good standing, points never expire. The cashback balance must reach $25 before users can access it for gift cards, statement credit or direct deposit.

Cardholders are able to redeem rewards through the Uber app, online through the cardholder portal at BarclaycardUS.com, or by calling the customer service number on the back of the card. Cashback redemption is capped daily at $500.

If there are any authorized users on the card, they can earn and redeem points for gift cards and cash back, but not for Uber credits. Each cashback point is equivalent to $0.01 (2,500 points = $25).

How to redeem rewards for Uber credits in the Uber app

Uber lets cardholders directly manage the rewards points they’ve accumulated for Uber credits, gift cards or cash back through the Uber phone application. Users must first add the Uber Visa Card as a payment method.

Once the card is added, the user will tap on the Barclaycard mobile app menu to see a points balance. After tapping the points balance, the user should be prompted to select the amount to be redeemed.

Uber says the redemption should happen within seconds, but may take up to 24 hours to be applied to the account. The process is demonstrated in the GIF below.

Part IV: Pros and cons

What we like about the Uber Visa Card

No annual fee

The Uber Visa Card charges no annual fee, which is unusual for a card this loaded with rewards and bonuses. Cardholders can make the most of this no-fee rewards card if they charge only items that fall into the bonus rewards categories and pay the balance in full each month.

4-3-2-1 rewards perks

Uber’s card awards holders a high return on most purchases. In addition, rewards are unlimited and never expire. The card’s 4-3-2-1 cashback rewards program is appealing.

No foreign transaction fee

Cardholders can swipe to pay for items and services overseas without incurring foreign transaction fees. The lack of this fee combines with the 3% travel rewards bonus category to make the Uber Visa Card a good travel companion. Purchases made overseas also earn cashback rewards.

Apply directly in the Uber app

Uber’s 40 million active riders won’t need to rush to a computer to apply for the Uber Visa Card once the application opens Nov. 2. They can simply apply through Uber’s phone application. Uber claims users will be able to submit an application and see a decision within minutes on the app. Users can also apply for the Uber Visa Card online.

Immediate access

Approved applications are granted access to the funds immediately. Users can add the card as a payment option in the Uber mobile application for immediate use on rides and UberEATS orders.

Immediate access comes in handy if an applicant is in need of the funds ASAP. But it’s unclear if cardholders will be able to use the card immediately on purchases outside the Uber app, too.

Exclusive access to events and offers

Uber Visa Card users will get exclusive invites to events and offers in select U.S. cities. Uber app users may already be familiar with this perk if they have checked out Uber’s Visa Locals Offers. Cardholders earn Uber credit when they visit participating stores and restaurants if they pay with a Visa card (like the Uber Visa Card). Uber’s banded credit card is a Visa, so cardholders can earn rewards — like 10% Uber rewards if you shop at Whole Foods — plus the regular purchase rewards if they use the Uber Visa Card at checkout.

What to watch out for with the Uber Visa Card

$500 daily redemption limit

Cardholders can only redeem up to $500 worth of points per day on Uber Credits and cash back for a bank deposit. This may prove problematic if one wants to use points to redeem more than $500 in cash back rewards via bank deposit. There is no daily limit for cash back as a statement credit or for gift cards.

2% cash back on online purchases

2% cashback on online purchases is good, but the bonus categories offer isn’t a leading rate in itself.

1% cashback on all other purchases

For all other purchases, 1% isn’t a very competitive offer.

No interest-free balance transfer period

The Uber Visa Card is not a good option for anyone looking to consolidate credit card debt using a balance transfer. Unlike with the Citi® Double Cash Card, Uber Visa Card cardholders don’t pay 0% interest on balance transfers for a period. The card charges the greater of $10 or 3% of the transfer amount to transfer a balance, followed by the regular 15.99%, 21.74%, or 24.74% variable APR the cardholder is charged on all other purchases.

Part V: Alternatives to the Uber Visa Card

Consumers who don’t use Uber, don’t dine out often, don’t travel much or don’t make most of their purchases online may not find the Uber Visa Card’s cashback offer very appealing. While they can still earn a flat 1% cash back on all purchases they won’t be able to benefit much from the card’s bonus categories. Using a flat-rate cashback card with a higher reward, or one that offers a high cashback bonus in a category they use more often, may be beneficial to those consumers.

Flat-rate cashback alternatives

A flat-rate cashback card like the leading Citi® Double Cash Card and Paypal CashBack Mastercard® is a great option for anyone who wants to earn a reward on all purchases without thinking about bonus categories.

Citi® Double Cash Card – 18 month BT offer

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

1% when you buy, 1% when you pay

APR

14.49%-24.49%

Variable

The Citi® Double Cash Card is the second-highest no-fee flat-rate cashback credit card on the market. The card awards a first 1% cash back when you spend, and another 1% cash back when you pay. Cardholders receive the first 1% when they make a purchase and the second 1% when they pay at least the minimum payment due on their billing statement from the period, totalling 2% cashback.

The Citi® Double Cash Card offers an 18-month introductory 0% balance transfer offer, too, so it’s a good choice for those seeking to consolidate debt. Borrowers with good or excellent credit scores may be approved for the Citi® Double Cash Card.

PayPal Cashback Mastercard<sup>®</sup>

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

2%

APR

16.99%-27.99%

Variable

Cardholders with a PayPal Cashback Mastercard® can earn an unlimited, flat 2% cashback on all eligible purchases made using the PayPal Cashback Mastercard® for no annual fee. The card charges slightly higher variable interest rates than the Uber Visa Card — 16.99%, 24.99% or 27.99% — based on creditworthiness. Borrowers with fair, good or excellent credit scores may qualify for the PayPal Cashback Mastercard®

Similar to the Uber Visa Card, those approved for the PayPal Cashback Mastercard® can use the card immediately to pay for purchases through PayPal’s online and mobile applications. Cash back can be redeemed to the cardholder’s PayPal balance. From there it can be sent to the user’s bank account or used to send money to peers or make purchases via PayPal.

Fidelity® Rewards Visa Signature® Card

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

2% on all spend

APR

14.99%

Variable

The Fidelity® Rewards Visa Signature® card earns cardholders 2% cash back on all purchases with no annual fee. The card is best for existing Fidelity customers, since the cashback earned has to be deposited into a Fidelity account.

Only borrowers with excellent credit should apply for this card. Fidelity also bases its credit limits on the total amount of assets it is managing on a consumer’s behalf, so those approved may still be disappointed in the limit they receive if they don’t have much money with Fidelity already.

Bonus category cashback alternatives

Uber doesn’t offer the best cashback rate on airfare and travel. In addition, the bonus categories the Uber Visa Card offers may not appeal to everyone hoping to earn cash back on the purchases they make most.

Best for airfare rewards:

PenFed Premium Travel Rewards American Express® Card

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

5x points on airfare, 1x on everything else

APR

9.74%-17.99%

Variable

Cardholders earn an unlimited five points per dollar spent on airline purchases when they pay with the PenFed Premium Travel Rewards American Express® card. While the points translate to 5% cash back earned, each point is only worth 0.8 cents, so the reward is actually 4.25% when redeemed for airfare. Regardless, it’s still higher than the 3% a cardholder would ean with the Uber Visa Card.

PenFed Premium cardholders also earn a sign-on bonus of 20,000 bonus points after they spend $2,500 within three months of opening the account. The card does not charge an annual fee or foreign transaction fees. If you travel often and want to earn more than the Uber Visa Card is offering, the PenFed Premium Travel Rewards American Express® card is a solid alternative.

Best for supermarkets and fuel:

Blue Cash Everyday® Card from American Express

Annual fee

$0 For First Year

$0 Ongoing

Cashback Rate

up to 3%

APR

13.99%-24.99%

Variable

The Blue Cash Everyday® Card is a good alternative for consumers who spend more money on grocery than dining and more running around IRL on gas than making online purchases. The card offers cardholders 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%) with no annual fee. In addition to a high cashback rate on groceries, cardholders earn 2% at U.S. gas stations and select U.S. department stores, and 1% on other purchases. The card also awards new cardholders a $150 statement credit after spending $1,000 in the first three months following opening of an account.

The post Uber Visa Card Review: Uber’s First Credit Card Offers a Lot for Millennials to Love appeared first on MagnifyMoney.

What Happens When You Miss a Credit Card Payment

iStock

Your phone rings — and rings, and rings some more. You know who’s calling. You know what the caller wants, too, but you can’t afford to give the money you owe on your credit cards. So, you let the debt collector leave a voicemail you have no intention of returning.

That’s the wrong way to deal with delinquent credit card debt, says Michaela Harper, debt counselor and director of the Community Education for Credit Advisors Foundation in Omaha, Neb.

“Don’t be afraid to talk to your creditor,” says Harper. “Avoiding them makes the problem worse because it sends it onto the next division” and brings your debt closer to being charged-off, which Harper says consumers with past-due debt should do their best to avoid. (More on that later.)

Credit card debts — or most debts for that matter — become delinquent the moment you miss a first payment. The events that follow the missed payment depend on how long the past-due debt goes unpaid. It begins with friendly reminder calls from the bank to pay your credit card bill, and can culminate in losing up to 25 percent of your annual income to wage garnishment.

The portion of consumers missing credit card payments has been on the rise since the lowest levels of delinquent credit card debt ever recorded were reached two years ago. About 2.47 percent of credit card loans made by commercial banks were delinquent in the second quarter of 2017, according to Aug. 23 figures from the Federal Reserve Economic Database.

Below is a timeline chronicling what happens when you miss a credit card payment, as well as tips from debt management experts on what you can do to mitigate the situation at each point. (You can jump to a specific time period by clicking on the milestones below.)

Zero to 30 days past due: Missed a payment

After you miss your first payment, your debt is delinquent and the clock starts ticking. Your bank should begin to contact you to remind you to make a payment. You are also likely to incur a late fee.

The first 30 days will sound more like courtesy calls, says Randy Williams, president and CEO of A Debt Coach. In reality, the bank is trying to verify your address and personal information to update the system in case your debt becomes more delinquent. (Williams used to work as a bill collector before switching over to debt consulting.)

What you can do

At this point, the bank’s agents may be more willing to provide customer service, so you can ask for an extension or create a payment arrangement to address the past-due debt before the missed payment begins to impact your credit report, which can be as early as 30 days past due. You may also try your luck at asking if the bank could waive any late fees already incurred, although the creditor is not obligated to extend this courtesy.

There’s only so much leeway a bank will give you, says Gordon Oliver, a certified debt management professional at Cambridge Credit Counseling. If you’ve asked for a late payment or interest charge to be waived in the past, you won’t have much leverage.

“There will be different reasons why a creditor may not extend those benefits at the time, but usually those terms are for borrowers who are in better standing,” Oliver adds.

30 to 90 days past due: Collection calls begin

Over the 30- to 60-day delinquency period, the bank will attempt to reach you to collect the past-due amount on your credit card bill.

“This is when they are trying to figure out what’s wrong. They are trying to collect the money,” says Williams.

“At this point it’s starting to affect your credit,” says Williams. He says the robo-collection calls may come as often as every 15 minutes. Borrowers with higher credit scores are likely to see a bigger drop than borrowers with lower scores. According to FICO data, for example, a 30-day late payment could bring a 680 credit score down 10 to 30 points and a 780 score down 25 to 45 points.

In addition to seeing your credit score drop, you will be charged late fees on the past-due account. After you have owed debt for two payment cycles, the CARD Act allows creditors to flag you in their system as a “high-risk” borrower, which means the interest you currently pay will rise to whatever the bank charges for customers at a high-risk status. That number varies from bank to bank but in some cases can get as high as 29.99 percent. The rate will stay that high at least until you have made six consecutive on-time payments, at which point the bank is required by law to reset the rate.

However, “the law doesn’t say they have to do it on their own,” says Harper. So, you will likely need to request a reset. You can find the APR charged to high-risk borrowers in your credit card terms.

What you can do

Harper says if you respond at this point, the bank may ask you to negotiate a payment arrangement.

“Never make a promise to pay that you can’t keep just to get someone off the phone,” says Harper. “If you are silent, you agree to the payment.”

Missing promised payments also gives the bank more leverage if the bill eventually goes to court, says Harper. “If they walk into court and they can point to all of the promised payments, it undermines your credibility.”

Harper advises debtors to be very clear if they cannot meet the bank’s proposed payment arrangements. You need to specifically tell them you cannot make the payments. If possible, take a look at your budget. If you find you are able to send them a small amount every month, tell them.

“That’s a valuable thing because it goes back to when the account charges off. You can slow down your progression toward charge-off by making the partial payments,” says Harper.

A charge-off happens when a creditor believes there is no chance of collecting your past-due debt, so the debt’s considered a loss. The debt gets written off the creditor’s financial statements as a bad debt and sold or transferred to a third-party collection agency or a debt buyer.

“If they feel like it’s a tough situation [you] are going through they will refer [you] to a credit counselor” around the 60- to 90-day mark, says Williams. Again, that benefit may not be extended to all consumers facing financial hardship.

90 to 120 days past due: Bank requests balance in full

After your bill is 90 days overdue, the bank will turn collection over to its internal recovery department to engage in more aggressive collection attempts. Williams says the bank will now be calling for the balance in full, not only the past-due amount.

The bank’s collectors will continue to call, but they may also send you multiple letters every day, or may attempt to reach you via social media, emails or emergency contacts.

Harper says the account may stay with the bank’s internal collections for another 90 days (180 days past due), but it’s important to note that at the 120-day past-due mark, your debt is at risk of getting charged off and being sold to a third-party collection agency.

That’s because the CARD Act states the past-due amount needs to be the equivalent of six months’ worth of your credit card’s minimum payment in order for the debt to be charged off. Including late fees and the amount added in higher interest payments, consumers may reach that figure in as little as four calendar months.

What you can do

If you can’t give them the entire past-due amount or balance in full, take a serious look at your budget. See if there is any room to make even a small payment. If you can find a few dollars, you may be able to enter a repayment plan with the bank, which will at least pause the collection calls. Don’t forget to leverage the collector’s insider knowledge. Explain your situation and ask if you can negotiate a solution with the bank.

“You want to pay off the debt, they want to pay off the debt. They may have solutions they can offer you that you don’t know about,” says Harper.

Once you’ve got an active repayment plan in place, the bank will pull you out of the collection list, Harper says.

120 to 150 days past due: Hardcore collection attempts

Watch your credit report carefully after your account becomes 120 days past due, as it may be charged off at any point. At this point, the collectors will continue to try every channel available to them to get in touch with you and collect on the debt. The attempts may get closer together and collectors may try more aggressive tactics to scare you into paying up.

“One hundred and twenty to 150 days, it is hardcore. Now they are going to offer you a settlement. They will do whatever they want to try and get to you to pay the debt off. It’s basically motivation to get you to pay now,” says Williams.

Debt collectors at this point may also take time to remind you of your rights under the CARD Act and Fair Debt Collection Practices Act as well as their right to collect on the past-due debt.

The bank’s collectors may not directly say they will proceed with legal action or wage garnishment if they do not intend to, as that is illegal under the FDCPA, but they may remind you of those possibilities if you do not pay and emphasize the bank’s right to collect on the debt owed to them, Williams says.

Williams adds, “They never say they are going to sue you; they say, ‘We have the right to protect our asset.’”

What you can do

Williams says at this point the debtor essentially has three options. Bring the account current by paying the entire past-due amount, arrange a debt settlement plan with the bank or try going to a credit counselor to create a debt consolidation plan.

“Near 120 days past due, they need to get some form of help to remedy the account before it goes to a charge off,” says Oliver, who adds that the timing the charge off will be difficult to predict.

For those who may be behind on several bills, Oliver also recommends getting some form of financial counseling to create a plan that addresses all your financial issues.

150 to 180 days past due: Last chance

At 150 days, collections efforts will remain aggressive and may even increase in frequency as the bank is now concerned about losing the debt to a charge-off.

Once your credit card payment is 150 days past due, you may start to hear the bank’s agents’ tactics shift as they may make a last-ditch effort to recover the debt, according to Williams.

What you can do

You will still have the options to pay the balance in full or reach a settlement with the bank, but you may have an additional option: Re-age your debt.

When your account is past due and you enter a re-age program, the late payments and collection activity are removed from your account. As a result, “your credit score may improve by 10 to 15 points if not growing every month from there,” according to Williams.

You will generally be asked to make at least three on-time payments on the debt before your account is re-aged. For example, the bank could ask you to pay $100 each month for three months before bringing your account back up to a current standing, but the bank will add the interest and fees you’ve already incurred to the total amount you owe. After the account is re-aged, you’ll go back to making minimum payments on the total amount of debt outstanding. Re-aging the account may also remove the “high-risk” stain from the account so your interest rate drops to to whatever it was before.

Williams says a re-age can be seen as a win-win for both parties: You are able to catch up on your delinquent debt and — in some cases — have its impact removed from your credit report, and the bank is able to recover the interest and fees that have accumulated since your account became delinquent.

Of course, the credit card company doesn’t have to allow you to re-age the debt and may not offer the option to you, but there is a possibility it will do so if you ask. Keep in mind you are only allowed to re-age an account once in 12 months and twice within five years, per federal policy, and re-aging is only an option on accounts that have been open for nine months or longer. Credit card issuers are allowed to set more strict re-aging rules for its accounts, as well.

After 180 days: Charged off to a third party

When you are about six months past due, it is extremely likely the bank will charge off your account and sell the debt to a third-party collection agency. If the bank does not charge off your account, it may take the matter to court.

If it goes to collection, third-party debt collectors may employ some of the same tactics the bank’s collectors did. Most collection agencies will push hard for the first 90 days, then at the end of that point in time they may decide to sue you, Harper says. Or they may sell your debt to another collections agency.

The third-party collectors will attempt to contact you using every channel available to them for the next 90 days or so, before they must decide to either charge off the debt or sue you. The collectors will likely demand you pay the full balance or ask you pay the balance in thirds, says Harper. If they can’t get a hold of you or get you to arrange a payment plan in that time, they may decide to turn it over to an attorney.

What you can do

You should try the same tactics that you would have used with the bank’s internal collections agency with the third-party agency, negotiating the price down and reaching a settlement with the third-party collector. If you don’t respond to the collection requests, you may be sued.

You may not be sued for some time. Companies can only sue you for unpaid debts within a certain period of time, called a statute of limitations — anywhere within three to 10 years, according to your state’s law. Your debt may be sold and resold several times before that happens. Check with the office of consumer protection at your state’s attorney general to find out what the rules are in your state.

If you are served with a lawsuit, you should check the letterhead to make sure the attorney or company filing the suit on behalf of the collections agency is licensed to practice law in your jurisdiction, says Harper, as you cannot legally be sued for credit card debt by an attorney outside your jurisdiction.

You should also be sure to respond to the lawsuit. If you don’t, you’ll likely lose. The court can automatically side with the lender if you don’t show up in court, also known as a default judgment. That may result in getting your wages or federal benefits garnished to pay the debt, not to mention the credit damage a judgment causes. Federal law states a creditor can garnish no more than 25 percent of your disposable income, or the amount that your income exceeds 30 times the federal minimum wage, whichever is less.

If you can’t afford to settle

If, given your current financial situation, the debt is unmanageable for you and you are not able to settle the account, you may want to consider bankruptcy. But you will have to file before a judgment is entered against you in court, which may be tricky to time, Harper says.

Given the difficulty in timing when the creditor will take your account to suit, you shouldn’t wait if you think bankruptcy is an option for you. Read here for more information on how and when to file for bankruptcy.

The post What Happens When You Miss a Credit Card Payment appeared first on MagnifyMoney.

Is Your 401(K) Tax Break on the Chopping Block?

Republican lawmakers are under pressure to put out new tax reform legislation by year’s end, but to make that happen, they need ways to pay for the hefty tax cuts proposed so far.

A proposal from President Trump calls for tax cuts for taxpayers at every income level, a reduction in the corporate income tax to 20 percent from 35 percent, and the end of the estate and alternative minimum taxes, among other things.

So far, implemented as is, the plan would add $1.5 trillion to the federal deficit, according to the Tax Policy Center. The deficit is the amount by which total government spending exceeds tax revenues for the fiscal year.

Such calculations have Republicans scrambling to figure out a way to achieve tax reform without adding to the deficit.

This week, Republicans lawmakers were rumored to be considering offsetting the cost of their tax cuts by reducing the 401(k) contribution limit for workers. (Trump swiftly denounced that plan on Twitter.)

At the moment, workers under 50 are able to contribute up to $18,000 in pre-tax dollars each year to a 401(k) retirement account. The amount is tax-deductible and reduces the overall amount the worker pays in annual federal income tax. The tax-deductible contribution limits are set to rise to $18,500 and $24,500, respectively, in 2018.

The Wall Street Journal reports Republican house leaders were considering a plan that would cut annual tax-deductible contribution limits on 401(k)s and, possibly, IRAs, down to just $2,400.

Workers would need to place any amount they’d like to save above that limit in a Roth IRA, which would be a boon to the federal government. Contributions made to Roth accounts are taxed immediately, not when the benefit is drawn out as with 401(k)s, so it would be one way to drive up tax revenue in the face of tax cuts.

On Oct. 23, Trump tweeted, “There will be NO change to your 401(k).”


Started by the IRS in 1978, retirement savings plans like the 401(k) and Individual Retirement Account (IRA) have been financial staples among middle-class families. And as pension plans have been phased out over time, defined contribution plans like the 401(k) plan have taken their place as a principal retirement vehicle for those families.

The proposed limit could prove costly to many Americans, as they are likely contributing above $2,400 annually to a 401(k) retirement account. According to Fidelity Investments, the average 12-month savings rate for 401(k) accounts in 2016 reached a record high of $10,200.

The notion of cutting back the amount workers can contribute, tax-free, to retirement accounts is understandably unsettling to many workers and members of the asset management community. That’s in part because, as Trump has noted on Twitter, 401(k) contributions allow many middle-class Americans a tax break.

Here’s how it works. For this example, we based our estimates on 2016 income tax brackets.

Let’s say Robin is  head of her household and drew a base salary of about $55,000 in 2016, placing her in the 25% tax bracket. She deferred 15% of her pre-tax income, or $8,250, to her 401(k) retirement account. Her $8,250 contribution reduces her annual taxable income to $46,750.

That newly calculated income not only dropped Robin to the 15% tax bracket, but she also saved nearly $1,700 in federal income taxes.

The administration’s tax plan reduces the seven existing tax brackets to just three — 12,  25 and 35 percent (with a possible fourth tax bracket for the highest-earning individuals). But the plan did not specify income ranges. As of this writing, it is unclear which incomes would fall into which bracket.

For the purposes of this example, let’s assume that Robin’s income would still land her in the 25 percent income tax bracket.

With a  401(k) contribution limit reduced to $2,400, she would have been taxed on $52,600 at a 25 percent tax rate. That would have increased the amount she paid in federal income tax to $7,297.50 from $6,350 in 2016.

Moving forward

It’s unclear if the new tax bill will actually include a reduction in 401(k) contribution limits. But one thing that is clear is this: If the tax-reform measures are to pass, funding for more than $1.5 trillion in lost revenue to tax cuts over the next decade has to come from somewhere.

The plan proposes to reduce the tax burden on middle-class Americans by doubling the standard deduction Americans can make when filing their federal income taxes to $12,000 for individuals and $24,000 for married couples filing jointly. However, it would eliminate the option to itemize deductions instead of using the standard deduction. The proposed plan would also increase the child tax credit — currently $1,000 — by an unspecified amount and create a $500 tax credit for nonchild dependents, like elderly family members. These and other tax cuts may translate to big losses in federal tax revenue.

An independent analysis by the Tax Policy Center, a nonpartisan think tank, claims the new tax plan would reduce federal revenues by $6.2 trillion over the first decade, while federal debt could rise by at least $7 trillion in the same period.

The post Is Your 401(K) Tax Break on the Chopping Block? appeared first on MagnifyMoney.

New Trump Rules May Mean More Expensive Birth Control for Millions of Women

The Trump administration recently issued two new rules that may increase the cost of contraception for millions of American women. The issued rules allow more companies to opt out of an Obama-era mandate that companies offer insurance providing birth control for women. Now, any company can be exempted from the mandate on moral or religious grounds.

The rule went into effect on Oct. 6.

Previously, only religious employers like churches or nonprofit religious groups — like some schools or hospitals able to prove they have religious objections to providing contraception coverage — could opt out of the mandate.

The rules could affect the more than 62 million women who currently have access to no-cost birth control under the Affordable Care Act, according to Planned Parenthood. As of this writing, no appeals process was in place.

Since the health care law, a signature of the Obama White House, went into effect, out-of-pocket spending on prescription drugs has decreased dramatically. The majority of this decline (63%) can be tied to the drop in out-of-pocket expenses on the oral contraceptive pill for women, according to the Kaiser Family Foundation. After the mandate, more women have opted for more expensive, more effective, longer-lasting contraception options they otherwise wouldn’t be able to afford, like intrauterine devices (IUDs).

“It is going to be a significant problem for families around the country,” said Maggie Jo Buchanan, the Southern regional director for Young Invincibles, a nonprofit advocacy group for young adults.  “People will be living on pins and needles just trying to figure out what is covered under their plan.”

How many women could the new regulations affect?

In its announcement of the changes, cast as protections for Americans’ conscience rights,, the Trump administration claimed that most women — specifically, 99.9 percent of the 165 million women in the United States — would not be affected.

Some women’s rights advocates and legal experts have disputed that math.

“The claim that 99.9 percent of women won’t be affected is quite inaccurate,” said Erika Hanson, a women’s law and public policy fellow at the National Women’s Law Center, a nonprofit organization that advocates for women’s rights, as recent research suggests the regulations may affect health care costs for millions of women.

Now that any employer can opt out of coverage, American women on employer-provided health insurance plans are at a higher risk of losing no-cost contraception coverage. Kaiser Family Foundation has reported that roughly  57.5 million women — about 59% of women ages 19 to 64 — received their health coverage from their own or their spouse’s employer in 2015.

“We all agree that the First Amendment and freedom of religion is an important Constitutional protection in this country,” says Hanson. “But that right does not give one the ability to impose their religious beliefs on someone else, especially when someone else is going to be harmed as a result of your religious beliefs.”

At the moment, it’s difficult to determine exactly how many people will be affected by the new regulations. Since the Supreme Court’s 2014 ruling that closely held private companies could seek an exemption on religious grounds, only a few dozen companies have asked for exemptions, POLITICO found last year.

“We are hoping that companies worried about their bottom line will stand behind the birth control benefit and say, ‘We value our employees and are going to continue to provide this coverage,’” Hanson said.

How will I know if I am affected?

Since companies aren’t required to disclose to employees whether they have opted out, many women may not find out they are not longer covered until they get to the pharmacy counter.

“No companies or schools have dropped coverage yet. But also under the rule, we wouldn’t know” if they did, Hanson said. “They don’t have to do anything or tell anyone.”

12 Tips to lower your contraceptive costs

For those who are strapped for cash, losing no-cost contraception coverage may mean losing access to birth control altogether. Research shows that copays as modest as $6 may deter some women from purchasing contraception coverage.

Those affected by the rules will incur the costs of figuring out a way to afford birth control out of pocket.

Getting prescriptions directly from your doctor or OB-GYN may not be the most economical choice.  “If you can’t use your health insurance coverage, it’s typically very expensive to go to your normal primary care physician and get a birth control prescription,” says Hanson.

Here are some other suggestions:

Go to a low-cost clinic

Try going a federally qualified health center for more affordable services. Women can find one nearby through the Health Resources and Services Administration. The program is run by the HRSA, a subset of the Department of Health and Human Services, and offers services based on income, whether you have health insurance or not.

Go generic

Going with the generic brand of the birth control pill could help women save money. Generic brands usually cost less than the name-brand version, but use the same active ingredients. Women should ask their doctors about switching, however; some women may experience adverse side effects, or different effects than with the branded version.

Check here for a list of the name-brand contraceptive medications and generic versions.

Coupons can help

If someone is prescribed a more-expensive, name-brand drug, she may find savings through the use of coupons. Search online on websites like HelpRx or EasyDrugCard.com to find a coupon for contraception. Some brands, like Loestrin 24 Fe, offer discount cards. This product’s card — you can apply here —  can help you pay pay as little as $25 per one?month prescription fill or three?month prescription fill. You can also get discounts for Yasmin.

Speak with your doctor

Women may also save money by going to a physician or clinic that offers prescriptions on a sliding, income-based scale. Physicians can sometimes provide more affordable coverage if a patient speaks to them about their financial situation. The doctors may also allow  patients to bypass insurance and pay in cash.

Shop around

Women looking for savings can compare prices at different retailers to save money. Call around to check the price of your prescribed contraception at pharmacies in your area. You may be surprised at how much prices will vary, especially if you aren’t covered by insurance.

Try a long-term solution

Using a longer-term contraception method like the IUD may help women save money on contraception. The IUD may cost more upfront — between no cost and $1,300, according to Planned Parenthood — but women usually save more in the long-run an IUD lasts the longest compared with other methods. For example, the median price of the Mirena IUD, is effective for up to five years and is $1,111, according to the doctor-database site Amino. That would put the monthly cost over that time at about $18.52. Meanwhile, the birth control pill costs uninsured women up to $50 per month.

Source: Amino

Join a prescription savings club

Both insured and uninsured women may find significant savings by joining a prescription savings club like those offered through large national pharmacy chains like Walgreens, CVS or Rite Aid. Other companies, such as My Prescription Savings Card and Good Neighbor Pharmacy, offer savings programs consumers can use at various locally owned pharmacies or smaller pharmacy chains. There may be an enrollment or annual fee charged for a membership. Good Neighbor, for example, charges a $5 annual enrollment fee.

Use pretax dollars

If a consumer has a Flexible Savings Account or Health Savings Account through an employer, that means an ability to fund the account with pretax dollars and use it to pay for health-related expenses. This is a smart way to stretch funds.

Ask for three months’ worth of the Pill

You may be able to earn a discount if you purchase more of the Pill at once. You may pay the same copay if you ask for a 90-day prescription as opposed to a 30-day supply. This also saves consumers time, as it cuts back the number of trips they will need to make to the pharmacy.

Use the mail

Consumers can also save simply by ordering medication through the mail. If the insurer has a long-term prescription program, women may pay a lower copay if they choose to have a 90-day prescription mailed, as opposed to picking it up at a pharmacy.

Try enrolling in a government program

Several government programs provide free or subsidized contraception for low-income women, including Medicaid, Title X-funded centers and some state-funded programs. Women having a tough time affording contraception coverage should check to see if they qualify for enrollment in these programs, enabling them to receive low-cost or free contraception and other medical services.

Use condoms

If you’re not in a long-term relationship, don’t engage in intercourse with the opposite sex often or don’t need contraception for other medical issues, you may not need to pay for birth control pills or other forms of short-term contraception like the Depo Provera shot. Women in this situation can speak with a primary care physician about getting off the contraception they now use, in favor of condoms to minimize the risk of pregnancy.

The post New Trump Rules May Mean More Expensive Birth Control for Millions of Women appeared first on MagnifyMoney.

The Pumpkin Spice Tax: Retailers Charge More, Shoppers Get Less for Pumpkin-Flavored Products

Cue the pumpkin spice tax rebellion.

A MagnifyMoney analysis of pumpkin spice-flavored items at several grocery stores and coffee shops found that customers often pay a premium for that perennial autumn flavor — in essence, a “pumpkin spice tax” that can be up to 133 percent higher on a per-unit (ounces) basis.

In the study, we compared the prices of the pumpkin spice and standard flavors of more than 200 food and beverage items at a half-dozen Manhattan-area retailers and restaurants in late September. We reviewed items in person at Trader Joe’s, Whole Foods, Fairway, CVS, Starbucks, Pret a Manger, Panera, Dunkin’ Donuts and McDonald’s. We supplemented our findings with a review of products at three online retailers — Walmart.com, Target.com and FreshDirect.com.

Pumpkin spice mania has reached a fever pitch in recent years, as retailers have rushed to incorporate the flavor into just about every item in our pantries — from cookies and cereals to bagels and waffle mixes.

Not only are some retailers charging significant surcharges on pumpkin spice-flavored products, but consumers are often paying more and getting less in return.

Read on for our full analysis. Or skip ahead to:

Retailer Spotlights:

Key Findings:

Pumpkin spice fans often pay more for less. Many retailers don’t just charge more for seasonal items — they give shoppers less product for their money. On FreshDirect.com, for example, a 6.5-oz. Pumpkin Pie Spice version of Land O’Lakes Spreadable Butter sold for $2.99, while the 8-oz. Land O’Lakes Spreadable Butter With Canola Oil sold for about 10 cents less, or $2.89. On a price per ounce basis, the Pumpkin pie spice option sold at a 28 percent premium. We found many more examples of retailers charging more for pumpkin-flavored products but offering less product.

Trader Joe’s was the worst pumpkin spice tax offender. Some retailers are more aggressive with pumpkin spice surcharges than others.. It claimed three of the top 10 highest pumpkin spice tax rates in our study. Among 10 products analyzed at Trader Joe’s, for example, we found an average pumpkin spice tax rate of 62%. By comparison, the average pumpkin spice tax rate at Target.com was just 14% across 20 items.

Coffee drinkers’ highest pumpkin spice premium? Welcome to Starbucks. The highest tax on the seasonal coffee drink was charged by the Pumpkin Spice Latte’s originator, Starbucks. The coffee chain charged $5.25 for its 16-oz. Pumpkin Spice Latte — exactly one dollar more than its 16-oz. Caffe Latte, sold for $4.25, in Manhattan’s Chelsea neighborhood. That’s an effective pumpkin spice tax rate of 23.53%.

McDonald’s, Dunkin’ Donuts and Whole Foods don’t charge a seasonal premium on most items. MagnifyMoney observed no significant pumpkin spice premium on any of the 10 seasonal items we identified at Whole Foods Market. Nor did we observe a premium on pumpkin spice drink options at McDonald’s or Dunkin’ Donuts.

The Top 10 Pumpkin Spice Tax Rates

Across all items reviewed, millennial-centric retailer Trader Joe’s charged the highest premiums on its pumpkin-flavored products. It claimed three of the top 10 highest pumpkin spice tax rates in our study.

The retailer is also one of several in our study that not only charges more for pumpkin-spice products but often offers less product by weight as well. That means shoppers are spending more but getting much less for their money.

Take Trader Joe’s Pumpkin Pancake and Waffle Mix as one example. The national chain charged $1.99 for its 32-ounce Buttermilk Pancake and Waffle Mix and $2.99 for its 21.2-ounce Pumpkin Pancake and Waffle Mix variation — $1 more for a product with 10 fewer ounces.

Based on the sticker price alone, shoppers may think they paid 50% more for the pumpkin spice version. But on a price-per-ounce basis, they paid more than twice the price — an effective pumpkin spice tax rate of 133%.

Trader Joe’s certainly wasn’t the only retailer taking advantage of the pumpkin spice hype.

At first glance, a Target.com shopper might see no difference in the price of Nabisco’s Oreos vs. the pumpkin spice version. As of late September, they had the same sticker price of $2.99. But the pumpkin spice version came with just 10.7 ounces — 3.6 ounces less than the original flavor. On a price per ounce basis, that’s an effective pumpkin spice tax rate of 33%.

See some of the highest-taxed items below. Percentages may be rounded, and list prices are used for comparisons. Per-unit cost is based on per-ounce figures where available, or per unit/count):

Pumpkin Spice Tax

Retailer

Product

Sticker Price

Price Per Oz./Unit

Per Oz./Unit

Sticker Price

1. Trader Joe's

Buttermilk Pancake
and waffle mix — 32 oz.

$1.99

$0.06

133%

50.25%

Pumpkin Pancake and
waffle mix — 21.2 oz.

$2.99

$0.14

2. Trader Joe's

Joe Joe's cookies —
20 oz.

$2.99

$0.15

87%

0.00%

Pumpkin Joe Joe's —
10.5 oz.

$2.99

$0.28

3. Trader Joe's

Joes O's —
15 oz.

$1.99

$0.13

69%

35.18%

Pumpkin O's —
12 oz.

$2.69

$0.22

4. Walmart.com

Twinings of London
Winter Holiday Spiced
Apple Chai, K-Cup
Portion Pack — 12 ct.

$8.11

$0.68

59%

60.17%

Twinings Pumpkin
Spice Chai Tea Keurig
K-Cups — 12 ct.

$12.99

$1.08

5. Target.com

Archer Farms Dark Chocolate Almonds — 13 oz.

$5.99

$0.46

59%

-33.4%

Archer Farms Pumpkin Spice Almonds — 5.5 oz.

$3.99

$0.73

6. Target.com

Krusteaz Honey
Cornbread & Muffin
Mix — 15 oz.

$1.67

$0.11

36.4%

35.9%

Krusteaz Pumpkin
Spice Muffin
Mix — 15 oz.

$2.27

$0.15

7. Target.com

Oreo Original
Chocolate Sandwich
Cookies — 14.3 oz.

$2.99

$0.21

33%

0.00%

Oreo Pumpkin
Spice Creme Sandwich
Cookies — 10.7 oz.

$2.99

$0.28

8. FreshDirect

Land O'Lakes
Spreadable Butter With
Canola Oil — 8 oz.

$2.89

$0.36

28%

3.46%

Land O'Lakes
Spreadable Butter,
Pumpkin Pie
Spice — 6.5 oz.

$2.99

$0.46

9. Walmart.com

Victor Allen's
Coffee Donut Shop
Blend Medium Roast
Single Serve Brew
Cups — 0.35 oz., 12 ct.

$3.25

$0.27

26%

26.8%

Victor Allen's Coffee
Pumpkin Spice Medium
Roast Single Serve Brew
Cups — 0.34 oz., 12 ct.

$4.12

$0.34

10. Walmart.com

Entenmann's Dark
Roast Coffee Single Serve
Cups — 0.35 oz, 10 ct.

$6.99

$0.69

23.2%

21.6%

Entenmann's Coffee
Pumpkin Spice Cups —
10 ct.

$8.50

$0.85

The above items were reviewed in-person at retailers in the Chelsea area of Manhattan on Sept. 22 and with online retailers on Sept. 25-26.

The Pumpkin Spice Latte Tax

Some may notice that the coveted pumpkin spice latte (PSL) — made popular by Starbucks after its debut in fall 2003 and now offered by coffee shops worldwide — typically carries a noticeable mark-up.

Starbucks’ grande-size PSL, for example, is sold at a 23.5% premium above the price of its non-pumpkiny caffe latte counterpart.

Pret a Manger and Panera also charge more for pumpkin lattes, although neither quite as high as Starbucks.

What you ultimately pay for your PSL may simply come down to how you like your coffee. You won’t pay a PSL tax at McDonald’s or Dunkin’ Donuts, but If you prefer Starbucks or Panera, paying the premium may be worth what you get.

Here’s what it will cost you to buy a 16-ounce pumpkin spice latte at some prominent national coffee chains in the Chelsea section of Manhattan.

Coffee Shop

Product

Sticker
Price

Pumpkin Spice
Tax Rate

Starbucks

Caffe Latte
16 oz.

$4.25

23.53%

Pumpkin Spice Latte
16 oz.

$5.25

Pret A Manger

Latte
16 oz.

$3.59

13.93%

Spiced Pumpkin Latte
16 oz.

$4.09

Starbucks

Chai Latte
16 oz.

$4.45

11.24%

Pumpkin Spice Chai Latte
16 oz.

$4.95

Panera Bread

Caffe Latte
16 oz.

$4.09

4.89%

Pumpkin Spice Latte
16 oz.

$4.29

Dunkin’ Donuts

Latte
16 oz.

$2.99

0.00%

Pumpkin Flavored Latte
16 oz.

$2.99

McDonald’s

Latte
16 oz.

$2.59

0.00%

Pumpkin Spice Latte
16 oz.

$2.59

The above items were reviewed in-person at retailers in the Chelsea area of Manhattan on Sept. 22.

Retailer Spotlight: Trader Joe’s

As mentioned above, America’s favorite favorite grocery store after Publix and Wegmans had the highest-taxed seasonal items in our analysis.

Among the highest-taxed items: Trader Joe’s Pumpkin Pancake and Waffle Mix — costing much more per ounce than TJ’s Buttermilk Pancake and Waffle Mix — and Joe Joe’s cookies.

Both the seasonal and nonseasonal Joe Joe’s are priced at $2.99 on the sticker. However, the seasonal Pumpkin Joe Joe’s cost 28 cents per ounce, while the regular Joe Joe’s cost 15 cents an ounce. In this case, customers pay almost double per ounce — something like the same price for half the cookies.

MagnifyMoney reached out to Trader Joe’s for comment but did not receive a response.

See below for a breakdown of some products.

Trader Joe's

Pumpkin Spice Tax

Product

Sticker Price

Price Per Oz./Unit

Per Oz./Unit

Sticker Price

Buttermilk pancake and
waffle mix — 32 oz.

$1.99

$0.06

133%

50.25%

Pumpkin pancake and waffle mix — 21.2 oz.

$2.99

$0.14

Joe Joe's cookies — 20 oz.

$2.99

$0.15

87%

0.00%

Pumpkin Joe Joe's — 10.5 oz.

$2.99

$0.28

Joes O's — 15 oz.

$1.99

$0.13

69%

35.18%

Pumpkin O's — 12 oz.

$2.69

$0.22

Plain bagels — 6 ct.

$2.29

$0.38

10.5%

8.73%

Pumpkin bagels — 6 ct.

$2.49

$0.42

Gluten-free buttermilk
pancake mix — 18 oz.

$3.99

$0.22

9.1%

12.53%

Gluten-free pumpkin
pancake mix — 18.5 oz.

$4.49

$0.24

The above items were reviewed in-person at the Trader Joe’s at 675 6th Ave. in New York City on Sept. 22.

Retailer Spotlight: Target

We found the highest seasonal-item, per-unit “tax” at Target.com on chocolate-covered pumpkin spice almonds.

At first glance, the seasonal almonds look cheaper than the comparable dark chocolate-covered almonds, sold in a larger package. When you look closer, you realize the pumpkin spice almonds are sold for almost 60 percent more per ounce. However, it’s important to note the discrepancy could be due to the difference in packaging.

MagnifyMoney contacted Target for comment but did not receive a response.

See below for a breakdown of the PST applied online at Target.com.

Target.com

Pumpkin Spice Tax

Product

Sticker Price

Price Per Oz./Unit

Per Oz./Unit

Sticker Price

Archer Farms Dark Chocolate Almonds — 13 oz.

$5.99

$0.46

59%

-33.4%

Archer Farms Pumpkin Spice Almonds
— 5.5 oz.

$3.99

$0.73

Krusteaz Honey Cornbread &
Muffin Mix — 15 oz.

$1.67

$0.11

36.4%

35.9%

Krusteaz Pumpkin Spice
Muffin Mix — 15 oz.

$2.27

$0.15

Oreo Original Chocolate
Sandwich Cookies — 14.3 oz.

$2.99

$0.21

33%

0.00%

Oreo Pumpkin Spice Creme
Sandwich Cookies — 10.7 oz.

$2.99

$0.28

International Delight® French
Vanilla Singles Coffee Creamer — 24 ct.

$2.64

$0.11

18.2%

20.8%

International Delight Pumpkin
Spice Coffee Creamer — 24 ct.

$3.19

$0.13

Tazo Organic Tea Latte
Chai Black Tea — 32 fl. oz.

$3.14

$0.10

10%

11.2%

Tazo Chai Pumpkin Spice
Latte Tea Concentrate — 32 fl. oz.

$3.49

$0.11

Keurig Green Mountain Breakfast
Blend Light Roast Coffee — K-Cup Pods — 18 ct.

$10.99

$0.61

9.8%

9.1%

Keurig Green Mountain Coffee
Pumpkin Spice Coffee K-Cups — 18 ct.

$11.99

$0.67

KISSES Halloween Fall Harvest
Milk Chocolates — 11 oz./approx. 69 ct.

$3.59

$0.33

9.1%

0.00%

KISSES Halloween Fall Harvest
Pumpkin Spice — 10 oz./approx. 64 ct.

$3.59

$0.36

Tazo Chai Black Tea — 20 ct.

$3.14

$0.16

6.3%

11.2%

Tazo Chai Pumpkin Spice
Tea — 20 ct.

$3.49

$0.17

Quaker Fruit & Cream Instant
Oatmeal Variety — 8 ct.

$2.59

$0.32

6.25%

5.8%

Quaker Pumpkin Spice Instant
Oatmeal Limited Edition — 8 ct.

$2.74

$0.34

Archer Farms Antioxidant Trail Mix — 9 oz.

$5.99

$0.67

-50.7%

-50.1%

Archer Farms Trail Mix Pumpkin Spice —
9 oz.

$2.99

$0.33

The above items were reviewed online, at Target.com, on Sept. 25-26.

Retailer Spotlight: Walmart

At Walmart.com, the most-taxed item was tea. Specifically: Twinings of London’s Pumpkin Spice Chai Tea Keurig Cups. Compared with the brand’s Winter Holiday Spiced Apple Chai flavor, the pumpkin spice variant costs about 60 percent more for the same number of cups. MagnifyMoney contacted Walmart for comment but did not yet receive a response.

See below for a breakdown of the Pumpkin Spice Tax applied online at Walmart.com.

Walmart.com

Pumpkin Spice Tax

Product

Sticker Price

Price Per Oz./Unit

Per Oz./Unit

Sticker Price

Twinings of London Winter Holiday
Spiced Apple Chai, K-Cup Portion Pack — 12 ct.

$8.11

$0.68

59%

60.17%

Twinings Pumpkin Spice Chai Tea
Keurig K-Cups — 12 ct.

$12.99

$1.08

Victor Allen's Coffee Donut Shop
Blend Medium Roast Single Serve Brew Cups —
0.35 oz., 12 ct.

$3.25

$0.27

26%

26.8%

Victor Allen's Coffee Pumpkin Spice
Medium Roast Single Serve Brew Cups —
0.34 oz., 12 ct.

$4.12

$0.34

Entenmann's Dark Roast Coffee
Single Serve Cups — 0.35 oz., 10 ct.

$6.99

$0.69

23.2%

21.6%

Entenmann's Coffee Pumpkin
Spice Cups — 10 ct./p>

$8.50

$0.85

Coffee-Mate Sweetened Original
Liquid Coffee Creamer — 1.5-liter pump bottle

$24.36

$0.48

18.7%

19%

Coffee-Mate Liquid Creamer, Pumpkin Spice — 1.5-liter pump bottle

$28.98

$0.57

Keurig K-Cups, Green Mountain
Nantucket Blend Coffee — 18 ct.

$10.98

$0.61

8.2%

8.74%

Keurig K-Cups Green Mountain
Pumpkin Spice Coffee — 18 ct.

$11.94

$0.66

Nestle Professional Coffee-Mate
Peppermint Mocha Liquid Coffee Creamer Singles,
Peppermint Mocha Flavor — 0.38 fl. oz. - 50/box

$15.04

$0.30

6.7%

6.3%

Nestle Coffee-Mate Pumpkin Spice
Liquid Coffee Creamer — 50-0.375 fl. oz. tubs

$15.99

$0.32

Oreo Sandwich Cookies — 14.3 oz.

$3.83

$0.27

3.7%

-22.2%

Oreo Sandwich Cookies Pumpkin
Spice — 10.7 oz.

$2.98

$0.28

Pepperidge Farm Milano Milk
Chocolate Cookies — 6 oz. pack

$3.83

$0.64

-14.1%

0.00%

Pepperidge Farm Pumpkin Spice
Milano Cookies — 7 oz.

$3.83

$0.55

Lindt Lindor Hazelnut Milk
Chocolate Truffles — 5.1 oz.

$3.78

$0.74

-16.2%

16.4%

Lindt Lindor Milk Chocolate Truffles
Pumpkin Spice — 5.1 oz.

$3.16

$0.62

Quaker Life Multigrain Cereal,
Vanilla — 18 oz. box

$3.83

$0.21

-19%

-21.7%

Quaker Life Pumpkin Spice
Multigrain Cereal Limited Edition — 18 oz.

$3.00

$0.17

International Delight French Vanilla
Non-Dairy Coffee Creamer Singles — 24 ct. box

$3.28

$0.14

-28.6%

-24.4%

International Delight Pumpkin Pie
Spice Non-Dairy Coffee Creamer Singles — 24 ct. box

$2.48

$0.10

The above items were reviewed online, at Walmart.com, on Sept. 25-26.

The future of pumpkin spice

The latest Nielsen data shows Americans’ taste for all things pumpkin spice is still going strong, but has begun to wane in recent years. Sales of pumpkin-themed consumer goods were up 6.3 percent in 2017, bringing in $414 million vs. $389.5 million in 2016.  But that was a slower rate of growth than the year prior, when sales grew by 10.8%.

Still, that won’t stop retailers from seizing an opportunity to cash in on the trend while it’s still hot, said food industry analyst and editor of Supermarketguru.com, Phil Lempert.

“A lot of that has to do with the time of year that it is packed and the amount of money that it takes to store those products…which is why at times we are going to see higher prices on those products,” he told MagnifyMoney.

Lempert added that companies have to make up the cost of carrying and storing the additional seasonal items in a warehouse.  “You want to get it out there at a fair price but you want to cover your costs otherwise you don’t have a business,” he said.

If you’re determined to get your pumpkin spice kick this year, the longer you wait to buy, the more likely you’ll be able to score a deal. Seasonal items tend to get the steepest price cuts as the season ends and retailers move to clear out their inventory.

The post The Pumpkin Spice Tax: Retailers Charge More, Shoppers Get Less for Pumpkin-Flavored Products appeared first on MagnifyMoney.