What’s the Difference Between Dental Insurance and Dental Discount Plans?

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Some employers offer dental insurance as an optional benefit, separate from health insurance. But those who don’t have this as an employer benefit, or don’t like their employer’s options, may want to find a plan on their own.

Choosing either dental insurance or a dental discount plan can save you big, but there are important differences to consider before deciding which route to choose.

Dental insurance versus dental discount plans

Before jumping into details, here’s a quick overview of the two offerings:

Dental insurance

Individual dental insurance costs more than insurance through an employer. According to the most recent figures from the National Association of Dental Plans, individual plans cost $4-$15 more per month than group plans (those offered through employers) and $20-$35 more for family plans. In 2016, the average DHMO (similar to HMOs for health insurance) premium cost $14.06 per month for employee-only coverage. The average DPPO cost $24.49 per month. Premiums for individual insurance would be higher, based on past research.

DHMOs are generally cheaper than DPPOs, both in premium and in service cost, but only if you go to an in-network provider, according to Guardian Life Insurance. Most DHMO networks are small, limiting your provider options, and you may be required to choose a primary care dentist. DPPO plans have larger networks and allow you to go to any dentist, though they may offer the best discount at in-network providers. DPPOs may have a maximum limit on coverage (often up to $2,000) per adult per year, while DHMOs do not have annual maximums, according to dental insurer Solstice Benefits.

Many dental insurance plans fully cover preventative care, like two cleanings and one set of X-rays per year. Insurers also tend to cover the majority (generally 80 percent) of basic procedure costs about half the cost of major procedures, according to Guardian Life. How much you have to pay will depend on the copay (DHMO) or coinsurance (DPPO) amounts set by your insurance. Your plan may or may not cover orthodontics, so that’s something to consider when shopping around.

Dental discount plans

With a discount plan, you pay a monthly or annual membership fee and will receive a discounted price on services. We looked at several discount plans on the comparison site DentalInsurance.com, and monthly membership fees for an individual range from about $8-$15, though costs vary by location.

Dental discount plan networks may be more limited than insurance networks, and compared with insurance, the out-of-pocket costs are often higher for patients. You can get full coverage of preventive care with a discount plan, but it’s less common than it is with insurance. With discount plans, there are no copays or coinsurance; rather, there are set discounts on specific services. Discounts range from about 20-50 percent, with routine procedures getting the highest discounts.

Based on a review of dental discount plans available online, it’s clear you’ll have to compare multiple plans to get a sense of your potential savings, as costs and coverage vary by provider and location.

Factors to consider when choosing one option over another
At first glance, you may think the only difference between dental insurance and a dental discount plan is the cost and amount of coverage, but there’s more to consider.

When do you need coverage to start?

Some insurance plans may allow you to get a cleaning or X-ray right away, but there are often waiting periods.

“It’s common to see six-month waits for fillings and one year for major services,” says Adam Hyers, owner of Hyers and Associates, an independent life and health insurance agency in Columbus, Ohio. “These waiting periods prevent consumers from abusing the plan” — using the insurance for a procedure and then dropping it right away.

By contrast, dental discount plans don’t have any waiting periods. It may take a few business days for your membership to go through. If you have an immediate (nonemergency) need, you may be able to pay for a dental discount plan and get a discount on the procedure a few days later.

How many options do you want?

An important consideration is how many dentists you can choose from, and if there’s a well-rated in-network dentist nearby. If you already have a dentist you like, check with the office to see if it will accept the insurance or discount plans you’re considering.

Brian Correia is a director of sales and client services for Solstice Benefits, which provides dental insurance and dental discount plans in five states. Correia says that generally, dentists who are just starting out will participate in dental discount plans and insurance networks because they’re trying to grow their customer base. Established dental businesses and chains might only accept insurance plans, although some offer in-house discount plans. Then there are dental practitioners who have a loyal client base.

“They may not take any insurance or discount plans, because people will keep coming to them and pay out of pocket,” says Correia. He adds that from a practitioner’s perspective, it’s easiest and most profitable to receive out-of-pocket payments from clients.

Dental insurance is the next most profitable for dental offices, because the dentist receives your copay or coinsurance and gets reimbursed from the insurance company. However, with a dental discount plan, the dentists only get what you pay — they don’t receive anything from the plan provider. That’s why new dentists, aiming to grow their client base, are often the only ones who accept discount plans and why your options may be limited.

What do the plans really cover?

As with any contract, you should carefully read the fine print before paying for insurance or a discount plan. Otherwise, you might be surprised to find out when you need to pay for a procedure, and how much it’ll cost you.

“With crowns and bridges, you might see a copay of $250 for a crown or bridge with an asterisk next to it,” Correia says. Read the content associated with the asterisk. It may say that laboratory fees — like the cost to get your new tooth molded — aren’t part of that copay and aren’t covered. You could also have to pay a materials fee if you want a more expensive material. And some inexpensive insurance policies may not offer any coverage for high-cost procedures, like a root canal.

Another fine-print point to consider is that your cost can vary depending on the dentist. Even two dental plan or insurance in-network dentists may charge different prices for the same procedure.

If you already have a dentist whom you want to stay with, you may want to call and confirm how different coverage will affect your costs. If you’re looking for a new dentist, create a short list of well-rated or recommended dentists and ask what your net cost will be before buying insurance or a dental plan.

Which option is best for you?

Compared with having no coverage at all, you can save money with either a dental insurance plan or a dental discount plan.

If you already have a dentist whom you like to visit and are looking to save money, your best bet may be to ask which options the dentist accepts and compare the costs for your family’s general needs. When you don’t have a dentist, it can be more difficult to compare all the different insurance and discount plans available.

For those who regularly get cleanings and don’t have a history of dental problems, a dental discount plan could provide adequate coverage for a low monthly fee. Although you may only break even or save a little money on your twice-a-year cleanings and annual X-ray, you’ll have some added security in knowing you can save money on other procedures. However, since the discount plan isn’t likely to cover the entire cost for major work, you may want to have some savings set aside for an emergency.

Buying dental insurance on your own could make both routine visits and emergencies more affordable, and may be the best option if you have a large family. But for individuals and those who aren’t prone to needing expensive dental care, the premiums can be so high, and the annual coverage limits so low, that you won’t always get a benefit.

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Collection Accounts Don’t Always Hurt Your Credit for Seven Years

When you fall behind on a bill, you might get charged a late fee and your late payments could be recorded in your credit reports. If a bill goes unpaid for long enough, your creditor may send or sell your account to a collection agency.

The collection agency will then attempt to collect the balance from you — sometimes aggressively — and often reports its possession of your account to the credit bureaus. A new account with the collection agency’s name will then appear on your credit reports, and this can have a significant negative impact on your credit scores.

You might think that paying off the debt clears everything up, but that isn’t necessarily the case.

Generally, if you pay the amount you owe or settle for a lower payment, the collection account on your reports will be updated and marked paid in full, settled, or something similar. The impact of a collection account on your credit scores diminishes over time, and a paid account could look better to creditors than an unpaid account. But like other derogatory marks, the account can remain on your reports for up to seven years and 180 days since the account first became delinquent (your first late payment with the original creditor).

After an account is removed from your credit report, collection agencies can still continue to attempt to collect payment as long as the account isn’t outside the governing statute of limitations (state laws determine how long a creditor can attempt to collect certain debts).

Even so, removing a collection account could improve your credit scores, making it easier and less expensive to open new loans or lines of credit. Here are a few exceptions to the standard timeline and instances when a collection account won’t affect your credit score.

You’re a New York state resident. For current New York state residents, satisfied judgments and paid collection accounts must be removed five years from the date filed or date of last activity, respectively.

The collection account was for a medical bill that your insurance paid. A settlement between New York Attorney General Eric Schneiderman and the three nationwide credit bureaus — Experian, Equifax, and TransUnion — in March 2015 resulted in new national credit-reporting policies. Now, medical debt can’t be reported to the credit bureaus for 180 days, and medical collection accounts that are being paid, or are paid in full, by an insurance company must be removed from your credit report.

You didn’t have a contractual agreement to pay the debt. Another result of the settlement in New York was that credit reporting agencies can no longer report debts that aren’t a result of a contract or agreement you signed. In other words, if your debt from a parking ticket or library fine gets sent to a collection agency, it won’t be added to your credit reports.

The collection agency agrees to a pay for delete. Also known as pay for removal, a pay-for-delete agreement with a collection agency is an arrangement in which you agree to pay some or all of the amount owed the collection agency and requests the credit bureaus delete the collection account from your reports.

You’ll want to get a written agreement from the collection agency before sending a payment, but this could be difficult because in general a pay-for-delete agreement is considered a little shady. “Right now, the credit reporting standards do not allow for deletion of accurate collections simply because they’re paid,” says credit expert John Ulzheimer, formerly of FICO and Equifax. “That doesn’t mean it doesn’t happen, simply that it’s counter to the standards that debt collectors have been given by the credit reporting industry players.”

It requires the collection agency to stop reporting an account that legitimately existed, which may violate the agreement the collection agency has with one or more of the credit reporting agencies.

Midland Credit Management bought your debt. In October 2016, Midland Credit Management, a subsidiary of Encore Capital Group, one of the largest debt collection agencies in the world, announced a new policy.

If MCM bought your debt and you begin payments within three months, and continue making payments until the account is paid off, the company won’t report the account to the credit bureaus (i.e., it won’t appear on your credit reports).

Additionally, if it’s been more than two years since the date of delinquency and you pay the account in full or settle the account, MCM will request the credit bureaus delete the collection account from your credit reports.

The account isn’t yours. If a collection account is on one of your credit reports and you don’t owe the debt, or it’s a type of collection account that meets one of the above criteria for removal, you may be able to dispute the account. The Fair Credit Reporting Act requires the credit bureaus and data furnishers (such as a collection agency) to correct inaccurate information.

Your lender uses one of the latest credit-score models. You might have paid or settled a collection account and still have to wait for the account to drop off your credit reports. However, if your lender is using the latest base FICO Score, FICO 9, or the VantageScore 3 scoring model, paid or settled collection accounts won’t affect your credit score. FICO Score 8 and 9 don’t consider collection accounts if your original balance was under $100.

However, lenders may use older credit-scoring models, which means a collection account could affect your score for as long as it’s on your credit reports and regardless of the original debt.

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How to Run a Financial Background Check on Yourself

Imagine getting turned down for a job or an apartment rental and having no idea why. You call up the lender or landlord, and they tell you the worst: you failed their credit background check. You’re dumbfounded. You’ve never missed a bill payment and as far as you know, your credit report should be squeaky clean. You immediately request a free copy of your credit report, only to find out there are all sorts of errors — including missed payments on debts you never borrowed and the names of collection agencies you’ve never heard of.

Unfortunately, this scenario isn’t so far-fetched. In 2012, a study from the Federal Trade Commission found that about one in five people had an error on at least one of their consumer credit reports. Sometimes the errors are minor and can be disputed easily. Other cases are much more complicated. In criminal cases of identity theft — if a person has been using your identity to get medical treatment on your tab, for example — you could find yourself facing legal charges on their behalf.

It’s practically impossible to prevent these types of mistakes from happening. To try to stay ahead of errors and potential fraud, it’s good to know how to run your own financial background check. And we’re not just talking about checking your credit reports. There are several important consumer reports that many people may not realize exist — from your medical history report and insurance records to your bank history and tenant records.

Banks, employers, landlords, insurance companies, lenders, utility companies, and other businesses purchase consumer reports to screen applicants. The information in your reports could impact their decision to offer you a loan, employment, or other type of contract. It’s also used to determine the terms of the arrangement, such as the interest rate on a loan or security deposit on a rental.

If you’re worried something on your consumer reports might blow your chances of qualifying for a job, a loan, or even housing, it is possible to check your credit and consumer reports before sending in an application. Catch them early enough and you have you a chance to dispute any mistakes.

Who Can Check Your Consumer Reports?

The Consumer Financial Protection Bureau maintains a list of several dozen consumer reporting agencies along with their contact information. You may recognize the three largest consumer reporting companies, Experian, Equifax, and TransUnion. But there are also specialty agencies that collect, organize, and sell specific types of information about you, such as your history of prescription drug purchases.

While you can always request a copy of your own reports, consumer reporting agencies can only send a copy to another individual or organization under certain circumstance. Your written permission or a court order, along with a valid reason for needing a copy of the report, could satisfy that requirement.

Generally, you’ll be able to request one free copy of each of your consumer reports at least once every 12 months. You also may be entitled to an additional free copy of a report if:

  •  The information within the report is used to make an adverse action against you, such as denying your application or raising your rate. To get a free report due to an adverse action, you must make the request within 60 days of receiving the notice.
  • You place a fraud alert on your credit file after someone stole your identity.
  • You’re unemployed and will look for work in the next 60 days.
  • You’re on public assistance.

When you don’t qualify for a free report, by law consumer reporting companies can only charge a maximum $12 per report that you request.

While you may be able to request a free or inexpensive copy of your consumer reports from a variety of agencies, the process could be time consuming. Although it’ll cost more, it could be worth your time to pay for a background check that includes information from multiple sources.

To conduct a DIY financial background check on yourself, we’ve listed several types of consumer reports you can check and how to go about checking.

Keep in mind, you might not always have a report to review. For example, if you’ve never had a credit line or loan, you might not have a consumer credit report. Or, if you’ve never filed an insurance claim, you might not have one of the specialty insurance reports.

You also might not have a report if there isn’t any recent activity, as information generally drops off reports after seven years.

Credit Reports

You can request a free copy of your credit report from a bureau once every 12 months on AnnualCreditReport.com. There are also companies that give you free access to your Experian, Equifax, or TransUnion reports throughout the year, as well as several paid options that give you access to your reports from all three bureaus.

Your credit reports contain several sections, including identifying information, a record of your payments on credit accounts, credit inquiries, and public records or collections information. Experian, Equifax, and TransUnion are the three largest nationwide credit bureaus, and your credit report from each bureau should be similar, but not necessarily the same.

Checking your credit reports is an important first step because the data on the reports could be used by lenders, landlords, utilities, insurance companies, and employers. Negative marks on your report could lead to you lose an apartment or job opportunity, or result in worse loan terms or higher insurance premiums. The information on your credit reports is also what determines your credit score, which is used for many similar purposes.

Credit reports contain positive information, such as on-time payments, as well as derogatory marks, including past bankruptcies, late payments, and liens. If you find incorrect information on one of your reports, you can file a dispute online or by mail.

Your credit report won’t necessarily come with a credit score, but there are free and paid ways to get a copy of one, or more, of your credit scores.

Check and Bank Account Reports

If you’re having trouble opening a bank account or getting a merchant to accept a check, look for errors or negative information in reports from the following companies.

ChexSystems keeps a database on consumers’ activity with checking and savings accounts. Many banks will pull your report and consider the information when reviewing your application for a new account. Unlike consumer credit reports, your ChexSystems report won’t have positive information. Instead, they only show negative marks, such bounced checks or unpaid fees.

You can request a free copy of your report online, by mail, or by fax, and file disputes online. ChexSystems also scores people based on a 100 to 899 scale based on the information within their report, and you can request a free copy of your score by mail or by fax.

There are also several companies that track consumers’ history with checks and help merchants and payment processors decide whether or not to accept someone’s check. You can request a free copy of your reports from Certegy Check Services, TeleCheck, and Early Warning Services.

Alternative Lending Reports

Some lenders don’t report your history of payments, or lack of payments, to the three nationwide credit bureaus. However, several smaller consumer credit reporting agencies, such as Clarity Services and FactorTrust, collect this “alternative” credit data. Often, the information comes from subprime or alternative lenders, such as payday lenders, rent-to-own retailers, subprime auto lenders, and check-cashing services.

MicroBilt, and its subsidiary PRBC, as well as CoreLogic Teletrack also compile credit reports using alternative lending data and use the information to create consumer credit scores. You can request a copy of your reports from CoreLogic and MicroBilt.

Insurance Reports

Insurance reports could show the types of insurance coverage you have, your claim history, and the resulting losses from a claim. Your report might have information on your driving record or your personal property insurance claims, and that data could impact your ability to get coverage and your premiums.

LexisNexis Risk Solutions offers two C.L.U.E. reports that you can order for free, one for personal property and a second for auto insurance. Insurance Information Exchange also collect information on people’s driving record. However, you can only request a free copy of your report after an adverse action has been taken against you due to information within the report.

Medical History Reports

Life, health, disability, long-term care, and other health-related insurance companies may use specialty medical reports to screen applicants.

MIB, Inc. collects information related to medical conditions and hazardous work environments, with your permission. Milliman IntelliScript creates reports on people’s prescription drug purchases.

Employment Screening Reports

Some companies pull job applicants’ credit reports, but others use more thorough background checks to screen applicants. The reports could have information about your criminal record, driving record, drug or alcohol test results, workers’ compensation claims, and volunteer activity. They could also be used to verify your education, professional accreditations, and previous salaries.

Employers aren’t allowed to pull your consumer credit report without your written permission. When a company requests a consumer report for employment-screening purposes, it won’t receive a credit score with the report.

The Work Number, Sterling Talent Solutions, Pre Employ, HireRight, GIS, and First Advantage all offer employment screening reports and services. You can request a free copy of your report, if it exists, from each company. Knowing what the hiring manager will or won’t see could give you extra time to prepare an explanation of the potentially negative information they find.

Tenant Screening Reports

With your permission, some landlords will look over a copy of your consumer credit report and check it for past late payments, bankruptcies, or other indications that you’ll have trouble paying rent.

Others use a more comprehensive tenant screening service and receive a report that could detail whether or not a person has a criminal record, is on a sex-offender or terrorist list, or has been evicted. Some tenant screening reports also have a record of the person’s rent payments and include a copy of one of their consumer credit reports.

You could request a copy of your reports, such as RealPage, Inc.’s LeasingDesk report or Experian’s RentBureau report, to check it for incorrect information before submitting rental applications.

Additional Reports

There are a variety of other consumer reports you can request and review for errors. For example, the CoreLogic Credco consumer report contains information related to properties you own and could be used by mortgage lenders or brokers. (The same company’s Teletrack report is mentioned above as an alternative lending report.) LexisNexis collects and compiles information on individuals from a variety of proprietary sources and public records.

There’s also SageStream, whose consumer reports are used by mobile phone providers, utilities, and other lenders. The National Consumer Telecom and Utilities Exchange collects information and sells reports about consumers’ telecom and utility accounts and payment history. If you’ve ever had to show a photo identification to make a return at a store, The Retail Equation could add that data point to your profile, and if they suspect fraudulent activity, you might be blacklisted from making returns to some retailers in the future.

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How BioCatch Uses Behavioral Biometrics to Help Keep Cyber Criminals at Bay

 

There’s a pressing need for innovative cyber security systems. Analysis from Juniper Research found the rise of professional cyber criminals could result in more successful attacks in the future. The firm estimates that data breaches could cost businesses over $2.1 trillion by 2019.

Founded in 2011 by former Israel Defense Forces intelligence officer Avi Turgeman and cyber security expert Uri Rivner, BioCatch is one example of innovation. The company offers a variety of user authentication and fraud prevention services to businesses based on its use of behavioral biometrics. The company has a portfolio of 34 patents, seven of which have been granted, raised $1 million in seed funding in September 2013, and brought in another $10 million in a series A round in 2014.

What is behavioral authentication?

BioCatch offers cloud-based behavioral authentication services for mobile and web applications. Using behavioral biometric data is one of the cutting-edge ways companies are authenticating users, and it’s potentially one of the best ways to keep your system secure.

Greg Hluska, a web developer and self-described hacker, explains traditional authentication methods differ from behavioral authentication in one key way. Typical authentication methods rely on something the user knows, like a password or passcode. Newer two-factor authentication methods rely on something the user knows and something they have, such as a password and a code that’s sent to their phone or an email account.

Behavioral authentication, on the other hand, changes things up by adding a verification layer based on how a user acts rather than what they know or have.

When companies like BioCatch try to track behaviors of people as they use mobile devices, they typically look at three different types of activity, explains Jason Sinchak, co-founder and CTO of mobile security company Sentegrity.

 

  • User interaction: How users touch the screen and type on the keyboard can be used to identify them or detect fraud.
  • Environment: Input from environmental sensors on the device, such as GPS, time, and Wi-Fi connectivity.
  • Device movement: How a user holds a device and activity associated with the device prior to an authentication attempt, such as running or walking.

Similar tests are implemented for computer-based systems. For example, if someone steals your information and logs in to your account, a behavioral authentication system might be able to detect the potential fraud based on typing patterns or how the cursor moves.

How does BioCatch’s behavioral authentication work?

BioCatch isn’t the only company in the behavioral biometric and authentication space, but it is one of the industry leaders. The company currently has clients in the banking and e-commerce space in North America, Latin America, and Europe and analyzes over a billion transactions each month.

Hluska says he’s familiar with BioCatch primarily because of the co-founder Turgeman’s previous service in Unit 8200. Unit 8200 is a decades-old intelligence unit within the Israeli Intelligence Corps. “They’re extremely hardcore,” Turgeman says. “It’s like the Jedi Academy of the InfoSec world.”

According to its website, BioCatch uses more than 500 parameters to create unique user profiles. Once you log in to an account, such as your online bank account, the software starts to build a “signature” for you based on how you interact with the site, the device you use, and other identifying information. In the future, when someone tries to log in to your account, their actions can be compared to your normal usage to help detect fraudulent activity.

To build and strengthen its profile, BioCatch creates “Invisible Cognitive Challenges” (ICC) for users to complete. They’re invisible because the user might not even realize they’re taking place. For example, on a mobile device the user might be prompted to input a date, and BioCatch could detect how quickly the person spins each wheel, how they stop, and how they handle corrections if they spin a wheel too quickly. On a computer, ICC could make a user’s cursor disappear after they complete a task and detect how the user goes about “searching” for the cursor.

Even without a user’s profile, BioCatch can help detect and prevent cyber crime by matching a user’s actions with known indicators. For example, cyber criminals tend to use keyboard shortcuts and copy and paste more often than other people.

In addition to helping authenticate users, BioCatch’s platforms offer a variety of protections against malware, bots, and social engineering. As a client, you can log in to a web portal to access a real-time assessment and easy-to-understand visualization of current sessions and associated risk scores based on the user’s biometrics.

Is implementing a behavioral authentication system always a good idea?

“Humans are the weakest link in many organizations’ cyber defenses,” says Joshua Crumbaugh, CEO of cyber security firm PeopleSec and a professional hacker. Cities, casinos, Fortune 500 corporations, and the U.S. government have all hired Crumbaugh to try and find weaknesses in their cyber security systems. Crumbaugh draws his conclusion from the ideas that humans can be “hacked” and can’t be updated or patched, and often people don’t think before they click. “This easily allows attackers to get a foothold within the network and bypass key protections such as multi-factor authentication,” says Crumbaugh. He also thinks that using behavioral biometrics could be a positive game changer for cyber defense.

While he may be right, there could be more to the picture than security. Thomas P. Keenan, a professor in the Faculty of Environmental Design and an adjunct professor in the Department of Computer Science at the University of Calgary, points to the “creepiness” factor inherent in collecting biometric data. “Monitoring things like how we hold our phones may indeed give people reason to dislike the company that is doing this to them,” says Keenan. “If another company makes a point of not tracking you in this way, that may constitute a competitive advantage.” However, a customer also likely won’t be happy if their account gets hacked or their personal information is stolen, so it’s a trade-off that could be worthwhile.

Should you give BioCatch a shot?

While no cyber security system is failproof, BioCatch’s behavioral biometric, authentication, and malware services are worth considering if you’re trying to protect mobile or web applications. The company has expertise working with banks, software vendors, and e-commerce clients and appears to have a good track record. Still, you may want to interview several companies to find the one that best meets your needs and budget.

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Mortgage Broker vs. Loan Officer: The Best Way to Shop for a Mortgage

Senior businessman showing a document to sign to a couple

When you need to take out a loan to buy a home, you generally have two options. You can work with a lender’s loan officer or hire a mortgage broker. Loan officers and mortgage brokers are not the same thing, although the terms are often used interchangeably.

Loan officers work for a bank or a lender and will only be able to show you mortgage options from that financial institution. In contrast, mortgage brokers are individuals or firms that are licensed by a state to act as middlemen between you and multiple banks or mortgage lenders. Because brokers aren’t beholden to a particular lender, they can shop around and try to find you a loan with terms that best fit your circumstances.

Why should you consider working with a mortgage broker?

One of the biggest benefits to working with a mortgage broker is that they take over the job of shopping for a loan. You might be able to do this on your own, and in some cases, you could find a better loan than the broker, but it can be a time-consuming and complicated process.

A broker can help collect and organize the documents you need to apply for a mortgage, such as your proof of employment and income, tax returns, a list of your assets and debts, and credit reports and scores. The broker can then use the information to look for loans, compare rates and terms, and apply for mortgages on your behalf.

Casey Fleming, a mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage,” says one of the big benefits is that brokers are generally “on your side,” while a loan officer represents the lender’s interest. Brokers are also incentivized to find you a loan that meets your needs and see the deal through closing because they don’t get paid until you close on the home.

Additionally, brokers might have access to lenders that don’t work directly with consumers, meaning you wouldn’t be able to get a loan from the lender even if you tried. And in some cases, brokers can leverage their relationship with a lender to get it to waive fees you’d otherwise have to pay.

Are there risks involved with using a mortgage broker?

While working with a broker could be a good idea, there are potential drawbacks to consider. “Not all brokers are created equal,” says Fleming. “Many have only a few sources for loans, and may not be able to find the best pricing.” There are also some mortgage lenders that don’t work with brokers and will only offer loans directly to consumers (through one of the lender’s loan officers).

Using a mortgage broker can also be expensive. Although you may find the services are worth paying for, consider the costs of using a broker:

Mortgage broker fees

Mortgage brokers are often paid in one of two ways. You may be able to choose how you’d like to pay the broker, or opt for both payment methods.

Some mortgage brokers will charge you a commission based on the loan you take out, often about 1% of the loan. For example, that’s a $3,000 fee on a $300,000 mortgage loan. You’ll pay this fee as part of your closing costs when you close on the home.

Other brokers may offer you a fee-free mortgage. However, what likely happens in this case is that the mortgage broker arranges a loan with a higher interest rate, leaving room for the lender to give the broker a cut. This route could cost you more over the lifetime of the loan but might be the better option if you want to minimize costs now.

Where to find a good mortgage broker

“Word of mouth is very useful when it comes to finding a good [mortgage broker],” according to Professor David Reiss, a real estate law professor at the Brooklyn Law School in Brooklyn, N.Y. You could ask friends or family members who’ve recently bought a home if they used a mortgage broker, as well as your real estate agent if he or she can recommend a broker.

However, don’t settle for the first recommendation you receive. The Federal Trade Commission recommends interviewing several brokers and trying to find one who’ll be a good fit for your home search.

Ask about their experience with buyers like you in the area, the fees they charge, and how many lenders they work with. “You want to know whether the mortgage broker can find competitive mortgage products, is well organized so that loans close in a timely manner, and whether it keeps away from bait-and-switch tactics that can be so difficult to deal with when buying a home,” says Reiss.

You can also look for reviews of the mortgage broker online, and check for complaints against the company with the Better Business Bureau. The National Association of Mortgage Brokers (NAMB) also has a directory of state associations and regulators, which you can use to check the broker’s license and standing.

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Mortgage Insurance Explained: What It Is and Why You Should Have It


There’s a lot to consider when purchasing a home. Location, size, and cost spring to mind as three of the most important factors. Perhaps you’ve budgeted and figured out how much you can afford for a down payment, but have you also considered your total monthly mortgage payments?

If you’re applying for a mortgage and can’t afford to put at least 20% down, you may have to pay for mortgage insurance.

What is mortgage insurance?

Mortgage insurance helps protect the lender’s investment, not the homeowner.

A homeowner’s insurance policy may reimburse you for a variety of expenses, including vandalism, thefts, and environmental damage to your home. Mortgage insurance is a bit different. Although you are responsible for mortgage insurance premiums, the policy protects the lender.

Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage,” explains mortgage insurance “insures the lender against principal loss in the event you default, they foreclose, and the foreclosure sale doesn’t bring in enough money to cover what they’ve lent you.” In short, if you don’t pay your bills, the insurance company will help make the lender whole.

The 20% down payment rule

Mortgage insurance isn’t required for all homebuyers. “Typically, homebuyers looking to get a conventional mortgage must pay PMI if they are making a down payment of less than 20%,” says Josh Brown of the Ark Law Group in Bellevue, Wash., which specializes in bankruptcy and foreclosures. Brown points out PMI serves a valuable function by allowing otherwise qualified homebuyers (with an acceptable debt-to-income ratio and credit score) to be approved for a conventional loan without the need for a large down payment.

How to find mortgage insurance

Mortgage lenders will often find a PMI policy for you and package it with your mortgage. You will have a chance to review your PMI premiums on your Loan Estimate and Closing Disclosure forms before signing paperwork and agreeing to the mortgage.

Types of mortgage insurance

There are two main types of mortgage insurance: Private mortgage insurance (PMI) and mortgage insurance premium (MIP).

PMI helps protect lenders that issue conventional, Fannie Mae and Freddie Mac-backed, mortgages. You’ll often be required to make monthly PMI payments, a large upfront payment at closing, or a combination of the two. These payments are made to a private insurance company and are required unless you have at least 20% equity in your home. You may request to cancel your PMI once you have paid down the principal balance of your home to below 80% of the original value.

Mortgages issued through the Federal Housing Administration (FHA) loan program also require mortgage insurance in the form of a mortgage insurance premium (MIP). You will be required to pay an upfront fee at closing and an MIP every month as part of your monthly mortgage payment. Your MIPs depend on when your mortgage was finalized and your total down payment.

How much mortgage insurance will cost you

Protect Your House

PMI premiums can vary depending on the insurer, your loan terms, your credit score, and your down payment. The premiums often range from $30 to $70 per month for every $100,000 you have borrowed, according to Zillow.

Many homeowners’ monthly mortgage payments include their PMI premium. Alternatively, you might be able to make a one-time upfront PMI payment. Or, you could make a smaller upfront payment and monthly payments.

As we mentioned earlier, for an FHA loan, you will have to pay upfront mortgage insurance premium (UFMIP) which is generally 1.75% of your loan’s value. You may have the option of rolling this premium payment into your mortgage and pay it off over time. Your MIP depends on your down payment, the base loan amount, and the term of the mortgage and can range from .45% to 1.05% of the loan’s value. The MIPs must be paid monthly.

Mortgage insurance doesn’t have to be forever

There are a few situations when you may be able to stop making mortgage insurance premium payments.

There are two eligibility requirements for conventional mortgages closed after July 29, 1999. As long as you’re current on your payments, PMI will be terminated:

  • On the date when your loan-to-value is scheduled to fall below 78% of the home’s original value.
  • When you’re halfway through your loan’s amortization schedule; 15 years into a 30-year mortgage, for example.

Your home’s original value is often the lower of the purchase price or appraised value. The current value of your home and your current loan-to-value aren’t figured into the above criteria.

You can also submit a written request asking your lender to cancel your PMI:

  • On the date your loan-to-value is scheduled to fall below 80% of the home’s original value.
  • If your current loan-to-value ratio is lower than 80%, perhaps due to rising home prices in your area or renovations you’ve done.
  • After refinancing your mortgage once you have at least 20% equity in the home.

Unlike PMI, if you have an FHA loan, your MIP may not ever be removed. The date your mortgage was finalized and the amount you put down determines your eligibility:

  • The MIP stays for the life of the loan for mortgages closed between July 1991 and December 2000.
  • The MIP will be canceled once your loan-to-value is 78%, if you applied for the mortgage between January 2001 and June 2013, and you’ve owned the home for five or more years.
  • If you applied after June 2013 and put at least 10% down, the MIP will be canceled after 11 years. If you put less than 10% down, the MIP stays for the life of the loan.

Refinancing an FHA loan to a conventional mortgage may provide you with additional options.

The pros and cons

There are a variety of pros and cons to consider when weighing the options of waiting to save a 20% down payment versus paying mortgage insurance.

Melanie Russell, a mortgage loan officer in Henderson, Nev., points out buying now can make sense if you expect home prices to increase or interest rates to climb.

What about waiting? In addition to avoiding mortgage insurance, putting more money down could lead to lower closing costs and a lower interest rate on your mortgage. Also, if you expect prices to drop, you’re saving on all the costs that could come with ownership, including taxes, mortgage, insurance, maintenance, and potential homeowners’ association fees.

In the end, it’s often a situational and personal choice. While Russell shared a few positives to buying early and paying for PMI, she also notes, “Only you can answer this question for yourself.”

When you don’t need mortgage insurance

There are also a few options that don’t require mortgage insurance, even if you can’t afford a 20% down payment.

For example, Veterans Affairs (VA) loans, offered to qualified veterans, don’t require mortgage insurance. You might not have to put any money down either, but these loans usually require an upfront payment at closing.

The Affordable Loan Solution program offered through a partnership between Bank of America, Freddie Mac, and the Self-Help Ventures Fund allows borrowers to put as little as 3% down without taking on PMI. Maximum income and loan amount limit requirements may apply.

You may also find some lenders willing to offer lender-paid mortgage insurance. You’ll pay a higher interest rate on the loan, but in exchange, the lender will make the insurance payments for you. “The math works differently every time,” says Fleming. “If a borrower thinks they won’t be in the property very long, [lender-paid mortgage insurance] might be a good choice, as sometimes the additional amount you pay is lower this way.”

However, if you’re in the home and paying off the mortgage for a long time, it could be more expensive than taking out a conventional loan with PMI. Because the premiums are built into your mortgage, you won’t be able to get rid of the extra payments after building equity in the home.

Another option could be to take out a second loan, called a piggyback mortgage. Although there are potential downsides to this route, you can use the money from the second loan to afford a 20% down payment and avoid PMI. Some people also borrow money from friends or family to afford a 20% down payment, but that could put your relationship in jeopardy if you run into financial trouble.

Finally, you might also discover lenders offering no-mortgage-insurance loans with a 10% to 15% down payment. As with the lender-paid mortgages, it’s important to review the fine print and the potential pros and cons of the arrangement.

The post Mortgage Insurance Explained: What It Is and Why You Should Have It appeared first on MagnifyMoney.

7 FinTech Startups Helping Businesses Fight Fraud

fraud identity theft hacker

Whether it’s a small shop or a multinational company, businesses must constantly have their guard up to protect against fraud. Installing security cameras, verifying dollar bills aren’t counterfeit, and hiring a security guard to prevent shoplifting can all help with physical fraud. But as commerce and banking continue to go online, digital security is critically important as well.

LexisNexis’ 2016 True Cost of Fraud study focuses on U.S. merchants. The study reveals businesses reported an increase in the cost of fraud as a percentage of annual revenue for the third year in a row.

On average, companies have dealt with nearly 650 fraudulent purchase attempts each month, and over 200 of those are successful. Increasingly, fraudulent purchases are coming from remote channels, either from mobile devices or other online methods.

Combating in-person, online, and mobile-transaction fraud can be an exhausting process, and several financial technology (FinTech) companies are working to help businesses outsmart thieves and win the fight.

1. Feedzai

freedzaiFeedzai uses machine learning and big-data analysis to help companies prevent fraud while managing payment processing, opening new customers accounts, underwriting merchant accounts, securing marketplaces, and validating customers.

Feedzai claims its Fraud Prevention That Learns technology, which bases its decisions on historical and real-time behavioral profiling, can detect fraud up to 10 days earlier than the competition, and identify 61% more fraud with lower false alarms.

2. IdentityMind Global

identitymindIdentityMind Global has a platform that payment service providers, online merchants, and financial institutions can use to identify and prevent fraudulent purchases, botnets, phishing attempts, account takeovers, and other types of attacks in real time.

The platform also offers anti-money laundering (AML), know your customer (KYC), and other risk management services to companies, including Bitcoin exchanges and internet lenders.

3. InAuth

inauthInAuth is a risk management and fraud-detection and -prevention platform for the banking, payments, health care, e-commerce, and mobile commerce industries. Large companies can also use it to secure and identify employees’ devices and information.

InAuth’s InExchange service allows businesses from different industries to share positive and negative information about devices, helping companies determine whether or not the device has been linked to fraudulent activity in the past. InAuth also works to identify when devices are infected with malware or crimeware, and whether or not it’s a rooted or jailbroken device, potential signs of fraudulent use.

4. Jumio

jumioAvailable for merchants in the retail, travel, gaming, finance, telecom, and sharing economy industries, Jumio offers digital identification verification, mobile checkout, and form-filling software. Two of its three products can help prevent fraud.

Netverify helps authenticate potential customers by letting them take a picture of their photo ID and use their phone or computer to scan their face. The software verifies that the person matches the photo in the ID. BAM Checkout lets customers make mobile purchases by taking pictures of their credit or debit card and driver’s license. The software compares the names on the ID and card, and can help prevent fraud while creating an easy checkout process for customers. Jumio also has a third service, Fastfill, which allows customers to quickly fill in their information by snapping a picture of an ID card.

While Jumio filed chapter 11 bankruptcy in March 2016 due to some reported financial irregularities within the company, Jumio’s assets were acquired by Centana Growth Partners. Under this new umbrella, Jumio does seem to have steadied itself and raised an additional $15 million from Centana in August 2016.

5. iovation

iovationiovation delivers device-based fraud prevention and authentication services to help prevent mobile and online fraud. The service automatically collects information about a device. This information is used to visit a company’s site and decide whether or not they should allow, deny, or conduct a manual review of a transaction. For example, iovation may notice a device was used to make over $1,200 of purchases in the previous 12 hours, check to see if a phone number is connected to more than three devices, and see if this purchase is coming from a high-risk location.

Using iovation’s fraud prevention service, companies can require suspicious users to go through additional identification protocol or prevent a transaction outright. They can also use iovationScore, a predictive risk score, to help them identify good and bad customers. As a result, they make a checkout experience smoother for good customers, by letting them skip a security check, for example. The scoring system uses real-time machine learning to monitor billions of transactions globally and increase its predictive capabilities.

6. BioCatch

biocatchBioCatch has created cloud-based technology that builds user profiles based on over 500 cognitive parameters, including behavioral patterns. By learning what it looks like when fraudsters create accounts, purchase products, or browse websites, BioCatch can help detect and stop future potential frauds. BioCatch can also help detect when someone takes over a legitimate account by comparing a user’s normal behaviors, including typing speed or cursor movement, to behaviors during the fraudulent session.

7. Trulioo

truliooCanadian startup, Trulioo, uses data from over 140 sources to collect and share information on over 3 billion people, making it one of the largest consumer data companies in the world. E-commerce stores can use Trulioo to verify new customers, reducing the risk of fraudulent purchases and subsequent chargebacks. Financial institutions can use Trulioo’s data to help them meet AML and KYC identity verification requirements.

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4 Companies That Help You Get Your Paycheck Early

Financial emergencies have a habit at cropping up at the worst possible time — when you’re stuck in-between paychecks. Perhaps you need $250 for an emergency car repair, but you just paid rent and won’t have the funds until your next payday in two weeks. Normally, you might want to turn to a credit card or a payday loan, racking up onerous fees in the process.

What if you could get a portion of your next paycheck early without paying hefty fees or interest?

That’s the premise behind the following four services. They try to help workers make ends meet without taking on debt by giving them access to the money they earn when they earn it.

Activehours

  • Available if you have direct deposit.
  • Withdraw up to $100 each day and $500 per pay period.
  • No fees or interest.

ActivehoursWhat it is: Activehours is an app-based service available on Android and iPhone smartphones. Once you download the app and create an account, you connect your bank account and verify your paycheck schedule. You must have direct deposit set up and linked to a checking account.

How it works: In order to use Activehours, you need to upload your timesheet, either manually or by connecting a time-tracking account to the app (your employer must use one of the eligible timesheet partners in order for this to work). Using this information, Activehours estimates your average take-home hourly rate after taxes and deductions.

As you work, the hours will be automatically shared with Activehours, or you may have to upload your timesheet. You can then cash out a portion of your earned pay before payday.

You can withdraw up to $100 each day. Based on your account balances and Activehours use, the pay-period maximum could increase up to $500. The payment will arrive in your checking account within a few seconds, or within one business day, depending on where you bank.

Activehours doesn’t connect to your employer’s payroll. It connects to whatever bank account you use to collect your pay. The next time your paycheck hits your bank account, Activehours will automatically withdraw what you owe. There aren’t any fees or interest charges for using the service, however Activehours does ask for support in the form of tips.

DailyPay

  • Works with popular ride-share and delivery services.
  • Get paid daily for your fares or deliveries.
  • There’s no interest. You pay a flat fee that is subtracted from the day’s earnings.

dailypayWhat it is: DailyPay caters to workers who are employed by ride-share or delivery services, such as Uber, Postmates, Instacart, Fasten, and DoorDash. It can also be used by workers at restaurants that use delivery apps, such as GrubHub, Seamless, or Caviar.

How it works: After signing up for DailyPay, you’ll need to connect a bank account where DailyPay can send you payments. Next, you’ll need to connect your DailyPay account with the system your employer uses to track your hours. DailyPay tracks the activity within the accounts and sends you a single payment with the day’s earnings, minus a fee. Restaurant workers get paid for the previous day’s delivery earnings, minus a fee, from all the connected delivery programs.

About those fees…

Fees are based on how much you ear per day. As a driver or on-demand worker, when you make less than $150 during a day you’ll pay a $0.99 fee. For workers who earn more than $150 in a day, the fee is $1.49. Restaurant workers’ fees vary based on order volume, but are often around $2.49 for each payday. In either case, you’ll need to update your account with each service and redirect the payments to go to DailyPay.

PayActiv

  • Employer must sign up and offer PayActiv as a benefit.
  • You can withdraw up to $500 in earned income before payday.
  • $5 fee for each pay period when you use the service.

PayActivLogo-200PayActiv is an employer-sponsored program that allows employees to withdraw a portion of their earned wages before payday. While you can’t sign up on your own, you can ask PayActiv to contact your employer about offering the service. There’s no setup or operating costs for employers.

Once your employer offers PayActiv, you sign up and withdraw money as soon as you earn it. You can withdraw up to $500 early during each pay period via an electronic transfer or withdrawal from a PayActiv ATM (available at some employers’ offices).

The early payment comes from PayActiv, but it isn’t a loan and you won’t need to pay interest. Instead, your employer will automatically send PayActiv an equivalent amount from your next paycheck.

There is $5 fee per pay period when you use the service, although some employers cover a portion of the fee, according to Safwan Shah, PayActive’s founder. As a member, you’ll also get free access to bill payment services and savings and budgeting tools.

FlexWage

  • Employer must sign up and offer FlexWage as a benefit.
  • You’ll receive a reloadable debit card tied to an FDIC-insured account where your employer deposits your pay. You can add earned pay to your account before payday.
  • No fees for employees.

Flex WageFlexWage is an employer-sponsored program that relies on the use of a payroll debit card and integrates with employers’ payroll systems. If your employer offers FlexWage, you can get your paycheck deposited into an FDIC-insured account with the linked Visa or MasterCard debit card. You can also add earned, but unpaid, wages to your account before payday without paying any fees.

With FlexWage, the employer determines how often you can make early withdrawals and the maximum amount you can withdraw. Unlike PayActiv, FlexWage doesn’t act as a middle-man. Your paycheck advances will come directly from your employer’s account.

Bottom Line

These four companies work slightly differently, but they share the same basic premise: giving you early access to the money you earned, without saddling you with a painful assortment of fees. If you’ve had to rely on borrowing money in the past when funds are tight, these could be a better alternative to credit cards or payday loans.

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8 Student Loan Repayment Options if You Join the Military

Happy healthy ethnic army soldier

Several military programs offer scholarships and grants in exchange for your prior military service, or a promise of service in the future. But, what if you already have a degree and are working to pay off your student loans? You may want to consider one of the military’s student loan repayment programs.

In 2013, CNN reported on Thomas McGregor, an attorney who enlisted in the Army to help pay off his $108,000 student loan debt. Between his income and a loan-assistance program, he was student loan free within four years.

Military service isn’t for everyone, and you should seriously consider the potential impact of signing up for a multi-year commitment. It was a good fit for McGregor, who decided to stay on after his three-year service ended. However, he was deployed to Iraq and Afghanistan, and some of his friends were injured or died in combat.

If you decide joining the military is a good choice for you and are paying down student loans, the loan assistance programs could guide your decision to choose one branch over another. While the different programs sometimes share similar names, the qualifications, requirements, and award amounts can vary from one branch’s program to another.

Make sure the loan-repayment guarantee is in your contract before enlisting and double-check your loan’s eligibility for repayment through the program. For example, a program may pay off some types of federal student loans, but not state or private loans. Restrictions also apply based on which position you enlist in, your length of service, and whether or not you have prior military experience. In some cases, the loan payments count as income for tax purposes.

The military’s loan repayment programs and offers can change based on government funding and a branch’s need for new recruits. You can find an overview of the programs below, and you should follow-up with a local recruiter to clarify specifics and find out whether or not you’ll qualify.

Air Force

  • JAG Corps Student Loan Repayment ProgramEligible attorneys can receive up to $65,000 in student loan repayments, payable over three years following the completion of your first year of service. The payments can go towards undergraduate, graduate, or law school loans and payments will go directly to your lender. If you stay on past four years, then you can qualify for a $60,000 in cash bonuses: $20,000 for two more years of service and another $40,000 for four more. That’s not specifically earmarked for your loans, but you can use them to pay off your debt. That would be $125,000 over 8 years, in addition to your salary and other benefits.

Army

  • Healthcare Loan Repayment ProgramsThe Army offers special pay and incentives to doctors, nurses, dentists, veterinarians, psychologists, and other healthcare professionals. Depending on your profession and specialty, you may be eligible for up to $120,000 in student loan repayments over three years of active-duty service in addition to salary, bonuses and special pay. Reserve-duty servicemembers may receive up to $50,000 for three years of service for loans.
  • College Loan Repayment ProgramThe Army also offers some highly qualified Military Occupational Specialists (MOSs) student loan assistance if they enlist for at least three years of service. At the end of each of the three years, you’ll receive the greater of $1,500 or 33.33 percent of your outstanding principal loan balance, less taxes. There’s a maximum potential payout of $65,000.

Army National Guard and Reserves 

  • College Loan Repayment Program The Army National Guard and Army Reserves have similar student loan payments for some highly qualified Military Occupational Specialists (MOSs). You could receive the greater of $1,500 or 15 percent of your outstanding loan principal at the end of each year of service, up to a maximum of $20,000. To qualify, you must enlist and serve for at least six years. Parent PLUS loans can be covered. 

Coast Guard

  • College Student Pre-Commissioning Initiative Student Loan Repayment ProgramThe Coast Guard offers recent college graduates who are 19- to 27-year-olds up to $10,000 per year, for six years, in student loan aid. The program requires candidates to complete a series of trainings, including basic training and leadership training, and enlist for five years as a commissioned officer. There are some interesting catches: you can’t have more than two dependents and if you’re single, you can’t have sole or primary custody of dependents. Online degrees also don’t qualify.

Navy

  • Health Professions Loan Repayment ProgramThe Navy pays select health care professionals up to $40,000, minus approximately 25% for federal income tax, in student loan payments each year in exchange for agreeing to continue, or begin, active duty service. The hefty tax portion will be taken out prior to sending the payment along to your lender.
  • College Loan Repayment Program Pays up to $65,000 in student loan payments if you’re serving in your first enlistment.

National Guard

  • Student Loan Repayment ProgramYou could receive the greater of $500 or 15 percent of your initially disbursed loan amount each year, with a maximum $50,000 payout and minimum six-year service agreement. You must have at least one disbursed Title IV federal loan.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) program isn’t military specific, instead it’s a federal loan-forgiveness program contingent on your employment with a qualified government or non-profit organization. Only federal student loan that are part of the Direct Loan program qualify for PSLF. However, you may be able to consolidate non-qualifying federal loans (such as a Perkins loan) into a qualified Direct Consolidation Loan.

With PSLF, your remaining loan balance will be forgiven after you make 120 qualifying monthly payments (10 years’ worth) while employed full-time. The 120 payments don’t need to be consecutive, and some, or all, of the employment, could be within the military. You currently won’t have to pay income taxes on the forgiven amount.

Additional Military Benefits

In addition to the loan repayment programs, your federal student loans may be eligible for a capped 6-percent interest rate during active duty, and up to five years of no interest if you’re serving in qualified hostile areas. You may also be able to postpone payments during active duty, but the loans will still accrue interest.

Bottom line

The military’s student loan forgiveness programs may be able to help repay your loans, but don’t take the decision to enlist lightly. Other employers offer loan repayment programs, and potentially less-dangerous jobs qualify for the PSLF. If you do decide to enlist, compare the loan repayment programs and be sure to get the loan repayment included in your contract.

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Financial Accounts You Should Know About After Graduation

piggybank

As a new graduate, you may be dealing with a dizzying number of new responsibilities, many of which involve money. There are helpful financial checklists aimed at graduates that recommend money-related habits or management tips. However, to put many of these lessons and ideas into practice, you also need to understand how different types of financial accounts work.

With simple explanations for each, here are several of the financial accounts you may encounter.

Non-Student Checking Accounts

You may have a student checking account that doesn’t have a minimum balance requirement or monthly fee. After graduating, your account could automatically switch to a standard checking account.

With many checking accounts, you’ll need to pay a monthly fee unless you meet a requirement, often a minimum balance or direct deposit each month. You may want to consider switching to a new non-fee checking account if you can’t meet the requirements.

Employer-Sponsored Retirement Accounts

According to the American Benefits Council, most full-time workers at large companies have access to an employer-sponsored retirement account, such as a 401k. If you work for a non-profit, educational institution, or government organization you may have, a 403b or 457 plan rather than a 401k. You can use these accounts to save for retirement, and get tax advantages for doing so.

You can generally choose to contribute a particular dollar amount, or a percentage of your pay, from each paycheck to your 401k account. You also may need to decide where the money gets invested once it’s in the account. You’ll likely be able to choose from a list of different mutual funds, and can ask your 401k manager or look online for guidance.

Your employer’s 401k plan doesn’t necessarily offer the best investment options or lowest fees, but many organizations offer a company match that can significantly increase your savings. The company might match a portion of the amount you contribute, up to a percentage of your annual salary. For example, the company may deposit 50 cents for each $1 you contribute, until they add the equivalent of six percent of your annual pay.

During 2016, you can contribute up to $18,000 ($24,000 for those that are 50 or older) into a 401k, 403b, or 457 plan, not counting the employer’s matching. Your contributions are tax-deferred, meaning you don’t have to pay income taxes on the money this year. In practice, you’ll get a deduction equal to your contribution. You do have to pay income taxes on the money when you withdraw it, unless it’s a Roth account.

You may have to pay a 10-percent penalty for withdrawing money from your 401k before you’re 59 and a half, but there are exceptions to help pay for medical, home, and educational expenses.

Independent Retirement Agreements

If your employer sponsors a retirement account and offers matching, it may be best to start saving for retirement with that account. But, if you don’t have access to an employer-sponsored account, max out your contribution and want to save more, or want more control of where you invest your money you can save money for retirement in an Individual Retirement Agreement (IRA). They’re also often referred to as individual retirement accounts.

There are several types of IRAs, but unless you run your own business, you’ll likely want to use either a Traditional IRA or a Roth IRA. There are differences, but both accounts offers tax advantages.

  • Traditional IRA – Contributions are post-tax, meaning you don’t pay income taxes now (you get a tax deduction), but will need to pay taxes when you withdraw the money. Aside from special circumstances, you’ll pay a penalty for withdrawing the money before you’re 59 and a half.
  • Roth IRA – Contributions are pre-tax, meaning you pay taxes on the money before making contributions (no deduction). You can withdraw your contributions at any time, but a few special circumstances aside you’ll pay a penalty if you withdraw earnings before you’re 59 and a half.

With either IRA, you can contribute up to $5,500 in 2016. Those that are 50 or older can contribute $6,500. As with employer-sponsored retirement accounts, you may need to decide where to invest your money once it’s in an IRA. There are income phase-outs on the tax deductions depending on how much you earn and if you already have access to a retirement plan at work.

myRA Accounts

The government-sponsored myRA account is a type of a Roth IRA. Intended for beginner investors that don’t have access to an employer-sponsored plan, myRA accounts don’t have fees or minimum funding requirements and guarantee a return on your investment without loss of principal.

The return on an investment in a myRA was 1.75-percent APR during April 2016, higher than you’ll get in most checking or savings accounts account but lower than what you might get by making riskier investments. However, if you’re able to just go ahead with a Roth IRA, then it probably makes more sense in many cases.

Brokerage Accounts

If you want to try your hand at investing without using a tax-advantaged retirement account, you can open a brokerage account. There are many brokerage account providers, including major financial services firms such as Fidelity, Merrill Lynch, Charles Schwab, and Vanguard, as well as online discount brokers like TradeKing and RobinHood.

You can deposit money into your brokerage account and then buy stocks or funds with it. You’ll likely be able to buy the same investments no matter where you open an account, but the fee to make a trade depends on the broker. Funds that aren’t invested often stay in a money market account, a bit like an interest-bearing holding account.

Flexible Spending Accounts

A flexible spending account (FSA) allows you to use tax-free money to pay for some medical expenses. FSA accounts must be set up by your employer, and you can only put up to $2,550 into the account per employer. However, that may be more than enough, because if you don’t use the money within the year, you have to forfeit it. Some employers let you rollover $500 to the following year and/or give you a two-and-a-half-month grace period at the beginning of the next year.

Health Savings Accounts

A health savings account (HSA) is medical savings account that you can have access to if you’re enrolled in an HSA-qualified high-deductible health plan. In some cases, your employer may make contributions to your HSA. Unlike the FSA, your HSA funds never expire. You can invest the funds and use them in retirement if you’d like. In 2016, the contribution limits for HSAs are $3,350 for individuals and $6,750 for families.

Insurance Policies

As a new graduate, there may also be several types of insurance you should consider purchasing.

  • You can stay on a parent’s health insurance policy until you turn 26. If this isn’t an option, you may want to buy coverage because there’s a penalty if you don’t have health insurance. Depending on your income and where you live, you may qualify for assistance paying for health insurance.
  • Auto: If you own a vehicle, you’re required to have auto insurance to drive it. Minimum insurance requirements vary by state, and the price can vary by provider.
  • Renters: Renters insurance can help protect you if your apartment is damaged or destroyed, someone gets hurts while visiting you, or your property is stolen (sometimes even if it’s stolen when you’re outside the home).

There may be discounts on auto or renters insurance that are fairly easy to get. For example, the one-time cost associated with buying a fire extinguisher for your apartment, or an anti-theft device like a steering-wheel lock for your car, could result in lower premium payments. You also may get a discount for buying multiple forms of insurance through the same provider.

What Now?

While the details of each account or insurance policies can be tricky to understand, the basic function is often straightforward. Keep this guide handy as you may have a reason to open, or use, one or more of these accounts or policies in the coming months.

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