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If you’re self-employed or helm a small but growing business, you already know that most business bank accounts are not designed with your needs in mind. They’re meant for larger, more established companies with complex finances and 10 or more people on the payroll.
One of the few business bank accounts that is set up for entrepreneurs like you is Bluevine Business Checking, a user-friendly checking account with no maintenance fees or minimums and a generous interest rate on eligible balances. It’s one of the best bank accounts for freelancers and people with side hustles and can handle the demands of slightly larger companies as well.
That said, Bluevine Business Checking isn’t perfect. Before you open an account, make sure it’s the right fit for your business.
What Is Bluevine Business Checking?
Bluevine Business Checking is a small-business checking account with no monthly maintenance fee and no minimum balance requirements. When you complete monthly qualifying activities, it yields 2.00% APY on eligible balances, enough to qualify as a high-interest checking account.
Bluevine Business Checking has some notable benefits that enhance its appeal for sole proprietors and microbusiness owners. It has a generous debit card rewards program through Mastercard Easy Savings, access to more than 120,000 in-network ATMs and retail money centers, and allows up to five subaccounts with their own bank account numbers to keep separate funds earmarked for specific purposes.
What Sets Bluevine Business Checking Apart?
Bluevine Business Checking stands out from most other business bank accounts for the following reasons:
No minimums and very few fees. Bluevine Business Checking has no minimum balance requirements and no monthly maintenance fee. In fact, it has very few fees of any kind. If you don’t make international wire transfers or certain other less common types of transactions, you probably won’t pay anything for it at all.
Excellent yield for a checking account. This account yields 2.00% APY on balances up to $250,000 when you complete qualifying activities. Those activities are quite easy for most businesses (and even freelancers and side hustlers) to manage.
Potentially generous debit card rewards program. Bluevine participates in the Mastercard Easy Savings debit card rewards program, which earns up to 20% back on select business purchases.
Key Features of Bluevine Business Checking
Bluevine Business Checking has low barriers to entry, a generous and easy-to-earn interest rate, and some other features worth noting.
Account Fees & Minimums
Bluevine Business Checking has no monthly maintenance fee. It also has no overdraft fees, though Bluevine reserves the right to decline transactions that would result in a negative balance. And other fees common to small-business checking accounts are absent, such as excess transaction fees or per-item deposit fees.
Account Yield & Qualifying Activities
Bluevine Business Checking yields 2.00% APY on the first $250,000 in the account. To earn this yield in any given statement period, you must do one of the following:
Make at least $500 in eligible debit card purchases
Receive at least $2,500 in customer payments to your main account or linked subaccounts
Balances above $250,000 don’t earn interest even if you complete the activity requirements.
ATM Access
This account comes with a Mastercard debit card accepted anywhere Mastercard is. You can withdraw or deposit cash at more than 120,000 ATMs and retail money centers across the United States through the MoneyPass and Green Dot networks.
Debit Card Rewards
Your Bluevine debit card is automatically enrolled in the Mastercard Easy Savings program, which entitles you to as much as 20% back on eligible business purchases with select merchants and 4% back on a wider range of purchases with about 50,000 participating merchants.
Subaccounts
You can add and link up to five subaccounts to your main Bluevine Business Checking account. Each gets its own unique account number and functions as a separate account, minus the debit card (your Bluevine debit card taps your main account only). Subaccounts are useful as employee expense accounts or pools of money set aside for specific purposes, like a rainy-day fund, payroll, or overhead expenses.
Mobile Features
Bluevine Business Checking has a mobile-responsive website and a comprehensive mobile app that can do anything the desktop banking interface can. The app is well-reviewed by verified users and has a long track record of reliability and user-friendliness.
Specific mobile features and capabilities include:
Remote check deposit
Digital bill payments (one-time and recurring)
Domestic and international check payments and wires
Access to the Mastercard Easy Savings portal
Main and subaccount management
Deposit Insurance
Bluevine offers federal deposit insurance on balances up to $250,000 through Coastal Community Bank, its member-FDIC partner bank.
Pros & Cons
Bluevine Business Checking has a lot of advantages for self-employed people and small-business owners, but it’s not perfect.
No maintenance fees or minimum balance requirements
Excellent yield with qualifying activities
No overdraft fees
Debit card rewards program
No account opening bonus
No debit cards for subaccounts
Only five subaccounts per main account
Pros
Bluevine Business Checking is more accessible than most business bank accounts for sole proprietors and microbusinesses. It’s also much more affordable.
No maintenance fees. There’s no monthly or annual maintenance fee on this account. That’s excellent news for frugal business owners who don’t want to pay to manage their money.
No minimum balance requirements. You can fund your new Bluevine Business Checking account with as much or as little as you want (or can afford).
No overdraft fees. This account charges no overdraft fees for negative-balance transactions, though Bluevine reserves the right to decline individual overdraft transactions.
Above-average yield with qualifying activities. Balances up to $250,000 yield 2.00% APY when you complete qualifying monthly activities. Neither option ($500 in debit card spending or $2,500 in customer payments) should be a heavy lift.
Debit card rewards through Mastercard Easy Savings. You can earn up to 20% back on select business expenses (and 4% back more reliably) through Mastercard Easy Savings, a free perk of this account.
Subaccounts with separate account numbers. Bluevine Business Checking’s subaccounts come with their own account numbers. That makes them ideal for holding funds that you’d rather not commingle with your main account, such as payroll.
Access to more than 120,000 ATMs and money centers. This account comes with access to more than 120,000 fee-free ATMs and retail money centers. That’s much more than the average business account and good news for business and employees who frequently travel for work.
Cons
Bluevine Business Checking lacks an account opening bonus opportunity and has some notable restrictions on subaccounts.
No account opening bonus. Bluevine Business Checking has no account opening bonus. Some other business checking accounts do, and a few are very generous.
No debit cards for subaccounts. Bluevine’s subaccounts don’t have debit cards of their own. Only the main account has one. That’s a drawback if you treat your subaccounts as functionally distinct bank accounts.
Only five subaccounts per main account. Bluevine allows only five subaccounts per main account. While it’s nice that each subaccount functions as its own separate bank account for accounting purposes, five is a low limit for a business with complex finances. Some competitors allow 20 or more subaccounts at once.
How Bluevine Business Checking Stacks Up
Before you open a Bluevine Business Checking account, see how it compares to other checking accounts geared toward freelancers and microbusinesses. One popular alternative is Lili; here’s how they compare.
Bluevine Business Checking
Lili
Monthly Fee
$0
$0 to $9, depending on plan
Minimum Balance
$0
$0
Subaccounts
Yes, up to five
Yes, but only one
Yield
2.00% APY on eligible balances
1% with Lili Pro only ($9 per month)
ATM Access
120,000+
About 40,000
Final Word
Bluevine Business Checking is made for self-employed individuals and owners of very small businesses ready to get serious about their professional finances. With a generous yield, a nice debit card rewards program, and basically no fees or minimums, it’s one of the most attractive small-business accounts on the market.
It’s not perfect for everyone though. Bluevine Business Checking can’t handle the complex finances or heavy transaction demands of larger businesses, so if your long-term plan involves a lot of growth, it’s not a permanent solution. In the meantime, it’ll do just fine.
The Verdict
Our rating
Bluevine Business Checking
Bluevine Business Checking is one of the most accessible business bank accounts for freelancers, side hustlers, sole proprietors, and owners of very small businesses. It’s also surprisingly generous, with an above-average interest rate on eligible balances and a debit card rewards program. But it lacks some benefits and capabilities found in bank accounts marketed to slightly bigger businesses.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
Banking
Wealthfront vs. Chime – Which Banking App Is Best?
There’s no shortage of online banks available for American consumers to conduct their banking and investing activities. We take a look at two popular branchless money management options, Chime and Wealthfront, in a head-to-head comparison. Find out which is the better fit for you here.
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
Highlights
A line of credit is an open-ended loan that allows you to borrow money as you need it.
Credit lines can be secured by valuable collateral (like real estate) or unsecured.
Common types of credit lines include home equity lines of credit and credit cards.
Credit line interest rates often vary with benchmark rates, and payments can increase or decrease accordingly.
Your home’s ancient climate control system is living on borrowed time. The problem: It costs north of $10,000 to install the fancy new heat pump system you need. Even with utility rebates and federal tax credits, that’s more than you can pay out of pocket. And the HVAC company’s financing package charges exorbitant interest rates given your credit score.
Fortunately, you have another option: a low-interest home equity line of credit backed by the equity in your home. It’s a far better fit for your budget than a short-term installment loan.
But it’s not all good news. To avoid an unpleasant surprise down the line, you need to understand how lines of credit work, inside and out, before you apply.
What Is a Line of Credit?
A line of credit is a type of open-ended loan that allows you to borrow money as you need it. You can borrow, or draw, from your line during a fixed or indefinite period of time and up to a borrowing limit determined by your lender.
You can draw on your credit line as you need funds and repay what you borrowed as you’re able. However, your total outstanding balance can’t exceed your borrowing limit. Once your balance equals your borrowing limit, you must repay some of the balance before you can borrow any more.
Secured vs. Unsecured Lines of Credit
A credit line can be secured or unsecured. And it’s important to understand the difference, as much of what you read about credit lines only applies to a couple of types — and that’s for good reason.
Secured lines of credit are backed by valuable collateral, which is a fancy term for an asset you can sell for cash. The most common types of credit line collateral are real estate equity (such as a home equity line of credit) and marketable securities, such as stocks.
A secured line of credit’s borrowing limit is closely related to the underlying value of the collateral. Because asset prices can change, you usually can’t borrow against the full collateral value.
For example, home equity lines typically allow you to borrow the difference between 80% or 85% of the property’s appraised value and the remaining balance on any other loans secured by the property, such as a mortgage. Portfolio lines generally allow you to borrow up to 30% of your portfolio’s value.
Because they’re backed by collateral the lender can seize and sell if you stop making payments, secured credit lines have relatively low interest rates. For example, rates on home equity lines are often just a point or two higher than rates on primary mortgages. But it’s very important that you make regular, timely payments, or there’s a real chance the lender seizes the assets pledged as collateral.
Unsecured lines of credit aren’t backed by valuable collateral. You’re still legally obligated to repay what you borrow, but the lender has no right to seize your property if you stop making payments. However, they can report the delinquency to consumer credit bureaus, which can damage your credit and make it more difficult to qualify for new loans or credit lines in the future (among other unwelcome consequences).
Because they’re riskier for lenders, unsecured credit lines typically have higher interest rates than secured credit lines. For example, the average credit card interest rate is around 20%.
However, when we talk about lines of credit, we’re usually referring to home equity lines or personal lines of credit, as credit cards and portfolio lines work differently.
How a Line of Credit Works
When you’re approved for a line of credit, the lender sets your borrowing limit and the rules for drawing on it, including the amount of interest and repayment terms.
Drawing on Your Credit Line
Once your credit line is open, you can draw against it as needed within the boundaries of your agreement. If the credit line has defined draw and repayment periods (periods during which you borrow versus repay the loan), the lender specifies those. A typical draw period lasts five to 10 years, and a typical repayment period another five to 10 years beyond that.
You can generally make draws electronically by transferring funds from your credit line to a linked bank account or, in some cases, using special paper checks issued by the lender. If your lender is a traditional bank, you may be able to visit a branch to pick up a bank check drawn against the credit line. And some lines of credit come with a Visa or Mastercard payment card you can use to make specific purchases in-person and online.
Interest on Draws
In most cases, draws begin to accumulate interest immediately after you make them.
Unless there’s an interest-free grace period between the draw date and the date interest begins to accrue, you can’t avoid paying some interest on your draws. But you can minimize the total cost by paying off the principal balance as quickly as possible.
Credit lines can have fixed or variable interest rates, but most have the latter. For example, most home equity lines have interest rates that fluctuate with benchmarks like the federal funds rate.
Repaying Your Draws
Credit lines are more flexible than traditional loans, but they still hold you accountable for repaying what you borrow.
Unsecured credit lines, like personal lines, typically require minimum monthly payments. That payment is usually very low, like 1% to 2% of the outstanding balance, but it’s high enough that you’ll eventually pay off the balance if you make only the minimum payment without any further draws. You’re free to pay off your entire balance at any time though, and unless the interest rate is very low, you absolutely should pay off your draws as aggressively as possible.
Secured credit lines may or may not have required monthly payments. For example, home equity lines generally require monthly payments, while portfolio lines don’t. During any draw period, the required payment is often just the interest that has accumulated since the last payment.
If your credit line has a draw period, it’s followed by the repayment period. During the repayment period, you can no longer make draws, even if your borrowing limit is higher than the outstanding balance. You have until the end of the repayment period to zero out the line’s balance, typically by making monthly principal and interest payments set by the lender. On a line with a fixed interest rate, these payments are always for the same amount; on a variable-rate line, they can fluctuate with benchmark rates.
Line of Credit vs. Installment Loan
To understand how a line of credit works, it’s helpful to contrast it with an installment loan, the other major type of loan.
Unlike a line of credit, an installment loan gives you an upfront payment for the entire loan amount, known as the principal. It has a fixed term during which you make a set number of payments, similar to a line of credit’s repayment period. The difference is that there’s no draw period and the principal is fixed from day one.
If the loan’s interest rate is fixed, each payment is for the same amount. If the rate is variable, the payment size may vary, but the number and frequency don’t. At the end of the term, the loan balance is zero and the loan is considered repaid.
Applying for a Line of Credit
Applying for a line of credit is usually similar to applying for a small- to medium-size installment loan, like a personal loan or auto loan. The process has some things in common with the mortgage application process but isn’t as intense or drawn-out.
Factors Lenders May Consider
Depending on the lender and the type of credit line, the lender considers factors like:
Your credit score
Specific items on your credit report, such as past bankruptcies or loan defaults
Your debt-to-income ratio, a key indicator of your ability to repay your credit line
Your employment status
The value of any underlying collateral
Steps in the Application Process
To apply for a line of credit, you need to:
Fill out an application (usually online)
Provide any documents the lender requests, such as recent tax returns or W-2s
Give the lender permission to pull your credit report and score
An appraisal to confirm the collateral’s value, if applicable
Not all types of credit lines have strict application and underwriting processes. For example, portfolio lines of credit usually don’t require a credit check or income verification. The most important (and sometimes only) factor the lender considers is the portfolio’s underlying value.
Line of Credit Management & Considerations
It’s nice to have a credit line (or several) at your disposal, but it’s important to use yours wisely. A credit line isn’t a license to spend recklessly.
Responsible Borrowing & Repayment
Credit lines often have generous borrowing limits, especially when secured by real estate or a well-endowed stock portfolio. And most have very low required monthly payments, at least at first. It’s tempting to treat them like ATMs.
That would be a mistake.
You should only draw on your credit line when you absolutely need to. It’s almost always better to pay for stuff in cash. Getting in too deep can have serious consequences. For example, if you borrow too much against your home equity line and stop making payments, the lender may seize your house to cover the debt.
Likewise, always pay more than the minimum required payment. Set and stick to a reasonable monthly payment during the draw period. Make sure it includes a significant amount of the principal. Pick a future date on which you’d like to have a zero balance and divide the number of months between now and then by your current outstanding balance.
Interest Rates & Fees
Secured credit lines almost always have lower interest rates than unsecured lines, so they’re better from a cost perspective. Other factors can affect credit line interest rates:
Your credit score
Your debt-to-income ratio
The amount of equity you’re borrowing against (for example, a credit line with a borrowing limit up to 90% of your home’s value has a higher interest rate than a line capped at 80% of your home’s value)
As with any other loan or financial account, shop around before choosing a particular credit line. Even small variations in interest rates or terms can have big effects on your total borrowing costs. Some credit lines have restrictive features with financial implications that can be unclear if you’re unfamiliar with them, such as a prepayment penalty or balloon payment (a lump-sum payment for the outstanding balance at the end of the repayment term).
Impact on Your Credit Score
Credit lines have positive and negative credit score impacts:
Negative impacts: Applying for a credit line usually causes your credit score to drop a bit due to the hard pull. It should bounce back within months. Moving forward, maxing out your credit line can increase your credit utilization ratio and hurt your score. Missing or stopping payments has the greatest negative impact of all, so make sure that doesn’t happen.
Positive impacts: You can all but guarantee your line’s credit impact is more positive than negative by borrowing only what you need (keeping your credit utilization ratio low) and making timely payments. Responsible use also reduces the risk of your line impacting your ability to repay other loans on your books.
Pros & Cons of a Line of Credit
Credit lines are more flexible and often more budget-friendly than installment loans. However, they have some important drawbacks that may not be apparent at first.
Allows you to borrow only what you need
Relatively easy to fit into your budget
Can have low interest rates
Can have higher borrowing limits
May encourage overspending
Payments can spike later on
Can result in asset loss
Interest rates often fluctuate
Pros
Credit lines maximize your borrowing power and can (but don’t have to) minimize your repayments, at least early on.
You can borrow as needed (and control your interest payments). You can borrow as much or as little as needed as long as you stay within your approved borrowing limit. That’s more flexible and potentially more cost-effective than an installment loan.
Repayments are relatively easy to fit into your budget. Most lines of credit have low minimum repayments that are easy to fit into your monthly budget. Even if you pay more than the minimum, you can keep your payments low by borrowing only what you need.
Potential for lower interest rates. Secured credit lines have low interest rates, not far above primary mortgage rates. They’re much more affordable than credit cards and unsecured personal loans.
Potential for higher borrowing limits. Credit lines usually come with higher borrowing limits than unsecured loans, especially if they’re secured by a valuable asset like a house.
Cons
Credit lines may tempt you to overspend, hurting your budget and credit score. They can also cost more than expected as time wears on.
May tempt you to borrow too much. The flip side of a generous borrowing limit is the temptation to max it out. That can negatively impact your budget and ding your credit score.
Payments can increase dramatically during the repayment period. Credit lines’ draw periods are sometimes called “teaser periods” due to their low required monthly payments. The switch flips during the repayment period, when the monthly payment is often several times higher.
Can result in asset loss. If you use your credit line responsibly and make timely payments, you have nothing to worry about. But you could lose your house if you default on a home equity line.
Interest rates can rise over time. Most credit lines have variable interest rates. When benchmark rates increase, so do these variable rates. That can increase your total borrowing costs over time.
Do You Need a Line of Credit?
There are some general use cases in which it makes sense to apply for a line of credit.
You have open-ended borrowing needs. If you know you need to borrow money but don’t know exactly when or how much, a line of credit is a better fit than an installment loan. With a line of credit, your risk of borrowing too much is lower.
You want to diversify your credit mix. Your credit mix is an important component of your overall credit score. If you only have installment loans on your credit report, a credit line diversifies your credit mix and may noticeably increase your score.
You have significant equity in a valuable asset, like your house. Many homeowners open home equity lines without a specific purpose in mind. Because a home equity line costs little or nothing to keep open if you don’t draw on it, it’s a useful backstop for unplanned expenses that you can’t (or would prefer not to) pay out of pocket.
You want to avoid a lengthy application process. Certain types of credit lines have relatively fast, easy application processes. If you have good credit and solid income, you can typically apply and get approved for a new credit card in minutes. Qualifying for a portfolio line of credit is even easier.
Line of Credit FAQs
Before you apply for a new line of credit, make sure you understand what you’re getting into. These are some of the most common questions first-time applicants have.
What Can You Use a Line of Credit For?
You can use a credit line for just about any legal purpose. They’re most commonly used for bigger expenses borrowers can’t or don’t want to pay all at once:
Emergency home repairs, like fixing a major plumbing leak or drainage issue
Scheduled home improvements, like kitchen remodels and HVAC upgrades
Major car repairs
Major discretionary purchases, such as a long-planned vacation or a new boat
You can use a credit line to cover everyday expenses, but that raises the odds you’ll use it to spend beyond your means. It’s best to treat your credit line like your emergency savings account, to be used only in specific circumstances.
What Are the Common Types of Credit Lines?
At the highest level, there are two types of credit lines: secured and unsecured. Secured lines are backed by valuable collateral; unsecured lines aren’t.
The most common types of secured credit lines are:
Home equity lines
Portfolio lines
Certain types of business lines secured by business assets, such as equipment or real estate
Lines secured by bank accounts, most often CDs
The most common types of unsecured credit lines are:
Credit cards
Personal lines of credit
Business lines not secured by business assets
Should You Get a Credit Card or Secured Line of Credit?
Both have their uses.
If you’re looking to open a line of credit to finance a major expense or create open-ended borrowing power you can tap or repay over time, a secured line is a better option. It’ll have a higher borrowing limit and, crucially, a lower interest rate than a credit card.
If you’re looking for a daily spending aid you can afford to pay off in full each month, a credit card makes more sense. As long as you use it responsibly, it’ll build your credit over time, which could set you up to earn better rates and terms on future loans and credit lines.
But absent a true emergency, you should always pay off your balance in full to minimize your exposure to famously high credit card interest rates.
Final Word
You can use a credit line for basically anything, but you don’t have to.
In a nutshell, that’s why credit lines are so useful. Unlike an installment loan, a credit line doesn’t obligate you to repay a set amount of money over a set period of time. You need to repay whatever you draw against it, and your borrowing costs could end up higher than expected, but you have a lot more discretion upfront.
Then again, discretion can be risky. Plenty of credit line users find out the hard way that the option to borrow is not the same as the ability to repay. Failing to hold up your end of the bargain, especially on a line secured by your home’s equity, can have serious financial and personal consequences.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
You probably live within a few minutes of at least one bank or credit union branch. If they can’t serve all your financial needs or you just don’t like them for whatever reason, you have literally hundreds of U.S.-based online and mobile bank accounts to choose from instead.
The vast majority of banking customers do just fine with one of these options or the other. But some go farther afield in search of the ideal banking partner. They park at least some of their cash overseas in institutions appropriately known as offshore banks.
Though relatively few Americans who live on U.S. soil have any need for it, offshore banking plays a crucial role in the global financial system and in the financial lives of many American citizens who live or do business abroad. Even if you’re not planning to open an international bank account anytime soon, it’s helpful to understand why offshore banking is a thing and when it makes sense to use.
What Is Offshore Banking?
Offshore banking means banking in a country you don’t live in. Contrary to popular belief, it’s not a situation limited to the rich and unethical. If you’re an American who has a bank account in a country other than the United States, you have an offshore bank account.
Offshore banking makes it easier and less expensive for people who live or do business abroad to manage their international funds.
American citizens living in other countries, known as expats, typically have bank accounts in their countries of residence as well as in the United States. So may Americans who operate businesses in foreign countries and American individuals who earn income abroad, especially if it’s denominated in a foreign currency.
Who Is Eligible for Offshore Banking?
Anyone is eligible to open an offshore bank account as long as they can prove they are who they say they are, fulfill any local regulatory requirements, and meet their chosen bank’s account opening requirements (such as making a minimum deposit). Depending on the bank’s policy, you may need a current residential or business address in the country where you plan to open the account.
Just because you can open a foreign bank account doesn’t mean you should. But it could make sense if any of these scenarios apply to you:
You live or own real estate in another country. Even if you don’t live abroad full-time, a local bank account can help you manage income and expenses earned abroad, potentially at lower cost. Many American retirees who own vacation homes abroad bank locally, as do digital nomads who spend some of the year in the U.S. and the rest elsewhere.
You frequently travel to the same country for business or are temporarily assigned to live there for work. Many U.S. government employees rotate between international postings. So do plenty of private-sector workers in industries like finance, logistics, energy, and manufacturing. If you’re in the same place long enough to stock a fridge and pay utility bills, a local bank account could be convenient.
You have significant investments or business interests in another country. If you own a business that owns assets or earns income in other countries, the company itself may need a bank account there. Depending on the company’s structure, you might need a personal account there as well.
You earn income in a foreign currency. If you’re a contractor or freelancer working abroad or with international clients who pay in their home currency, a foreign bank account could reduce your operating expenses and make it easier to access your earnings.
You often send money to relatives in another country. Western Union’s international wire transfer fees can add up quickly. Transferring funds directly to a foreign bank account you control is often cheaper, though it can take longer.
Benefits of Offshore Banking
Offshore banking is a matter of convenience for Americans living and working abroad. It can also have direct financial benefits, such as access to investment opportunities that aren’t available in the U.S. and reduced exposure to currency exchange rates.
1. Higher Liquidity & Convenience
An international wire transfer is the most reliable way to send money to most countries. But it’s expensive, often on the order of $30 to $50 per transfer, and can take several business days. Regulatory reporting requirements for larger transfers add time and hassle to the process.
If you need a local source of funds in a country where you spend lots of time or have business interests, an offshore bank account is more convenient and offers easier access to your cash when you need it. It’s especially useful if you’re employed abroad and get paid in the local currency. Many international businesses aren’t set up to pay into U.S. bank accounts.
2. Asset Protection
Although you must comply with all applicable U.S. and local laws, an offshore bank account could shield some of your assets from U.S.-based creditors. An international bank account isn’t a practical liability shield for most regular Americans, but if you own a business that fails or experiences significant financial distress, it could make it more difficult for creditors to enforce judgments against you.
3. Higher Interest Rates
As in the United States, bank interest rates in other countries are influenced by (and often closely tied to) benchmark rates set by local central banks. And while local benchmark rates vary considerably, they’re often higher than in the United States. That means you could earn higher yields on offshore savings accounts, though taxes and currency fluctuations could reduce your net income somewhat.
4. Investment & Currency Diversification
Offshore bank accounts often come with access to local financial professionals and wealth managers, and more generally to investment opportunities not readily available to people based in the United States.
Relatedly, while the U.S. dollar is relatively stable, an offshore bank account denominated in another currency can reduce the impact of natural currency fluctuations. That’s especially important if you’re paid in a non-U.S. currency and don’t want to pay currency exchange fees on every paycheck or lose purchasing power if the U.S. dollar declines in value.
How to Open an Offshore Bank Account
Though policies and procedures vary from bank to bank, the process to open a bank account abroad should feel familiar if you’ve opened a bank account in the United States. Follow these steps:
Choose your account type. Your ideal account type depends on your objectives for the account. If the aim is to save foreign income, an interest-bearing savings account is the best fit. If you’re paying day-to-day expenses out of the account, you need a checking account or its local equivalent.
Make sure you’re eligible. Confirm that you meet the bank’s eligibility requirements. For example, some offshore banks might refuse your application if you have no current local address. If you’re trying to open a joint bank account with a spouse or domestic partner, make sure the bank allows that ownership type and that your co-owner meets eligibility requirements.
Choose your currency. Generally, international banks denominate accounts in local currencies, but some use the U.S. dollar instead. If you earn income in a currency other than the U.S. dollar, a local-currency account could significantly reduce your foreign exchange expenses.
Gather proof of identity, residence, and possibly employment. Gather up your U.S. passport, government-issued ID (like a driver’s license), and proof of local residence or ownership if required. Ask the bank what else you need to prove your residence and identity, and if you need to verify local employment for regulatory or immigration enforcement purposes. Be prepared to get documents notarized or provide an apostille stamp, which might require a trip to the nearest U.S. embassy or consulate.
Fund the account. If the bank has a minimum required opening deposit, you might need to set up a wire transfer from a U.S. bank account. If you already have funds in the bank’s home country, a local transfer is likely to be cheaper.
Set up or transfer bills and deposits. Don’t transfer bills related to your personal or business activities in the United States, as paying those out of a foreign account is likely to be more expensive than from a U.S.-based account (if it’s even possible). But do set up or transfer bills charged by local vendors, like municipal utilities in the international city where you live, along with direct deposit from any local employers or other income sources.
Offshore Banking FAQs
Despite its exotic and vaguely dangerous reputation, offshore banking is a straightforward concept. These are some of the most common questions nonexperts have as they get up to speed on it.
Is Offshore Banking Illegal?
No, offshore banking is not illegal.
There is some truth to the idea that offshore banking is popular with wealthy people seeking to avoid U.S. or foreign taxes or criminals interested in obscuring money flows across international borders. But there’s nothing inherently illegal or unethical about having a foreign bank account.
It’s true that the Internal Revenue Service and other U.S.-based financial regulators closely monitor U.S. citizens’ overseas accounts for signs of tax evasion or other suspected criminal activities. Once your combined foreign bank account balance reaches $10,000, you need to file an annual disclosure with the IRS and may need to meet other regulatory requirements.
If you plan to open an international bank account, consider consulting a U.S.-based tax professional who understands offshore banking rules.
What Countries Have Offshore Banking?
Any country that allows noncitizens to open a local bank account can be said to have offshore banking. In fact, by total account value, the United States is one of the world’s biggest offshore banking destinations for non-U.S. citizens thanks to its well-developed banking system, relative political stability, and the U.S. dollar’s status as the de facto currency of international business.
For Americans, top offshore banking destinations include low-tax Caribbean nations like the Bahamas and the Cayman Islands, U.K. crown dependencies like Jersey and Guernsey, and Switzerland (which has historically had strict financial secrecy laws).
Can I Open an Offshore Bank Account Online?
It depends on whether your chosen offshore bank has an online application process open to nonlocals, but many international banks allow new customers to open accounts without visiting a physical branch. This is an important practical consideration if you’re looking to open an account in a new country ahead of your move there.
If it’s not clear from the website whether you can open an account online, call the bank’s business office and ask. To speed the process along, understand which identity- and asset-verification documents you’ll be asked to provide.
Is Offshore Banking Worth It?
It depends on where you live, where you earn income, and other aspects of your life and financial situation. For many people, the answer changes over time.
Offshore banking often makes sense when:
You currently live or work in another country full-time.
You’re planning to move abroad.
You spend a significant amount of time in another country each year (for example, you own a vacation home outside the U.S. and spend winters there).
You own a business or real estate in another country.
You regularly travel abroad for business.
You earn significant income in a currency other than the U.S. dollar.
You support family members in another country.
However, there are no absolutes in offshore banking. If you meet one or more of these criteria but aren’t sure whether you really need an international bank account, ask your financial advisor, accountant, or another financial professional you trust.
Final Word
Offshore banking has a complicated reputation fed in part by a complicated history. Frankly, it sounds like something extraordinarily rich people who don’t play by the same rules as everyone else would do. And offshore banking is indeed integral to many multimillionaires’ and billionaires’ asset-protection strategies.
It’s also used and abused by international business people skirting (or outright violating) U.S. tax laws. That’s why the IRS is so strict about requiring disclosure for larger offshore bank accounts. The agency needs to know how much money individual U.S. taxpayers and corporations are hiding abroad, and where it is.
But offshore banking is also a legitimate financial activity done by hundreds of thousands if not millions of Americans with nothing to hide.
@media (max-width: 1200px)
body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;
Michael R. Lewis is a retired corporate executive and entrepreneur. During his 40+ year career, Lewis created and sold ten different companies ranging from oil exploration to healthcare software. He has also been a Registered Investment Adviser with the SEC, a Principal of one of the larger management consulting firms in the country, and a Senior Vice President of the largest not-for-profit health insurer in the United States. Mike’s articles on personal investments, business management, and the economy are available on several online publications. He’s a father and grandfather, who also writes non-fiction and biographical pieces about growing up in the plains of West Texas – including The Storm.
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
You probably live within a few minutes of at least one bank or credit union branch. If they can’t serve all your financial needs or you just don’t like them for whatever reason, you have literally hundreds of U.S.-based online and mobile bank accounts to choose from instead.
The vast majority of banking customers do just fine with one of these options or the other. But some go farther afield in search of the ideal banking partner. They park at least some of their cash overseas in institutions appropriately known as offshore banks.
Though relatively few Americans who live on U.S. soil have any need for it, offshore banking plays a crucial role in the global financial system and in the financial lives of many American citizens who live or do business abroad. Even if you’re not planning to open an international bank account anytime soon, it’s helpful to understand why offshore banking is a thing and when it makes sense to use.
What Is Offshore Banking?
Offshore banking means banking in a country you don’t live in. Contrary to popular belief, it’s not a situation limited to the rich and unethical. If you’re an American who has a bank account in a country other than the United States, you have an offshore bank account.
Offshore banking makes it easier and less expensive for people who live or do business abroad to manage their international funds.
American citizens living in other countries, known as expats, typically have bank accounts in their countries of residence as well as in the United States. So may Americans who operate businesses in foreign countries and American individuals who earn income abroad, especially if it’s denominated in a foreign currency.
Who Is Eligible for Offshore Banking?
Anyone is eligible to open an offshore bank account as long as they can prove they are who they say they are, fulfill any local regulatory requirements, and meet their chosen bank’s account opening requirements (such as making a minimum deposit). Depending on the bank’s policy, you may need a current residential or business address in the country where you plan to open the account.
Just because you can open a foreign bank account doesn’t mean you should. But it could make sense if any of these scenarios apply to you:
You live or own real estate in another country. Even if you don’t live abroad full-time, a local bank account can help you manage income and expenses earned abroad, potentially at lower cost. Many American retirees who own vacation homes abroad bank locally, as do digital nomads who spend some of the year in the U.S. and the rest elsewhere.
You frequently travel to the same country for business or are temporarily assigned to live there for work. Many U.S. government employees rotate between international postings. So do plenty of private-sector workers in industries like finance, logistics, energy, and manufacturing. If you’re in the same place long enough to stock a fridge and pay utility bills, a local bank account could be convenient.
You have significant investments or business interests in another country. If you own a business that owns assets or earns income in other countries, the company itself may need a bank account there. Depending on the company’s structure, you might need a personal account there as well.
You earn income in a foreign currency. If you’re a contractor or freelancer working abroad or with international clients who pay in their home currency, a foreign bank account could reduce your operating expenses and make it easier to access your earnings.
You often send money to relatives in another country. Western Union’s international wire transfer fees can add up quickly. Transferring funds directly to a foreign bank account you control is often cheaper, though it can take longer.
Benefits of Offshore Banking
Offshore banking is a matter of convenience for Americans living and working abroad. It can also have direct financial benefits, such as access to investment opportunities that aren’t available in the U.S. and reduced exposure to currency exchange rates.
1. Higher Liquidity & Convenience
An international wire transfer is the most reliable way to send money to most countries. But it’s expensive, often on the order of $30 to $50 per transfer, and can take several business days. Regulatory reporting requirements for larger transfers add time and hassle to the process.
If you need a local source of funds in a country where you spend lots of time or have business interests, an offshore bank account is more convenient and offers easier access to your cash when you need it. It’s especially useful if you’re employed abroad and get paid in the local currency. Many international businesses aren’t set up to pay into U.S. bank accounts.
2. Asset Protection
Although you must comply with all applicable U.S. and local laws, an offshore bank account could shield some of your assets from U.S.-based creditors. An international bank account isn’t a practical liability shield for most regular Americans, but if you own a business that fails or experiences significant financial distress, it could make it more difficult for creditors to enforce judgments against you.
3. Higher Interest Rates
As in the United States, bank interest rates in other countries are influenced by (and often closely tied to) benchmark rates set by local central banks. And while local benchmark rates vary considerably, they’re often higher than in the United States. That means you could earn higher yields on offshore savings accounts, though taxes and currency fluctuations could reduce your net income somewhat.
4. Investment & Currency Diversification
Offshore bank accounts often come with access to local financial professionals and wealth managers, and more generally to investment opportunities not readily available to people based in the United States.
Relatedly, while the U.S. dollar is relatively stable, an offshore bank account denominated in another currency can reduce the impact of natural currency fluctuations. That’s especially important if you’re paid in a non-U.S. currency and don’t want to pay currency exchange fees on every paycheck or lose purchasing power if the U.S. dollar declines in value.
How to Open an Offshore Bank Account
Though policies and procedures vary from bank to bank, the process to open a bank account abroad should feel familiar if you’ve opened a bank account in the United States. Follow these steps:
Choose your account type. Your ideal account type depends on your objectives for the account. If the aim is to save foreign income, an interest-bearing savings account is the best fit. If you’re paying day-to-day expenses out of the account, you need a checking account or its local equivalent.
Make sure you’re eligible. Confirm that you meet the bank’s eligibility requirements. For example, some offshore banks might refuse your application if you have no current local address. If you’re trying to open a joint bank account with a spouse or domestic partner, make sure the bank allows that ownership type and that your co-owner meets eligibility requirements.
Choose your currency. Generally, international banks denominate accounts in local currencies, but some use the U.S. dollar instead. If you earn income in a currency other than the U.S. dollar, a local-currency account could significantly reduce your foreign exchange expenses.
Gather proof of identity, residence, and possibly employment. Gather up your U.S. passport, government-issued ID (like a driver’s license), and proof of local residence or ownership if required. Ask the bank what else you need to prove your residence and identity, and if you need to verify local employment for regulatory or immigration enforcement purposes. Be prepared to get documents notarized or provide an apostille stamp, which might require a trip to the nearest U.S. embassy or consulate.
Fund the account. If the bank has a minimum required opening deposit, you might need to set up a wire transfer from a U.S. bank account. If you already have funds in the bank’s home country, a local transfer is likely to be cheaper.
Set up or transfer bills and deposits. Don’t transfer bills related to your personal or business activities in the United States, as paying those out of a foreign account is likely to be more expensive than from a U.S.-based account (if it’s even possible). But do set up or transfer bills charged by local vendors, like municipal utilities in the international city where you live, along with direct deposit from any local employers or other income sources.
Offshore Banking FAQs
Despite its exotic and vaguely dangerous reputation, offshore banking is a straightforward concept. These are some of the most common questions nonexperts have as they get up to speed on it.
Is Offshore Banking Illegal?
No, offshore banking is not illegal.
There is some truth to the idea that offshore banking is popular with wealthy people seeking to avoid U.S. or foreign taxes or criminals interested in obscuring money flows across international borders. But there’s nothing inherently illegal or unethical about having a foreign bank account.
It’s true that the Internal Revenue Service and other U.S.-based financial regulators closely monitor U.S. citizens’ overseas accounts for signs of tax evasion or other suspected criminal activities. Once your combined foreign bank account balance reaches $10,000, you need to file an annual disclosure with the IRS and may need to meet other regulatory requirements.
If you plan to open an international bank account, consider consulting a U.S.-based tax professional who understands offshore banking rules.
What Countries Have Offshore Banking?
Any country that allows noncitizens to open a local bank account can be said to have offshore banking. In fact, by total account value, the United States is one of the world’s biggest offshore banking destinations for non-U.S. citizens thanks to its well-developed banking system, relative political stability, and the U.S. dollar’s status as the de facto currency of international business.
For Americans, top offshore banking destinations include low-tax Caribbean nations like the Bahamas and the Cayman Islands, U.K. crown dependencies like Jersey and Guernsey, and Switzerland (which has historically had strict financial secrecy laws).
Can I Open an Offshore Bank Account Online?
It depends on whether your chosen offshore bank has an online application process open to nonlocals, but many international banks allow new customers to open accounts without visiting a physical branch. This is an important practical consideration if you’re looking to open an account in a new country ahead of your move there.
If it’s not clear from the website whether you can open an account online, call the bank’s business office and ask. To speed the process along, understand which identity- and asset-verification documents you’ll be asked to provide.
Is Offshore Banking Worth It?
It depends on where you live, where you earn income, and other aspects of your life and financial situation. For many people, the answer changes over time.
Offshore banking often makes sense when:
You currently live or work in another country full-time.
You’re planning to move abroad.
You spend a significant amount of time in another country each year (for example, you own a vacation home outside the U.S. and spend winters there).
You own a business or real estate in another country.
You regularly travel abroad for business.
You earn significant income in a currency other than the U.S. dollar.
You support family members in another country.
However, there are no absolutes in offshore banking. If you meet one or more of these criteria but aren’t sure whether you really need an international bank account, ask your financial advisor, accountant, or another financial professional you trust.
Final Word
Offshore banking has a complicated reputation fed in part by a complicated history. Frankly, it sounds like something extraordinarily rich people who don’t play by the same rules as everyone else would do. And offshore banking is indeed integral to many multimillionaires’ and billionaires’ asset-protection strategies.
It’s also used and abused by international business people skirting (or outright violating) U.S. tax laws. That’s why the IRS is so strict about requiring disclosure for larger offshore bank accounts. The agency needs to know how much money individual U.S. taxpayers and corporations are hiding abroad, and where it is.
But offshore banking is also a legitimate financial activity done by hundreds of thousands if not millions of Americans with nothing to hide.
@media (max-width: 1200px)
body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;
Michael R. Lewis is a retired corporate executive and entrepreneur. During his 40+ year career, Lewis created and sold ten different companies ranging from oil exploration to healthcare software. He has also been a Registered Investment Adviser with the SEC, a Principal of one of the larger management consulting firms in the country, and a Senior Vice President of the largest not-for-profit health insurer in the United States. Mike’s articles on personal investments, business management, and the economy are available on several online publications. He’s a father and grandfather, who also writes non-fiction and biographical pieces about growing up in the plains of West Texas – including The Storm.
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
You probably live within a few minutes of at least one bank or credit union branch. If they can’t serve all your financial needs or you just don’t like them for whatever reason, you have literally hundreds of U.S.-based online and mobile bank accounts to choose from instead.
The vast majority of banking customers do just fine with one of these options or the other. But some go farther afield in search of the ideal banking partner. They park at least some of their cash overseas in institutions appropriately known as offshore banks.
Though relatively few Americans who live on U.S. soil have any need for it, offshore banking plays a crucial role in the global financial system and in the financial lives of many American citizens who live or do business abroad. Even if you’re not planning to open an international bank account anytime soon, it’s helpful to understand why offshore banking is a thing and when it makes sense to use.
What Is Offshore Banking?
Offshore banking means banking in a country you don’t live in. Contrary to popular belief, it’s not a situation limited to the rich and unethical. If you’re an American who has a bank account in a country other than the United States, you have an offshore bank account.
Offshore banking makes it easier and less expensive for people who live or do business abroad to manage their international funds.
American citizens living in other countries, known as expats, typically have bank accounts in their countries of residence as well as in the United States. So may Americans who operate businesses in foreign countries and American individuals who earn income abroad, especially if it’s denominated in a foreign currency.
Who Is Eligible for Offshore Banking?
Anyone is eligible to open an offshore bank account as long as they can prove they are who they say they are, fulfill any local regulatory requirements, and meet their chosen bank’s account opening requirements (such as making a minimum deposit). Depending on the bank’s policy, you may need a current residential or business address in the country where you plan to open the account.
Just because you can open a foreign bank account doesn’t mean you should. But it could make sense if any of these scenarios apply to you:
You live or own real estate in another country. Even if you don’t live abroad full-time, a local bank account can help you manage income and expenses earned abroad, potentially at lower cost. Many American retirees who own vacation homes abroad bank locally, as do digital nomads who spend some of the year in the U.S. and the rest elsewhere.
You frequently travel to the same country for business or are temporarily assigned to live there for work. Many U.S. government employees rotate between international postings. So do plenty of private-sector workers in industries like finance, logistics, energy, and manufacturing. If you’re in the same place long enough to stock a fridge and pay utility bills, a local bank account could be convenient.
You have significant investments or business interests in another country. If you own a business that owns assets or earns income in other countries, the company itself may need a bank account there. Depending on the company’s structure, you might need a personal account there as well.
You earn income in a foreign currency. If you’re a contractor or freelancer working abroad or with international clients who pay in their home currency, a foreign bank account could reduce your operating expenses and make it easier to access your earnings.
You often send money to relatives in another country. Western Union’s international wire transfer fees can add up quickly. Transferring funds directly to a foreign bank account you control is often cheaper, though it can take longer.
Benefits of Offshore Banking
Offshore banking is a matter of convenience for Americans living and working abroad. It can also have direct financial benefits, such as access to investment opportunities that aren’t available in the U.S. and reduced exposure to currency exchange rates.
1. Higher Liquidity & Convenience
An international wire transfer is the most reliable way to send money to most countries. But it’s expensive, often on the order of $30 to $50 per transfer, and can take several business days. Regulatory reporting requirements for larger transfers add time and hassle to the process.
If you need a local source of funds in a country where you spend lots of time or have business interests, an offshore bank account is more convenient and offers easier access to your cash when you need it. It’s especially useful if you’re employed abroad and get paid in the local currency. Many international businesses aren’t set up to pay into U.S. bank accounts.
2. Asset Protection
Although you must comply with all applicable U.S. and local laws, an offshore bank account could shield some of your assets from U.S.-based creditors. An international bank account isn’t a practical liability shield for most regular Americans, but if you own a business that fails or experiences significant financial distress, it could make it more difficult for creditors to enforce judgments against you.
3. Higher Interest Rates
As in the United States, bank interest rates in other countries are influenced by (and often closely tied to) benchmark rates set by local central banks. And while local benchmark rates vary considerably, they’re often higher than in the United States. That means you could earn higher yields on offshore savings accounts, though taxes and currency fluctuations could reduce your net income somewhat.
4. Investment & Currency Diversification
Offshore bank accounts often come with access to local financial professionals and wealth managers, and more generally to investment opportunities not readily available to people based in the United States.
Relatedly, while the U.S. dollar is relatively stable, an offshore bank account denominated in another currency can reduce the impact of natural currency fluctuations. That’s especially important if you’re paid in a non-U.S. currency and don’t want to pay currency exchange fees on every paycheck or lose purchasing power if the U.S. dollar declines in value.
How to Open an Offshore Bank Account
Though policies and procedures vary from bank to bank, the process to open a bank account abroad should feel familiar if you’ve opened a bank account in the United States. Follow these steps:
Choose your account type. Your ideal account type depends on your objectives for the account. If the aim is to save foreign income, an interest-bearing savings account is the best fit. If you’re paying day-to-day expenses out of the account, you need a checking account or its local equivalent.
Make sure you’re eligible. Confirm that you meet the bank’s eligibility requirements. For example, some offshore banks might refuse your application if you have no current local address. If you’re trying to open a joint bank account with a spouse or domestic partner, make sure the bank allows that ownership type and that your co-owner meets eligibility requirements.
Choose your currency. Generally, international banks denominate accounts in local currencies, but some use the U.S. dollar instead. If you earn income in a currency other than the U.S. dollar, a local-currency account could significantly reduce your foreign exchange expenses.
Gather proof of identity, residence, and possibly employment. Gather up your U.S. passport, government-issued ID (like a driver’s license), and proof of local residence or ownership if required. Ask the bank what else you need to prove your residence and identity, and if you need to verify local employment for regulatory or immigration enforcement purposes. Be prepared to get documents notarized or provide an apostille stamp, which might require a trip to the nearest U.S. embassy or consulate.
Fund the account. If the bank has a minimum required opening deposit, you might need to set up a wire transfer from a U.S. bank account. If you already have funds in the bank’s home country, a local transfer is likely to be cheaper.
Set up or transfer bills and deposits. Don’t transfer bills related to your personal or business activities in the United States, as paying those out of a foreign account is likely to be more expensive than from a U.S.-based account (if it’s even possible). But do set up or transfer bills charged by local vendors, like municipal utilities in the international city where you live, along with direct deposit from any local employers or other income sources.
Offshore Banking FAQs
Despite its exotic and vaguely dangerous reputation, offshore banking is a straightforward concept. These are some of the most common questions nonexperts have as they get up to speed on it.
Is Offshore Banking Illegal?
No, offshore banking is not illegal.
There is some truth to the idea that offshore banking is popular with wealthy people seeking to avoid U.S. or foreign taxes or criminals interested in obscuring money flows across international borders. But there’s nothing inherently illegal or unethical about having a foreign bank account.
It’s true that the Internal Revenue Service and other U.S.-based financial regulators closely monitor U.S. citizens’ overseas accounts for signs of tax evasion or other suspected criminal activities. Once your combined foreign bank account balance reaches $10,000, you need to file an annual disclosure with the IRS and may need to meet other regulatory requirements.
If you plan to open an international bank account, consider consulting a U.S.-based tax professional who understands offshore banking rules.
What Countries Have Offshore Banking?
Any country that allows noncitizens to open a local bank account can be said to have offshore banking. In fact, by total account value, the United States is one of the world’s biggest offshore banking destinations for non-U.S. citizens thanks to its well-developed banking system, relative political stability, and the U.S. dollar’s status as the de facto currency of international business.
For Americans, top offshore banking destinations include low-tax Caribbean nations like the Bahamas and the Cayman Islands, U.K. crown dependencies like Jersey and Guernsey, and Switzerland (which has historically had strict financial secrecy laws).
Can I Open an Offshore Bank Account Online?
It depends on whether your chosen offshore bank has an online application process open to nonlocals, but many international banks allow new customers to open accounts without visiting a physical branch. This is an important practical consideration if you’re looking to open an account in a new country ahead of your move there.
If it’s not clear from the website whether you can open an account online, call the bank’s business office and ask. To speed the process along, understand which identity- and asset-verification documents you’ll be asked to provide.
Is Offshore Banking Worth It?
It depends on where you live, where you earn income, and other aspects of your life and financial situation. For many people, the answer changes over time.
Offshore banking often makes sense when:
You currently live or work in another country full-time.
You’re planning to move abroad.
You spend a significant amount of time in another country each year (for example, you own a vacation home outside the U.S. and spend winters there).
You own a business or real estate in another country.
You regularly travel abroad for business.
You earn significant income in a currency other than the U.S. dollar.
You support family members in another country.
However, there are no absolutes in offshore banking. If you meet one or more of these criteria but aren’t sure whether you really need an international bank account, ask your financial advisor, accountant, or another financial professional you trust.
Final Word
Offshore banking has a complicated reputation fed in part by a complicated history. Frankly, it sounds like something extraordinarily rich people who don’t play by the same rules as everyone else would do. And offshore banking is indeed integral to many multimillionaires’ and billionaires’ asset-protection strategies.
It’s also used and abused by international business people skirting (or outright violating) U.S. tax laws. That’s why the IRS is so strict about requiring disclosure for larger offshore bank accounts. The agency needs to know how much money individual U.S. taxpayers and corporations are hiding abroad, and where it is.
But offshore banking is also a legitimate financial activity done by hundreds of thousands if not millions of Americans with nothing to hide.
@media (max-width: 1200px)
body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;
Michael R. Lewis is a retired corporate executive and entrepreneur. During his 40+ year career, Lewis created and sold ten different companies ranging from oil exploration to healthcare software. He has also been a Registered Investment Adviser with the SEC, a Principal of one of the larger management consulting firms in the country, and a Senior Vice President of the largest not-for-profit health insurer in the United States. Mike’s articles on personal investments, business management, and the economy are available on several online publications. He’s a father and grandfather, who also writes non-fiction and biographical pieces about growing up in the plains of West Texas – including The Storm.
Average mortgage rates tumbled yesterday following a first-class inflation report. In some cases, they are now back below 7% for an excellent borrower wanting a conventional, 30-year, fixed-rate mortgage. Phew!
First thing, markets were signaling that mortgage rates today might fall but perhaps only a little. However, these early mini-trends often switch speed or direction later in the day.
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.122%
7.147%
+0.15
Conventional 15-year fixed
6.297%
6.321%
+0.1
Conventional 20-year fixed
7.34%
7.403%
+0.03
Conventional 10-year fixed
6.872%
6.985%
+0.05
30-year fixed FHA
7.065%
7.685%
+0.02
15-year fixed FHA
6.503%
6.972%
+0.16
30-year fixed VA
6.75%
6.959%
+0.25
15-year fixed VA
6.625%
6.965%
Unchanged
5/1 ARM Conventional
6.75%
7.266%
Unchanged
5/1 ARM FHA
6.75%
7.532%
+0.11
5/1 ARM VA
6.75%
7.532%
+0.11
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock a mortgage rate today?
The chances of mortgage rates falling far and for long later this year improved yesterday. That day’s inflation report helped a lot.
But I reckon we’ll probably need a heap more similarly rate-friendly data in order to bring about that significant and sustained fall. And, while it’s possible such a heap will be delivered quickly, it’s probably more likely we’ll see any improvements late this year or sometime in 2024.
So, my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCK if closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:
The yield on 10-year Treasury notes tumbled to 3.81% from 3.91%. (Very good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were higher. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $75.65 from $75.94 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices rose to $1,964 from $1,959 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — held steady at 81 out of 100. (Neutral for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might fall. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
What’s driving mortgage rates today?
Yesterday
Yesterday’s consumer price index (CPI) was a real tonic for mortgage rates. Comerica Bank’s chief economist said that “the fever is breaking“ for inflation.
And The Wall Street Journal (paywall) suggested: “Inflation cooled last month to its slowest pace in more than two years, giving Americans relief from a painful period of rising prices and boosting the chances that the Federal Reserve will stop raising interest rates after an expected increase this month.“
Note that the Journal’s writers (and many others) still expect a rise in general interest rates on Jul. 26. And that might limit how far mortgage rates can fall in the short term.
But other things could also limit the extent and duration of further decreases in mortgage rates. More and more people are talking up the possibility of a “soft landing.“ That refers to the Fed successfully driving down inflation without throwing the country into a recession.
But those of us wanting lower mortgage rates were kind of hoping for a recession. Of course, we didn’t want the bad stuff for the wider population. But mortgage rates tend to fall when the economy is in trouble and rise when it’s doing well.
So, while some falls in mortgage rates might be on the cards later in the year or in 2024, they might not be as big as we’d once been able to hope.
The rest of this week
This morning’s producer price index (PPI) for June was nothing like as important to mortgage rates as yesterday’s CPI. It and tomorrow’s import price index (IPI) are generally seen as secondary inflation measures. But, with markets hyper-sensitive to inflation news right now, they’re worth observing.
Today’s PPI was probably good for mortgage rates. The headline figure (PPI for final demand) came in at 0.1% in June, compared with the expected 0.2%. Just don’t expect it to have as positive an effect as yesterday’s news.
Please read the weekend edition of this daily report for more background on what’s happening to mortgage rates.
Recent trends
According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.
Freddie’s Jul. 6 report put that same weekly average at 6.81%, up from the previous week’s 6.71%. But Freddie is almost always out of date by the time it announces its weekly figures.
In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. Andwe now update this section on Fridays.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q2/23) and the following three quarters (Q3/23, Q4/23 and Q1/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. They were both updated in June.
In the past, we included Freddie Mac’s forecasts. But it seems to have given up on publishing those.
Forecaster
Q2/23
Q3/23
Q4/23
Q1/24
Fannie Mae
6.5%
6.6%
6.3%
6.1%
MBA
6.5%
6.2%
5.8%
5.6%
Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change, unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
Sure, you’re probably not using paper checks for most things. But are you returning payments to medical providers and insurance companies in the mail? Paying by check for the random parking ticket or your child’s piano lessons? Now is a good time to stop: Check fraud tied to mail theft is up nationwide, according to a February alert from the Financial Crimes Enforcement Network. And letter carrier robberies are also on the rise.
This is partially due to the effects of the pandemic, when thieves targeted government relief checks in the mail. “Fraudsters just went back to tried-and-true potential attack factors that seemed to be working,” says Michael Bruemmer, head of global data breach resolution for Experian.
The U.S. Postal Service is vulnerable, and thieves who can access your checks can change the amount and ferret those funds right out of your bank account. And then it can take weeks to get the funds back.
“It’s absolutely a life disruption event when you mail a check and it’s been intercepted,” says Mary Ann Miller, fraud and cybercrime executive advisor and vice president of client experience at consumer identity company Prove. “That can take all the money out of your account at once.”
Here are some steps to keep yourself safe from check fraud — and what to do if you’re a victim.
Use payment alternatives
Look for ways to pay your bills that don’t require using the mail. Check your statement for online payment instructions, for example. “We are beginning to see more online options,” Miller says. “In fact, some medical providers, like One Medical, have a very nice option to pay from a mobile app along with all of your medical information. I find it super helpful and modern.”
If you’re paying individuals, ask if they’ll accept electronic payment through PayPal, Venmo, Zelle or another cash app. “There’s really no need to be writing checks today,” Bruemmer says.
Working with a vendor that doesn’t offer an easy way to pay online? Call and ask if you can pay over the phone. “Paying by phone via the IVR — interactive voice response — or a live customer service representative is definitely a preferred option,” Miller says. “Just make sure you are calling the correct number for the utility or medical provider.”
And in general, experts recommend using credit cards to transact, whenever possible. “You have a lot more protection globally with a credit card, if you’re traveling internationally, or if you’re buying things online,” says Derek Miser, an investment advisor and CEO at Miser Wealth Partners in Knoxville, Tennessee.
Send checks safely
If you must send a check, take steps to lower the chances of financial mayhem. If it’s a big payment, consider using a shipper like UPS or FedEx. “They do accept checks and provide a tracking number,” Miller says.
If you’re using the U.S. Postal Service, send your payment in a security envelope and take it directly to the post office, bypassing mailboxes and mail carriers. You can also write your checks using a black gel ink pen to make it harder for criminals to wash your checks (the ink soaks into the paper).
If you’re sending a check to someone, ask them to let you know once they receive it. That way, if too much time has passed and the recipient hasn’t gotten the check, you can place a stop payment, Miller suggests.
One last safeguard: Keep enough funds in your checking account to pay the bills, but put the rest elsewhere, such as a linked savings account. The smaller your checking account balance, the less money that can be accessed by someone forging a check against your account.
Take action if a check goes awry
If you suspect a check has fallen into the wrong hands, call your bank right away. Then file a police report and contact the person or business that was meant to receive the check. If you were making a payment, you may have to make arrangements to make another payment to prevent late fees or interest.
Be forewarned: Processes for returning fraudulently lost money to bank accounts vary by institution, and some timelines are lengthy. “The customer generally is made whole, but that could be months,” Miller says.
In the meantime, consider putting a fraud alert on your credit reports in case someone tries to open credit in your name, and go over your bank statements and credit reports with an eagle eye. Note that you’re eligible for a free credit report from each of the three major reporting agencies each year at AnnualCreditReport.com.
You can also set up check monitoring at some banks, from which you’ll receive text messages or alerts when transactions over a certain amount are cashed.
“I would say now that just about every bank has some sort of monitoring,” Bruemmer says. “Take advantage of that free alerting that comes from being a member of a financial institution.”
This article was written by NerdWallet and was originally published by The Associated Press.
Buying new furniture can be an exciting way to personalize and update your home, whether your taste runs towards a sleek, modern look, a funky boho vibe, or anything in between. But furniture can be expensive, so you’ll likely want to shop at the right time to get the best possible deal.
When precisely that is will typically vary based on what you are hunting for. Indoor furniture may be on sale in the winter and summer, but outdoor pieces may be marked down at the end of summer and in the fall.
To help you save a bundle on your new furnishings, no matter what you may be looking for, read on for smart intel and advice.
When Is the Best Time to Buy Furniture?
The best time of year to buy furniture depends on which kind of furniture you’re talking about. Here are some rules of thumb to keep in mind as you redesign your living space.
Indoor Furniture
Like many other manufactured goods, sales on indoor furniture are dependent on the release of new pieces: when a showroom needs to make room for next season’s stock, they put the older stuff on sale. New furniture designs tend to be released in spring and fall, which means the best sales happen at the end of the winter and summer seasons.
So for indoor furnishings like beds and couches, shopping at your local furniture stores in January/February and July/August and paying special attention to any seasonal or holiday sales may offer decent savings on the cost.
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Outdoor Furniture
Outdoor furniture, on the other hand, tends to be released in the late winter and spring between February and April. Shoppers might consider the earlier part of that range the best time of year to buy furniture for outdoor spaces in plenty of time for the long, sunny days of summer.
However, furniture shops also generally want to have that stock off their floor by August, which means there are usually some great outdoor furniture sales to shop over the summer and particularly towards early fall.
Custom Furniture
Having a piece (or three) hand-built to your specifications can bring your interior design dreams to life. However, on-demand, custom-built furniture typically costs more and is less likely to go on sale the way ready-made furniture does.
That said, buying custom furniture can be better for your budget in the long run if it means you won’t be itching to change your furniture again in a couple of years — or if it means your furnishings are of higher quality and, hopefully, a longer life. Plus, buying custom designs from a small business, or even an individual crafter, can feel more rewarding than purchasing something from a big-box store.
Recommended: Budgeting for Basic Living Expenses
Furniture Shopping on Holiday Weekends
As is true of many major purchases, holiday weekends and annual sales can offer excellent opportunities to buy furniture on the (relatively) cheap. Some holidays that routinely bring furniture sales include:
• Presidents Day
• Memorial Day
• Fourth of July
• Labor Day
• Black Friday and other winter holiday sales events.
Many retailers offer regular sales in addition to these events, so it’s always a good idea to watch for promotions. Signing up for the store’s email newsletter can help keep you apprised of their ongoing sales events, and many dealers also offer clearance stock year-round that could be worth perusing.
Recommended: 25+ Tips for Buying Furniture on a Budget
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General Furniture-Buying Tips
No matter what time of year you shop for your furnishings, the following tips can help you find a good deal and get the most for the money you do spend.
You can also benefit from them if you’re budgeting to buy a house and putting in offers; you want to get the best possible price if you’ll be filling a home with new furniture.
Being Patient
Furniture — especially furniture you want to keep around for a decade or longer — is a big purchase. It’s worth waiting to find the right piece rather than dropping a bunch of money on one that’s only okay.
If you’re furnishing your new home for the first time and need something fast, consider visiting a local thrift shop or surfing Craigslist. You might be able to find an inexpensive, pre-owned piece that’s only temporary, but still workable — and won’t eat too much into your budget.
💡 Quick Tip: When you overdraft your checking account, you’ll likely pay a non-sufficient fund fee of, say, $35. Look into linking a savings account to your checking account as a backup to avoid that, or shop around for a bank that doesn’t charge you for overdrafting.
Shopping Around
With so many design aesthetics and price points to choose from, furniture shopping is not a time for brand loyalty. You likely shop around for the best deals on groceries or when looking to switch bank accounts, so apply the same principle here. Shopping around at different dealers can help you find the best deal for your needs, but also give you more ideas and inspiration when it comes to creating a cohesive look for your home.
Recommended: Passive Income Ideas to Build Wealth
Consider Shopping Online
Online shopping for furniture can open a whole new world of color and design options. Some discount furniture retailers don’t offer physical storefronts, which can make shopping a little tricky. Choosing certain pieces of furniture, like couches and armchairs, for example, may be easier if you try them before you buy them.
Many online furniture retailers do offer return policies, which can help make your purchase less stressful, knowing that if it doesn’t work out, you’re not stuck with the product. And at online stores that do have brick-and-mortar locations, you could visit in person, try out a certain model, and then order online later, which may give you a better opportunity to compare the pieces you’re considering side-by-side.
Asking About the Warranty
Since furniture does tend to be a major expense, you want to make sure it’s built to last and has some guarantee to go with that. Many furniture sellers do offer warranties (just as some home warranties exist), and the fine print may also specify what the return policy is. In short, it’s worth getting familiar with.
💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.
The Takeaway
Shopping for furniture during certain times of the year can help you save money on a potentially expensive project like furnishing your home. When budgeting to buy a house, furnishings are just one of many things to save for, so it’s a goal that might take a backseat to expenses that are essential to homeownership, like the down payment and monthly mortgage, among others.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
New Year’s resolutions don’t have to be reserved for diets and exercise. Sometimes the area of your life that really needs attention is your finances. As 2022 ends and 2023 begins, this is your opportunity to reset and reevaluate.
The new year is the perfect time to give your finances a boost. Here are my top 15 financial New Year’s resolutions that can help improve your financial health.
I’m jumping in with the big ones first…
What’s Ahead:
1. Start investing
While it may not be the easiest resolution on this list, investing is one of the best ways to build your wealth. If you don’t think that you have time to start investing, I get it. Investing can take time to understand. We’ve done our best to lay out the different investing methods in our article: How To Invest: Essential Advice To Help You Start Investing.
While it’s totally possible to invest without the help of an advisor, many of us are choosing the advisor route because, let’s be honest, it’s just so much easier. Remember that advisors also includerobo-advisors, which can help you decide what to invest in including when to buy and sell.
Read more: The Best Robo-Advisors
2. Build your emergency fund
When emergencies happen, you don’t want to be stuck without anemergency fund. Emergency funds can be lifesavers when unexpected challenges make their way into your life, like losing your job or getting into an accident, or a global pandemic.
So, if your emergency fund is non-existent at the start of the new year, it is time to change that!
To start, decide how much money you need in your emergency fund by calculating your monthly expenses. This should include not only your rent or mortgage but also your utilities and your basic expenses. Many financial experts agree that this should be at least three to six months’ worth of expenses, but it can’t hurt to overestimate how much money you would need in times of emergency.
If you need help calculating how much money you should save in your emergency fund, check out MU30’s handyemergency fund calculator to help you find your perfect number.
My husband and I like to keep our emergency fund in ahigh-yield savings account. These accounts allow us to access our savings quickly. Even better, high-yield savings accounts accrue interest at a higher rate than a traditional savings account, letting our money grow while it lies in wait.
Read more: Best High Yield Savings Accounts Compared
3. Pay off your credit card debt
If credit card debt is bogging down your financial success, why not make it a goal to tackle it in the new year?
Paying off your credit card debt is an important step in becoming financially healthy. If you don’t pay it off, you are doing a serious disservice to your credit score.
When searching for ways to pay off your debt, I recommend opening abalance transfer credit card. While it may sound counterproductive on one hand, these cards can help you consolidate your debt and even stop it from collecting interest for some time. That’s a big incentive right there!
Read more: How To Pay Off Credit Card Debt Fast – The Smart Way
4. Start a budget and track your expenses
If you don’t already have one, you need a budget. Creating and sticking to one could be the single best thing that you do for your finances in the new year. Budgets force you to take a hard look at the money that you bring in, the money that you shell out, and the money that you may owe.
If you have never followed a budget before, the thought of starting one can be daunting. The truth is, budgets can be incredibly freeing. Once you get used to following your budget, you can begin finding ways to free up cash to put towards your future.
Read more: How To Make A Budget: Our Step-By-Step Guide To Managing Your Money
5. Pay off your student loans
Student loan debt is one of the nation’s largest consumer debts and if you have it, you know just how painful it can be. Wouldn’t it be nice if you could get rid of your student loan debt altogether? Well, depending on how much you have, 2023 could be the year that you make it possible!
Making a plan to pay off your student loans is all aboutgetting organized. Knowing who you owe, how much you owe, and how you will afford to pay off your loans should be your first priority.
If you are having trouble trying to fit your student loan payment into your budget, it’s worth it to give your lender a call. Often, you can work outincome-driven repayment plans or deferments that can lessen the financial blow of your current loan payments.
Read more: Income-Based Repayment: Should You Do It?
6. Open a retirement account or fine-tune your existing one
When you are young,saving for your retirement probably sounds like the least exciting thing that you can do with your money. The truth is, the sooner that you start, the more secure you will be when your retirement comes. Investing in your retirement means that you are investing in your future.
If you’re employed, a quick conversation with your boss or human resources department can help you find out if your employer offers retirement accounts like 401(k)s or 403(b)s. Often, employers who have them will match a percentage of your annual contributions. This match is like an extra bonus from your employer that you don’t collect until retirement.
If your employer does not offer retirement accounts or you’re self-employed, you still have options for saving for your retirement.IRAs, or Individual Retirement Accounts can be opened by anyone.
Read more: The Beginner’s Guide To Saving For Retirement
7. Build your credit
If you are going into 2023 without any credit, it’s time to start building some. The credit system was put in place as a way to give future lenders and creditors information about potential borrowers. This allows them to make an informed decision and weigh the risks of loaning money to you.
If you haven’t built your credit, you could find yourself regretting it when you want to finance a car or even buy a house. Most lenders will not give out loans to people with poor credit and if you’re lucky enough to find one that does, your interest rates are often through the roof!
Taking out a loan with acosigner or becoming anauthorized user on your parent’s credit card can help you get started. Personally, I began building my credit with asecured credit card. When you get a secured credit card, you’ll need to put down a deposit, which then becomes your line of credit.
The OpenSky® Secured Visa® Credit Card is unique among secured cards in that they won’t run your credit when you apply, giving even those with no credit the ability to qualify.
Read more: Best Secured Credit Cards
8. Create a will
Don’t be fooled into thinking that having a will is just for old people. If you don’t have a will already, making it one of your New Year’s resolutions could benefit you and your family. Without one, in the event of your death, yourstate’s laws will determine who takes ownership of your assets and property.
If you’re wondering if you really need a will, the answer is probably a resounding yes. Most importantly,wills are strongly recommended for those who have children, have a spouse, or have a positive net worth. Having a will protects your family and your assets, something that all of us can agree is important.
If you don’t have a will, don’t put it off!
Read more: Do I Need A Will? Who Needs A Will (And When)
9. Spend less money
Everyone wants to save money, right? One of the best ways to do that is toconsciously spend less of it. While it is easier said than done, spending less money in 2023 is doable with a few tweaks to your spending habits.
To begin spending less money, I recommend this: take a hard look at your budget and try to find spending categories that you can cut back on. Lessening, or even getting rid of, spending categories allocated towards things like coffee runs and eating out could save you a significant amount of money each month.
Here are a couple more of my favorite ways to save:
Find a better deal on cell phone service. Cell phone services can be expensive. If you haven’t shopped around lately, give it a try. Many cell phone service companies will work hard to beat their competitors and will often beat your current rate!
Learn how to clip coupons. Clipping coupons is an easy way to save money at the grocery store and beyond. Often found in local circulars and newspapers, using coupons can add up to some significant savings.
Make a grocery list. Grocery lists can keep you on track financially in the midst of temptation, saving you from overspending on snacks and unneeded ingredients.
Make coffee at home. Coffee runs add up quickly, but it would be hard to get through the workweek without it. Instead of running to the coffee shop, try making coffee at home and bringing it to work in an insulated thermos.
Bring lunch to work. If you areeating out for lunch every day, your finances are more than likely feeling the pressure. Why not try giving them a break and pack last night’s leftovers instead?
Have date nights at home. Date nights can be an important part of staying connected with your partner and you shouldn’t have to sacrifice them. Finding alternative date night ideas, like cooking dinner together at home, can help you rack in the savings.
Try a meal delivery service.Meal delivery services will deliver pre-portioned ingredients and easy-to-follow recipes straight to your door. Home Chef is just one option, offering meals that take as little as five minutes to prepare. Plus, whether you’re looking to cut back on meat, carbs, calories, or more, Home Chef has options for you.
Cut back on subscriptions – We live in a world overrun by subscription services. It can be easy to sign up for a bunch and then never use half of them.
10. Save money on insurance
Protecting the ones you love is always a priority. In 2023, why not make it a goal to do so, while also keeping more of your hard-earned money in your bank account? I’ve found that one of the best ways to do this is by saving money on insurance.
11. Define your long-term financial goals
Sometimes you get so caught up in your present financial situation that you forget to plan for the future. Setting long-termfinancial goals is an exciting way to keep yourself on track and to ensure that your money is working for you.
Long-term financial goals vary depending on the person and the state of their finances. These goals could include saving for retirement, a downpayment on your future home, or even saving for that trip that you have always wanted to take. After you have defined your financial goals, it is time to start planning for how and when you will reach them.
I like to organize my long-term financial goals into my monthly and yearly household budget. This allows me and my husband to aggressively work towards our goals.
12. Track your expenses
Implementing this habit in my household was easy. My husband and I decided to ask for receipts with every purchase, ensuring that we don’t miss any expenses. After making a purchase and returning home, we began recording the totals on our receipts into monthly spending categories. These include areas of spending like groceries, entertainment, and gas.
Knowing how much we spend each month allows us to not only make a more accurate budget but also plan for the future. Keeping track of your expenses gives you a reference to look back at when creating a budget, including utility bills that may change due to the seasons.
If you have a mortgage, chances are that you would like to get rid of it. Well,making extra principal mortgage payments in 2023 could help you be free from it faster!
Those who can afford to put extra money towards their mortgage, but don’t, are missing out on some major savings. If you pay your mortgage for the life of your original loan, you could end up paying nearly as much in interest as you do for your home itself.
For example:
A $150,000, 30-year mortgage with an interest rate of 4.5% will cost a total of $273,610 by the end of thirty years. This means that $123,610 of your payments have been made towards interest.
If you take the same mortgage, but pay an extra $100 monthly, you would save $29,723.18 and shorten your loan by six years and four months.
If you want to make paying down your mortgage a priority in 2023, simpleloan pay-off calculators can help you figure out how much extra money you would like to put towards your mortgage.
You could also consider refinancing your mortgage, which can provide you with a much better interest rate, which, in turn, can lower the total cost of your loan.
14. Save money with money-making and reward apps
What if I told you that you are throwing money out the window every time that you shop online? If you are shopping without a cash back app, this is most definitely true for you! And since most of us have resolved to online shopping, this extra money could be adding up quickly!
To remedy this, I like to use a cash back app. Not only do cash back apps help you save money, but they can help you make money, too!
If you are looking to save, or make, money, Swagbucks may be a great choice for you. In fact, it is the internet’s leading rewards site! For users who are hoping to save money, I recommend installing Swagbucks browser extension, the “SwagButton.”
15. Get your taxes done early
Tax season is coming and there is no need to stress about it. Getting yourtaxes done early in 2023 can help put your mind at ease and save you from taking an extra trip out of the house. You may even find yourself with your return in hand faster than if you wait until closer to the deadline!
Filing taxes can be complicated. Luckily, there are great tax preparation companies that can help make filing a breeze and answer many of your tax questions – you can find a list of our favorites here.
Summary
The end of 2021 is fast approaching and it’s time to start thinking about the resolutions that you’ll make for 2023. While many of us – myself included – typically resolve to follow a healthier lifestyle, we sometimes forget to think about our financial health.
As 2021 comes to a close, start thinking about what you can do to make your finances stronger, because we never know when a financially challenging year will hit again.
There’s yet another real estate and mortgage startup shaking things up called Reali, which like others in the space, is attempting to eliminate costly real estate commissions and lender fees.
The San Mateo, CA-based company, which is pronounced “really,” charges flat fees to buy or sell a home, as opposed to taking a percentage of the sales price, like 2.5%, as is the norm.
At the moment, it is available to home buyers and sellers throughout California. It’s unclear if/when they will expand to additional states.
The company also operates a mortgage lender division called Reali Loans, Inc., which was formerly known as Lenda.
Let’s learn more about Reali and see how it could save you some money.
How Selling a Home Works with Reali
First, you download the Reali app and claim your home to schedule a free home valuation with a licensed Reali agent. They’ll let you know what your home is worth in as little as a day.
Next, you can request a listing presentation where you meet your Reali agent – if you want to move forward, you get a customized home-prep checklist to get your home listed on the market an average of two weeks faster.
Speaking of agents, they assign you a local real estate agent based on the zip code where the property is located. To that end, the agent is expected to be very knowledgeable about the area.
Like traditional agents, they’ll market the property on the usual channels such as the MLS, Trulia, Zillow, along with digital channels like Google, YouTube, Facebook, Instagram, and the Reali app.
Once the property is listed, you receive real-time updates, such as buyer activity and offers, directly in the app, and you can chat with the Reali team.
You’re able to follow the home sales process from start to finish, including the escrow portion, so you’ll be in the know the entire time.
What really makes Reali different (sorry) is the flat fee model, which counters the traditional percentage-based real estate commission model.
Instead of charging 2.5% to 3% to list your home, Reali charges a flat fee. It varies based on the property’s listing price, as seen in the table above.
For example, if you home is listed for $700,000, you’ll pay Reali a $5,000 flat fee. If that sounds expensive, imagine paying $17,500 instead.
Note that the flat fee is based on the listing price of the home, as opposed to the home’s final sale price.
While you can save a ton on the listing agent portion of the commission, the buyer’s agent will likely demand their 2.5% or 3%. So you’ll still need to pay that out of your sales proceeds.
All in all, you can save a ton of money using Reali, assuming the home sells for a similar price as it would via a traditional real estate agent.
In our example, $12,500 in savings on the listing agent side of things. Not too shabby.
But that’s the kicker – will the home sell for the same amount with Reali versus a traditional real estate agent? The answer is it probably depends. Still, those savings look pretty good.
Buying a Home with Reali
Reali doesn’t just help existing homeowners unload their properties. It also lets you get into a new home.
In fact, you can sell your home via the Reali app and then fire it up to buy your next house.
Like the sell-side of things, they rebate you a portion of the usual commission if you use a Reali agent for the home purchase.
As seen in the table above, they charge a flat fee for different sales prices. On a $1 million home, Reali would earn $15,000 and you’d be rebated $10,000.
In a typical transaction, a real estate agent would get the full $25,000 or more, depending on their commission split.
The Reali Rebate is deposited straight into your bank account within 7-10 after closing escrow, and it’s non-taxable.
If you’re already working with an agent, you can’t take advantage of this service.
But if you feel comfortable doing it yourself, you can schedule a visit via the Reali app and get matched up with a Reali agent once you’ve found a property you like.
And all properties on the MLS are eligible, not just those listed by Reali.
Reali Cash Offer
If you want to give yourself a competitive edge in a seller’s market, there’s also the Reali Cash Offer, which allow you to buy a home with cash and then take out a mortgage after the fact.
This is similar to the programs offered by Accept.inc, HomeLight, and UpEquity.
Reali claims it has a 100%-win rate, beating out other buyers who either have to make a contingent offer or obtain home loan financing to close the deal.
With the Reali Cash Offer, you get pre-approved through Reali Loans, then place a non-contingent cash offer on the property backed by Reali.
Assuming your offer is accepted, you make your down payment directly to escrow and close in as little as three days.
Then you must refinance within 60 days of closing with Reali Loans or any other lender you choose.
Reali Trade-In
But wait, there’s more. Reali also has an iBuyer feature via its Reali Trade-In program that lets you buy a replacement home before selling your existing home.
Like the Reali Cash Offer, you first get pre-approved with Reali Loans to see how much you qualify for.
Next, you work with a Reali agent to find your new home, and once you’re ready, Reali will make an all-cash offer on your behalf.
After closing, Reali will retain “ownership” of the new home until you’re ready to buy it from them.
In the meantime, you pay your old mortgage and they defer rent on the new home. It’s unclear what the rent is, but probably market rate.
While that’s happening, they inspect, stage, deep clean, and eventually list your old property for sale.
Once it sells, they give you the proceeds less a 5% fee and closing costs, and you buy back your new home from Reali at the same price they bought it for.
This compares to the 5-6% charged by real estate agents, the near-10% that Opendoor charges, and the 11%+ you might be charged by a bridge lender, per Reali.
Reali Loans
In April 2019, Reali Loans was launched thanks to the company’s acquisition of Lenda, another online mortgage lender startup that surfaced in 2014.
The company stands out in that it doesn’t charge any lender fees, including $0 origination fees, $0 application fees, $0 credit report fee, and so on.
You only have to pay third party fees like title, escrow, and home appraisal, along with prepaid items like interest, taxes, and insurance.
Reali Loans seems to have competitive mortgage rates as well, and they have a neat little slider that lets you choose a lower rate with higher closing costs, or a slightly higher rate with fewer closing costs.
Their loan process also seems to be mostly digital and paperless, with a dedicated Home Loan Advisor that works with you every step of the way.
To streamline things even more, there’s also Reali Escrow, which keeps everything in-house and moving forward. Speed aside, they say it’s cheaper too, and if you’re not aware, escrow fees can be quite pricey.
All in all, Reali wants to be a one-stop shop for all your real estate and mortgage needs, which aside from convenience, should result in an overall lower cost.