Paying bills is one of those forever things in life. But between the sheer number of bills for the month—rent or mortgage payment, car payment, utilities, credit cards—and the different ways to pay them, it can be tough to keep track of it all.
Making timely payments, though, is essential. Paying bills on time can mean avoiding late fees, higher interest rates, and dings to your credit score. In fact, your payment history—or how often you pay your bills on time—makes up the biggest portion of your credit score.
Fortunately, learning how to pay bills on time is often just a matter of getting organized and setting up a bill payment schedule. Try these tips and tricks to make missing bill due dates a thing of the past.
Take stock of all your monthly bills
First things first: You need to make a list of your bills for the month. Comb through your credit card and bank statements, and even your credit reports, to find typical payment amounts for your rent, utilities, loans, and credit cards. And don’t forget to look for more irregularly scheduled bills, like car insurance or subscription renewals.
Next, record the bills on a spreadsheet, in a budgeting app, or using any “method that will keep you organized and help you pay your bills on time,” says Dan Herron, a CFP® and certified public accountant. Be sure to include payments that are automatically paid out of your checking account or billed to your credit card. For each bill, write down:
Even if you’re a budgeting whiz, there may come a day when you can’t afford to pay all of your bills on time. That’s why you should also organize monthly bills by payment priority.
Using the above list, sort your bills into two groups: higher and lower priority. High-priority bills are for basic needs like shelter, transportation to work, and health insurance, or those that generally must be paid in full. Lower-priority bills are those that are important but offer some flexibility—for example, the ability to make a minimum payment (as is the case for a credit card) or to extend your payment due date.
Now you have a categorization system to help you make smart decisions about how to pay bills during times when you’re short on money.
Optimize your payment schedules
Once you have a monthly bills checklist, you can create a bill payment schedule that turns a slew of payment due dates and methods into a more streamlined system for how to pay bills. Here’s how to create one.
Group bills by due date
Many bills are due around the same time. Go through your monthly bills checklist and group them based on due date similarity.
Change your bill due dates
Some creditors allow you to change your regular bill due date. If you have many bills due at the beginning of the month, you may want to move some to the end of the month for better cash flow (for example, instead of paying a bill on Oct. 1, see if you can move it up to Sept. 30.) Update your bill payment schedule if you make any changes.
Add due dates to a calendar
Once you have your bills organized by due date, add them to a digital calendar and set payment reminders for a week before each bill is due, Herron says.
How to organize your bills
Staying organized is the best way to pay bills each month. What works best for you won’t be exactly the same as for someone else, but there are guidelines for how to pay bills most efficiently.
Create a bill ‘drop zone’
Rather than tossing your paper bills onto an already teetering pile of mail, keep unpaid bills in a dedicated file folder or basket. For electronic bills, create a digital folder for unpaid bills in your email, on your desktop, or in a cloud storage system. Once you’ve paid a bill, move it from the unpaid folder into a paid folder for that month or year, Herron says.
Automate as much as possible
The bill pay feature in your Discover® Cashback Debit account can make paying bills a snap. While automating all your bills comes with the risk of overdrawing your checking account—be sure you have overdraft protection or a connected savings account, Herron says.
Checking with cash back and no monthly fees
Discover Bank, Member FDIC
Decide when to pay your bills
Figure out how to pay bills that won’t be automatically paid from your checking account. Will you pay them when they come due or on a specific day or two each month? For example, if you have a bunch of bills due on the 15th of the month, you might decide to pay them all on the 8th of the month.
Take advantage of tech
Good news: You don’t have to rely solely on your memory or your organizational skills to pay your bills on time. Lean on technology for help.
Sign up for reminders from your bank and creditors when your bills are due. You can also receive notices of when payments or checks have cleared and when your checking account balance has dipped below a certain amount.
Also, consider using online bill pay through a checking account, which is one of the best ways to pay bills each month. In addition to automatic payments, this service offers features you can’t get from many other payment methods, such as paying multiple bills from one place and scheduling your bills to be paid in advance.
Have savings ready in case of an emergency
Having savings can help you ride out an emergency—say, a medical issue or a surprise car repair—without skipping a bill payment or taking on debt. Many financial experts recommend having enough money stored up to cover three to six months’ worth of expenses in case of a financial emergency. (Read our guide on adjusting your budget in case of a layoff.)
You can build your savings with sporadic deposits over time, but it’s also a good idea to include saving a regular amount as an “expense” in your budget. And if you have money left over after paying your bills, consider setting aside an additional portion in a separate savings account. “If the account is a high-yield savings account, you can earn some interest while you’re at it,” Herron says.
Ask for help when you need it
If you’re worried you won’t be able to cover all your bills—or you’ve already fallen behind—you have options! While it’s best to contact your creditors before you miss a payment, don’t be afraid to reach out at any point. Many creditors—such as credit card companies, medical providers, and banks—have options to help make paying your bills more manageable. For example, they might put you on a payment plan, adjust your payment due dates, or waive late fees.
Depending on your income level, there are also government programs targeted at helping people pay their utility bills.
Reevaluate and readjust
Managing and paying your bills is not a one-and-done situation. Be sure to keep your monthly bills checklist and bill payment schedule updated throughout the year.
Herron recommends reviewing your credit card and checking account statements weekly to “check your spending and see if there are any bills that you don’t recognize or that have gone up in price.” Not only can this help you stay on budget, but it’s also a good opportunity to cancel any subscriptions you no longer want. If you’re struggling to pay your bills, look for areas where you can reduce your expenses or find a better deal and then take action, like shopping around for cheaper internet service.
You’re in control
Paying bills may never be your favorite thing to do, but creating a system for how to pay bills on time can make you feel much more prepared and secure when the first of the month (or the 15th or the 30th) rolls around.
Automation is one easy step to help ensure your bills get paid on time each month, and a Discover Cashback Debit account makes bill paying simple and straightforward. Plus, it earns 1% cash back on up to $3,000 in debit card purchases each month.1 That’s a win-win for anyone looking to stay current on their bills and make a little extra cash while they do it.
Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
1ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay® Cash), online sports betting and internet gambling transactions, and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal®, who also provide P2P payments) may not be eligible for cash back rewards. Apple Pay is a trademark of Apple Inc. Venmo and PayPal are registered trademarks of PayPal, Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.
Spring break is just around the corner, and many Americans will soon flock to Mexico’s white sand beaches and bustling cities to enjoy their time off. But those opting for a road trip will need to sort out their car insurance coverage first. Mexico legally requires all drivers, including American tourists, to have liability insurance, and failing to purchase enough insurance could land drivers in jail should they cause an accident.
Standard U.S. auto insurance policies won’t cover drivers south of the border, so it’s vital to purchase Mexican car insurance before making the trip.
Liability car insurance is crucial when driving in Mexico
Many large U.S. insurance companies partner with Mexican insurers to offer Mexican car insurance to their customers. Plans are flexible, starting at a single day of coverage and going for as long as a year. Another option is to purchase insurance from a U.S. broker that specializes in Mexican car insurance.
Mexico requires drivers to hold 100,000 Mexican pesos (around $5,800) for bodily injury and death liability coverage and 50,000 Mexican pesos (around $2,900) for property liability damage. If you’re caught driving in Mexico without this minimum coverage, you may face a fine of at least $200. If you cause an accident while driving uninsured in Mexico and cannot pay for the damages you caused, you could face jail time. That’s because in Mexico, all car accidents are considered criminal offenses, not just civil matters.
“If you don’t have insurance and you cause an accident, you can be held by the authorities,” says Geoff Hill, vice president of business development at Baja Bound, a California-based agency that specializes in Mexican auto insurance. “If you’re at fault, they will hold you until you can come up with the money to pay for the damage you [caused]. If you had insurance, you wouldn’t be on the hook for that.”
Oscar Arrieta, an Allstate insurance agent in El Paso, Texas, stresses the importance of having strong liability coverage above all other protection while driving in Mexico. The country’s liability insurance requirements are likely not enough to protect you and your finances if you cause an accident. “To me, protecting your vehicle is secondary,” he says. “It’s [about] the damage you create.”
Arrieta recommends a policy that has at least a $300,000 combined single limit, which is one larger liability limit to cover both bodily injury and property damage. Baja Bound only sells policies that start at that $300,000 limit and go up to $500,000 in liability coverage.
Other types of car insurance coverage worth having in Mexico
Because there’s a possibility that a car accident could land you in jail, many Mexican insurance policies include legal assistance coverage. This benefit can help you find and pay for an attorney and post bail, up to your policy’s limit.
Mexican insurers also typically offer hands-on support at the scene of an accident. If you’re in a car accident, an adjuster from your insurance company will arrive at the accident to examine the scene and determine how to proceed with other drivers’ insurers. That’s a big difference from how things work in the U.S., where adjusters won’t get involved until later.
To drive with peace of mind, it might be wise to consider strengthening your Mexican car insurance policy by purchasing medical payments coverage, which pays for the cost of treating your and your passengers’ injuries after an accident.
Even though it’s legally required, only a small portion of drivers in Mexico have car insurance, according to Mexico’s National Commission for the Protection and Defense of Users of Financial Services. And those who do might only satisfy the $2,900 property damage liability coverage requirement.
That is why you should also consider buying physical damage coverage and theft coverage which, combined, offer similar coverage to collision and comprehensive insurance in Mexico. These cover the cost of repairing or replacing your own car after it’s stolen or damaged in various situations, up to its current market value. Some U.S. insurance companies offer limited insurance coverage in Mexico, as long as you’re within a certain distance of the border, so check with your insurer to see if damage to your vehicle is covered in Mexico.
But no matter what, if you’re driving in Mexico, it is crucial to purchase liability insurance coverage at the very least — even if your insurer will cover damage to your car while driving in Mexico.
Mexican rental car insurance
If you’re planning to rent a vehicle for your trip, the best move will be to do so once you’re in Mexico. Many U.S. rental companies restrict or prohibit their cars from being driven into Mexico. The coverage options available at Mexican rental counters will all comply with the local minimum requirements, so that will be one less thing to worry about when your only concern should be finding the best taquería in town.
Uninsured motorist coverage shields you from having to pay for injuries and property damage in accidents that weren’t your fault and were caused by an uninsured driver.
According to the Insurance Research Council, 14.0% of motorists on the road are uninsured. Purchasing uninsured motorist coverage reduces the likelihood that you’ll have to pay out of pocket if you’re involved in an accident caused by one of these irresponsible drivers.
It’s generally a good idea to add uninsured motorist coverage to your auto insurance policy, as it’s fairly inexpensive, usually only costing an extra $5 – $10 a month, per vehicle, for policyholders with clean driving histories. Below, we give you the scoop on the different kinds of uninsured motorist coverage and what these policies entail.
Breaking Down Uninsured Motorist Coverage Variations
There are two main kinds of uninsured motorist coverage. Similar to your standard auto insurance policy’s collision and bodily injury coverage, this kind of policy breaks down into uninsured motorist bodily injury coverage and uninsured motorist property damage coverage.
• Uninsured motorist bodily injury coverage: Covers your party’s medical expenses and related costs in accidents caused by uninsured drivers.
• Uninsured motorist property damage coverage: Covers your repair bills and related costs in accidents caused by uninsured drivers.
Bodily injury and property damage coverage for uninsured motorists are sometimes packaged and sold together when you purchase uninsured motorist insurance. However, this isn’t the case with all policies; check with your insurance provider to know for sure. Now, let’s take a closer look at each of these kinds of coverage.
Uninsured Motorist Bodily Injury Coverage (UMBI)
Uninsured motorist bodily injury coverage (UMBI) pays for the cost of medical bills, lost wages, pain and suffering, and funeral costs (though we hope that is never needed) in the event an uninsured driver causes an accident in which you’re the victim.
In some instances, this policy may pay out if you, as a pedestrian or bicyclist, are involved in an accident caused by an uninsured driver. Check with your insurance provider to confirm whether this might be covered.
UMBI typically does not have a deductible to meet; you would get full reimbursement of the costs.
Uninsured motorist property damage coverage (UMPD) pays for the cost of repair bills for either your vehicle or property in the event either is involved in an accident caused by an uninsured driver.
Unlike bodily injury coverage, UMPD often requires the payment of a deductible when used. This is usually set by state law and typically is between $100 and $1,000. 💡 Quick Tip: If your car is paid off and worth only a few thousand dollars, consider updating your car insurance: You might choose to opt out of collision coverage and double down on liability.
Uninsured vs Underinsured Motorist Coverage
Here’s another kind of coverage you should know about: underinsured motorist coverage, which helps cover your costs if you’re involved in an accident where the party at fault has insufficient insurance coverage to pay for your medical costs.
Underinsured motorist coverage differs from uninsured motorist coverage in that it’s designed to cover any shortfalls in your costs due to the underinsured motorist’s inadequate insurance policy. By contrast, uninsured motorist coverage covers your bills due to the uninsured driver’s failure to purchase insurance.
Similar to uninsured motorist coverage, underinsured motorist coverage also comes in bodily injury and property damage variants. Both bodily injury and property damage coverage is usually packaged and sold together, though insurance policies may vary.
Underinsured motorist coverage is sold separately from uninsured motorist coverage, and states can have different coverage requirements for each. Check with your insurance provider to verify whether you need to purchase these separately.
Uninsured Motorist Coverage Limits
Your auto insurance quote will typically break down your uninsured motorist coverage limits into two numbers: a smaller dollar figure followed by a larger dollar figure, separated by a slash. For example, $100,000/$300,000.
This can also be expressed as follows:
• $100,000 per person
• $300,000 per accident
These two numbers represent the per person and per accident coverage limits of your uninsured motorist insurance. The per person limit is the maximum your insurance company will pay for any single individual injured in a covered accident. Conversely, the per accident limit is the maximum your insurance company will pay for a covered accident, regardless of how many injured people are in your party.
How Uninsured Motorist Coverage Limits Work
If you’re thinking, “But what exactly does that mean?” we hear you. Let’s spell out how this coverage would work. If you have a family of five that’s riding in a car and it gets hit by an uninsured driver, the maximum amount your insurance company will pay for their cumulative medical bills is $300,000, despite each individual’s coverage limit being $100,000.
If you’re ever involved in an accident caused by an uninsured driver where your costs exceed your coverage limits, in most cases, your health insurance policy will usually kick in to cover the balance. Consult your insurance providers for the specifics on your policies.
Recommended: How Much Auto Insurance Do I Really Need?
How Much Uninsured Motorist Coverage Do I Need?
The answer depends on whether your state requires uninsured motorist coverage. If it does, you must buy at least the state’s minimum (for more details, see below). Typically, this amount will match your liability coverage amounts. If your state does not require this kind of coverage, consider variables like the healthcare costs in your state and how much your vehicle is worth. Generally, uninsured motorist coverage is fairly affordable and is a worthy investment for some peace of mind.
According to the Insurance Research Council, approximately one in seven drivers on the road are uninsured. This figure is even higher in states like Mississippi and Michigan, where over 25% of drivers on the road are estimated to be uninsured.
Based on those figures, residents of higher risk states may be well-served by purchasing uninsured motorist coverage, while it might not be as high of a priority for residents of lower-risk states, like Massachusetts or New Jersey, where 3.5% and 3.1% of drivers respectively are estimated to be uninsured.
Now, let’s circle back to the states that do require this kind of policy. The table below lists the regulations regarding the minimum required uninsured and underinsured motorist coverage for each state.
Recommended: What Does Liability Auto Insurance Typically Cover?
Uninsured/Underinsured Motorist Coverage Requirements by State
Let’s take a look at the guidelines in every state, so you can see how much coverage may be required where you live. In each category, the amount shown is per person/per accident. When there is not a figure in an area of the chart, that means the insurance isn’t required.
State
Uninsured Bodily Injury
Uninsured Property Damage
Underinsured Bodily Injury
Underinsured Property Damage
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
$25,000/$50,000
$25,000/$50,000
Delaware
District of Columbia
$25,000/$50,000
$5,000
Florida
Georgia
Hawaii
Idaho
Illinois
$25,000/$50,000
$25,000/$50,000
Indiana
Iowa
Kansas
$25,000/$50,000
$25,000/$50,000
Kentucky
Louisiana
Maine
$50,000/$100,000
$50,000/$100,000
Maryland
$30,000/$60,000
$15,000
$30,000/$60,000
$15,000
Massachusetts
$20,000/$40,000
Michigan
Minnesota
$25,000/$50,000
$25,000/$50,000
Mississippi
Missouri
$25,000/$50,000
Montana
Nebraska
$25,000/$50,000
$25,000/$50,000
Nevada
New Hampshire*
$25,000/$50,000
$25,000
$25,000/$50,000
$25,000
New Jersey
$15,000/$30,000
New York
$25,000/$50,000
North Carolina
$30,000/$60,000
$25,000
$30,000/$60,000
$25,000
North Dakota
$25,000/$50,000
$25,000/$50,000
Ohio
Oklahoma
Oregon
$25,000/$50,000
Pennsylvania
Rhode Island
South Carolina
$25,000/$50,000
$25,000
South Dakota
$25,000/$50,000
$25,000/$50,000
Tennessee
Texas
Utah
Vermont
$50,000/$100,000
$10,000
$50,000/$100,000
$10,000
Virginia*
$30,000/$60,000
$25,000
$30,000/$60,000
$25,000
Washington
West Virginia
$25,000/$50,000
$25,000
Wisconsin
$25,000/$50,000
Wyoming
*New Hampshire and Virginia do not require drivers to purchase auto insurance, but drivers who do choose to purchase auto insurance must have at least the minimum uninsured/underinsured motorist coverage amounts listed.
Recommended: 5 Steps to Switching Your Car Insurance
How Much Does Uninsured Motorist Coverage Cost?
Depending on how much uninsured motorist coverage you choose to purchase and your personal driving habits, your costs could be as little as $5 to $10 per month. This figure also tends to vary widely based on the overall percentage of uninsured motorists in your area, according to national insurance data.
Insurance premiums vary widely across drivers, states, and even insurance providers, so make sure you check around for a personalized quote. 💡 Quick Tip: Saving money on your fixed costs isn’t always easy. One exception is auto insurance. Shopping around for a better deal really can pay off.
The Takeaway
The prospect of being in an accident caused by an uninsured driver is a real concern, given the number of these motorists on the road. Adding uninsured motorist coverage to your auto insurance policy may be a good idea. In some states, it may even be required by law. For a relatively low cost, you can protect yourself from the possibility of being left with bills because another driver didn’t have enough insurance. The right package of car insurance policies is one way to protect yourself from unexpected circumstances.
When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.
SoFi brings you real rates, with no bait and switch.
Photo credit: iStock/RyanJLane
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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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.
Looking for the best summer jobs for teachers? Teachers, just like students, really enjoy the summer break. It’s a great time for them to relax and feel refreshed. But, this break can also be a chance for teachers to make extra money and even start a new business. I know many, many teachers who have…
Looking for the best summer jobs for teachers?
Teachers, just like students, really enjoy the summer break. It’s a great time for them to relax and feel refreshed. But, this break can also be a chance for teachers to make extra money and even start a new business.
I know many, many teachers who have side hustles in the summer. From part-time gigs to full-time summer businesses, there are many side jobs for teachers that you may want to try out.
Best Summer Jobs for Teachers
There are many summer jobs for teachers listed below. If you want to skip the list, here are some jobs that you may want to start learning more about first:
Flexible way to freelance – Proofreading
Side job for teachers from home – Blogging
How to make passive income as a teacher – Sell printables
Work as much or as little as you want – Flea market flipping
Creative job idea – Dog treat baker
Side job for teachers in summer – Grocery shopper
Camp counselor – If you love the outdoors, being a camp educator can be both rewarding and enjoyable, combining teaching with adventure activities.
Summer school teacher – Many schools have summer classes where you can continue teaching.
1. Teach summer school
One clear way for teachers to earn extra money in the summer is by teaching summer school.
It’s a good way to use your teaching abilities and make some additional income. The best part is that summer school happens during your summer break (big surprise, right?!), so it fits well with your schedule when you’re already off from regular school.
To start, check with your local school districts. A lot of them have summer school programs, and they usually share job opportunities on their websites or local education job boards.
2. Sell educational printables
Selling educational printables is a way for teachers to earn extra money. It’s especially good for those who want to make passive income as a teacher.
Your materials, like worksheets, lesson plans, and activities, are helpful to other teachers and parents looking for high-quality educational content.
Some places to sell your educational printables include:
Teachers Pay Teachers(TPT) – This is a popular site where millions of teachers buy and sell original educational resources.
Etsy – This site is known for handmade items, but also is a great place for selling educational materials and printables.
Educational printables include things like math problems, vocabulary cards, and science experiments. They’re useful for different grades, age groups, and learning goals, making it simple to improve regular teaching or homeschooling. You can share these resources online or print them for in-person classes too.
Recommended reading: How I Make $400,000 Per Year Selling Educational Printables.
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
3. Flip used items for resale
Trying your hand at flipping items from flea markets and thrift shops can be a fun and money-making summer job for you as a teacher.
Flippers are people who find items at flea markets, yard sales, and thrift stores that are priced lower than their actual value. They then sell these items for a profit.
The summer is a great time to do this because there are typically a lot of yard sales, flea markets, and people just in general decluttering more (so you may find more things that people are giving away), where you can find items to resell.
Some items that you can buy and resell include clothing, antique furniture, collectible toys, sports equipment, electronics, rare books, jewelry, and more.
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This free workshop will teach you how to get into the flipping business. It will teach you how to resell furniture, electronics, appliances, and anything else you can find.
4. Tutor
During the summer, your teaching skills are still needed. Tutoring can be a flexible and fulfilling summer job that lets you work with students one-on-one either online or in person.
You may be able to tutor on subjects like math, foreign language, science, and more. You also may be tutoring kids, teenagers, or even adults.
To begin, you can look for tutoring jobs on online tutoring sites like Tutor.com. You can also sell in-person local tutoring sessions by reaching out to tutoring companies nearby or advertising your services on social media or in local Facebook parent groups for your area.
5. Camp counselor
Becoming a camp counselor could be a rewarding experience for you in the summer. In this job, you’d guide groups of children through indoor and outdoor activities, as well as educational programs at summer camps.
Your daily tasks would include keeping campers safe, organizing games, and giving both educational and emotional support.
Summer camps come in different types, ranging from general adventure camps to specialized ones focusing on sports, arts, or science.
6. Freelance bookkeeping gigs
If you like numbers and you’re a teacher, online bookkeeping can be a way to spend your summer.
A bookkeeper is someone who assists in managing and tracking the financial aspects of a business. They usually keep records of sales, track expenses, and generate financial reports.
People with virtual bookkeeping jobs work from home, handling their responsibilities remotely. Virtual bookkeeping is a great choice for remote work as all tasks can be completed online or with computer software, eliminating the need to go into an office physically.
Recommended reading: How To Find Online Bookkeeping Jobs
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This free training will teach you what you need to know to become a virtual bookkeeper and make money from home.
7. Swim instructor
If you’re a teacher who loves the water, becoming a swim instructor for the summer could be the perfect seasonal job for you. Your educational background gives you the ability to communicate and manage classes, which are important skills for teaching swimming.
To find swim instructor jobs:
Look on websites like Craigslist or Facebook for listings, including summer-specific roles.
Check out local community centers, pools, and summer camps.
Networking can help, so let friends and professional contacts know you’re looking.
Another job similar to this would be to become a lifeguard at a local pool.
8. Tour guide for local attractions
As a teacher, your ability to tell stories and lead can be very useful for a summer job as a tour guide. Your skill in explaining things well makes you a great choice to share history and local stories with visitors.
Check out jobs at museums, historical places, or become an ambassador for your city by guiding people to discover hidden treasures.
9. Pet care jobs
If you’re a teacher who loves animals, you may want to look into summer jobs in pet care, like being a dog walker or pet sitter. Your caring skills can easily transition to taking good care of furry friends while students are on break.
Rover is a website that connects pet owners with pet sitters and dog walkers. You can choose to do this job on weekends throughout the year or only open your schedule during the summer months – it’s your choice.
Starting on Rover is simple – you create a profile sharing your experience with pets and the services you can offer, such as dog walking, pet sitting, and house sitting.
After that, customers will send you requests, and you can discuss pricing. Rover handles the payment process, and you’ll get paid directly into your account.
Recommended reading: 7 Best Dog Walking Apps To Make Extra Money
10. Test prep instructor
As a teacher, your knowledge of academic subjects is very helpful, especially in the summer. Becoming a test prep instructor can be a great chance to help students in getting ready for their exams and earn extra money.
Test prep instructor jobs include subjects like math and English, and they cater to different education levels, from elementary school to college.
11. Sell your lesson plans
Teachers Pay Teachers (TPT) is a website made just for educators to buy and sell educational items, and it’s a well-liked side hustle for teachers. If you’ve created lesson plans, worksheets, or other teaching tools for your class, you can share them on TPT and make some extra income.
The school year may be over for you, but that doesn’t mean that you can’t create and sell lesson plans – these are bought year-round!
You can sell:
Lesson plans and unit studies
Worksheets and printable activities
PowerPoint presentations and interactive notebooks
Posters, charts, and visual aids
On Teachers Pay Teachers, the typical teacher can earn around an extra $300 to $500. However, some teachers make hundreds of thousands of dollars extra each year.
12. Coach a school sport
If you love sports and you’re a teacher, coaching a school sport during the summer might be a great match for your skills and interests.
Coaching a school sport is a great option within your own school district, as many schools need help with their sports teams. You can try coaching sports like soccer, basketball, volleyball, and track and field. Additionally, there are opportunities with after-school clubs such as yearbook, chess, choir, and more that can be a teacher’s side hustle.
13. Run a dog bakery
Beginning a dog bakery can be an enjoyable side job for teachers who adore both dogs and baking. By creating treats for dogs such as cupcakes, cookies, cakes, and more, you can earn an additional $500 to $1,000, or even more, each month.
Recommended reading: How I Make $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).
14. Sell handmade goods on Etsy
Etsy is a popular online marketplace that connects makers and shoppers looking for unique handmade goods. If you’re a teacher with a creative side, this could be a great site for you to showcase and sell your crafts during the summer months.
Some examples of what you can sell on Etsy that are related to school include:
Educational games and activities
Educational materials like lesson planners and printable worksheets
Handcrafted classroom decorations or educational games
Personalized items such as bookmarks, nameplates, or tote bags
But, you don’t have to only sell teaching-related items. You can sell many other things such as furniture, clothing, jewelry, soap, home decor, and more.
15. Work at a restaurant
Many teachers work part-time or full-time at a restaurant during the summer as servers, hosts, bartenders, and kitchen staff.
Working in restaurants can fit teachers well since they have flexible hours that can match your open summer schedule, and you can leave the job easily once school resumes in the fall.
I know many, many people who have done this, and I would say this is one of the top summer jobs for teachers.
16. Proofread
As a teacher, you likely excel at proofreading and can easily catch mistakes. Using these skills, proofreading can be a fantastic side job. By proofreading, you can help authors, website owners, students, and others in their writing while earning extra income.
Even the best writers can overlook errors in grammar, punctuation, and spelling. That’s why having a proofreader can be helpful for nearly everyone.
You can usually set your own hours, which is perfect for the irregular schedules you might have.
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This free 76-minute workshop answers all of the most common questions about how to become a proofreader, and even talks about the 5 signs that proofreading could be a perfect fit for you.
17. House sit
House sitting is a good option for teachers looking to make extra income during the summer months because a lot of people take vacations in the summer. As a house sitter, you are typically responsible for maintaining someone’s home while they are away. This can include watering plants, collecting mail, and making sure the house remains secure.
People hire house sitters to make sure their homes aren’t left empty, as a visible presence can discourage potential thefts.
To begin house sitting, you can join house-sitting websites to find gigs in your area or ask for referrals from friends and family. Starting with people you know for house-sitting and then using their references can expand your job search.
18. Blog
Blogging can be an enjoyable way for you, as a teacher, to earn extra money from home. Many teachers run blogs, and it makes sense – you can blog when you have free time, without sticking to a strict schedule.
To start your blog, first, pick a topic you’re passionate about, maybe something related to your teaching field or a hobby you enjoy. There are plenty of different niche ideas such as personal finance, travel, food, home, pets, and so much more.
You can earn money as a blogger through ways like:
Affiliate marketing – Share links to products or services related to your blog topic and earn a commission for sales made through your referral links.
Advertising – Add display ads or sponsored posts on your blog.
Courses and ebooks – Create courses or ebooks in your expertise area and sell them through your blog.
Learn more at How To Start A Blog FREE Course.
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Want to see how I built a $5,000,000 blog?
In this free course, I show you how to create a blog, from the technical side to earning your first income and attracting readers.
19. Freelance writing
If you’re looking for remote summer jobs for teachers, then becoming a freelance writer can be a great option.
Freelance writers create content for blogs, websites, magazines, newspapers, advertising companies, and more. You can find writing jobs on platforms like Upwork and Fiverr. Also, you can find clients independently by reaching out to websites you are interested in writing for.
I have been a freelance writer for years, and it all started as a side hustle. This is a great side hustle because you can choose to work as much or as little as you want, such as if you are only looking to do freelance writing in the summer months when you are not teaching at a school.
Recommended reading: 14 Places To Find Beginner Freelance Writing Jobs
20. Transcribe
An online transcriptionist’s role involves listening to video or audio files and typing out the content they hear. Various types of transcriptionists exist, including legal, general, and medical transcriptionists.
This job demands solid typing and listening skills, and the flexibility to work from home on your schedule. Transcriptionists typically earn an average of $15 to $30 per hour.
This is another great side hustle because you can choose to work as much or as little as you want, such as if you are only looking to make extra money during the summer months.
I recommend signing up for FREE Workshop: Is a Career in Transcription Right for You? You’ll learn how to get started as a transcriptionist, how you can find transcription work, and more.
Recommended reading: 18 Best Beginner Online Transcription Jobs To Make $2,000 Monthly
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In this free training, you will learn what transcription is, why it’s a highly in-demand skill, who hires transcriptionists, how to become a transcriptionist, and more.
21. Rent out an unused room in your home
If you have a spare room in your house, you might want to try renting it out over the summer. Platforms such as Airbnb or Vrbo make it easy for you.
I have rented out rooms to others in the past, and it has been a great way to make extra money. If you live in a touristy area, this could even be a gig that you only do in the summers and earn enough to cover your bills or at least pay for some of them.
22. Rent your garage space
If you have available storage space like a garage, driveway, closet, basement, or attic, you might consider renting it out to make extra money. This can be a profitable side hustle without requiring much of your spare time.
Neighbor is a platform where you can list your extra space for rent and potentially earn up to $15,000 per year.
This is a gig that may take up more than just your summer because typically people may store their stuff more long-term. But, you may find some people who only need to store things a few months at a time or perhaps you can also try to turn this into a year-round side hustle.
Recommended reading: Neighbor Review: Make Money Renting Your Storage Space
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You can use this website to list your unused space for rent and make up to $15,000 per year by doing so. With Neighbor, you can rent out your garage, driveway, basement, parking lot, shed, warehouse, carport, attic, street parking, or even a closet.
23. Teach English as a second language
If you’re a teacher looking for a seasonal opportunity, teaching English as a second language (ESL) during the summer can be a rewarding experience.
Many institutions are looking to hire for ESL teaching jobs, ranging from local schools to international language camps and online platforms. Here’s how you can get started and what you might expect:
Typically, ESL teachers need a bachelor’s degree and a teaching credential like TEFL (teaching English as a foreign language) certification. Some positions abroad might have additional requirements.
24. Answer online surveys
If you’re looking for a flexible way to earn extra cash during the summer, answering online surveys could be a great fit. Companies are always in search of genuine feedback to improve their products or services, and your opinions are valuable.
Now, this won’t be a full-time job, but you share your thoughts and can make extra money or free gift cards on your own schedule.
The survey companies I recommend are:
Swagbucks
User Interviews – These are the highest paying surveys with the average being around $60 for an hour of your time.
Branded Surveys
American Consumer Opinion
Pinecone Research
PrizeRebel
InboxDollars
Recommended reading: 18 Best Paid Survey Sites To Make $100+ Per Month
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User Interviews pays very well for market research studies and these are some of the highest paying online surveys, with each paying $50 to $100 or more. The average pays over $60.
25. Mystery shop
Companies hire mystery shoppers to gain insights into their customers’ experiences. They seek genuine opinions on products, feedback on customer treatment, evaluations of phone call interactions, and more. Mystery shoppers play a key role in providing valuable feedback to companies.
This is a great summer side hustle for teachers because you can simply pick up mystery shopping jobs when you need them. So, it’s completely okay and normal to only accept jobs during the summer.
Here’s what mystery shoppers do:
Visit businesses anonymously.
Complete specific tasks, such as purchasing a product or asking questions.
Record your observations.
Provide a detailed report on your experience.
I have done many secret shopping jobs over the years, and I often got mystery shops that provided me with $100 to cover a free dinner.
Recommended reading: How To Become A Mystery Shopper
26. Find gigs on Craigslist
Craigslist can be a goldmine for finding great summer jobs for teachers. It’s a site where individuals and businesses post quick jobs to make extra money.
You can find these gigs by going to the Craigslist website for your city or area. Right on the home page, you’ll spot a section labeled “Gigs.” This is where short-term job offers are posted, ranging from labor-intensive tasks to more skill-specific roles.
Here are some jobs I have found in the past on Craigslist:
Moving boxes to a new house
Deep cleaning a home
Putting together new furniture out of a box
Taking down a shed in a backyard
Handyman
Movie extra
Event parking help
27. Deliver groceries with Instacart
If you’re a teacher looking for flexible summer jobs for teachers, try delivering groceries with Instacart.
Grocery delivery services, like Instacart, are in demand as more people prefer having someone else do their grocery shopping.
Becoming a personal grocery shopper with services like Instacart can earn you an average of $15 to $20 per hour for delivering groceries. You’re paid per order, and you get to keep 100% of your tips. The flexibility allows teachers to choose their schedules, working in the evenings, on weekends, or even exclusively during the summer.
Recommended reading: Instacart Shopper Review: How much do Instacart Shoppers earn?
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Instacart is a popular website for people looking to earn extra money shopping for and delivering groceries. Instacart gives you the option to turn your free time into a chance to make some extra money.
28. Real estate agent
If you’re a teacher looking for a productive way to spend your summer months, you may consider becoming a real estate agent.
Some teachers work as real estate agents alongside their full-time teaching jobs. This is possible because you can list and sell homes during weekends, breaks, evenings, and over the summer.
However, selling homes may have some challenges, as clients may occasionally require your full attention during the day, and you might be occupied with teaching. This is something to consider before getting into real estate as a side job.
29. Virtual assistant
If you’re a teacher looking for a flexible summer job that pays well, becoming a virtual assistant (VA) could be a perfect fit. As a VA, you can use your organizational skills and attention to detail to help businesses and entrepreneurs from the comfort of your home.
Some examples of what a VA does include:
Email management – Keep inboxes organized and respond to emails on behalf of your clients.
Scheduling – Manage calendars, arrange meetings, and send reminders.
File organization – Keep digital files in order using online tools like Google Drive or Dropbox.
Recommended reading: Best Ways To Find Virtual Assistant Jobs
30. Drive for Uber or Lyft
Driving for Uber or Lyft can give you a flexible way to earn money during your summer break.
You get to set your own hours and work as much or as little as you desire, meaning you can align this job with your summer plans.
31. Library assistant
As a teacher, your skills are a natural fit for a summer position as a library assistant. Libraries often seek additional staff during the summer months, providing a great opportunity for you to engage in a role that supports literacy and learning in a calm environment.
Your job may include doing things such as:
Organizing books – Keeping the library orderly and materials easy to access
Circulation desk duties – Checking books in and out for people
Helping library users – Helping visitors find books and resources, and answering inquiries
You can simply contact libraries near you to see if they are hiring.
32. Driver’s ed teacher
Teaching driving lessons to teenagers and adults is a popular side hustle for teachers. If you’re interested, you can check if the high school near you needs a teacher for this subject. Alternatively, reach out to a local driving school to inquire about potential teaching opportunities.
Driving instructors make around $20 an hour more or less, depending on where you live.
Back when I was in high school, I actually took my driver’s ed course at my high school in the summer. It was an easy summer credit, and I also got a discount on my car insurance. One of the teachers taught this course and it seemed fairly easy (other than having to deal with a bunch of us high school students over the summer who were wanting to learn how to drive, ha!).
33. Babysitting
Babysitting can be a side job for teachers, and depending on your location, you might earn around $15 to $25 per hour. Parents tend to prefer hiring teachers as babysitters due to their extensive experience with children.
Becoming a babysitter can be a great way to make extra money in the summer as well, as you can choose to sign up for babysitting jobs that are only during this time.
Plus, many families need extra help during the summer because school is not in session, but the parents still have to work. That is where you come in!
Another job similar to this would be elderly companion care.
Frequently Asked Questions
Below are answers to common questions about finding summer jobs for teachers.
Do teachers still make money during the summer?
Yes, many teachers do receive income during the summer, especially if their annual salary is distributed over 12 months. However, if you’re paid only for the months you work, looking for summer employment can supplement your income during this period. Not all teachers have summer gigs, but those who want to make income in addition to their teacher salaries may try to find something in the summer.
What is the best summer job for a teacher?
The best summer job for a teacher often capitalizes on their skill set. Positions like tutoring, educational program coordination, or teaching summer school are highly relevant options. Teachers might also consider roles in curriculum development or educational content creation.
What jobs exist for substitute teachers looking for summer employment?
Substitute teachers can find summer jobs in other educational roles, such as tutoring, mentoring, or working in summer camps. Many community centers and educational institutions also look for qualified professionals to lead summer workshops or help with childcare programs.
What are some summer jobs for teachers from home?
Teachers looking for summer jobs from home can find opportunities such as online tutoring or virtual summer school teaching. Other side gig ideas include writing content for websites, blogging, transcribing, and more.
Best Summer Jobs for Teachers – Summary
I hope you enjoyed this article on the best summer jobs for teachers.
As you can see, there are many ways to make extra money over your summer vacation.
Teachers have lots of options during the summer. They can stick with education by teaching summer school or tutoring. Or, they can try something new like being a camp counselor or giving local tours.
Teachers who like trying out new things might sell educational printables, sell things for profit, or sell services like pet care or freelance writing.
What do you think are the best jobs for teachers in the summer?
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.
Nearly 215 million U.S. drivers carry car insurance, and many may ask themselves, “Why is my car insurance so high?” If you’re one of those Americans, know that there are ways you can take control of the situation and reduce your insurance premiums.
We’ll guide you through why your car insurance may be higher than normal and ways you can proactively work to lower the costs.
1. Credit Score
Most insurance providers consider your credit score when determining insurance rates. Maintaining a good credit score can help individuals maintain a lower insurance premium. However, those with poor credit scores often need to pay more since they are seen as being higher risk.
Factors that impact your FICO® credit score include:
Length of credit history
Payment history
Credit mix
Amount owed
New credit
Keep in mind that credit score is only one factor used by insurers to set premiums.
2. Driving Record
Your driving record can significantly impact your insurance premium costs. Those with clean driving records without any traffic violations or accidents tend to pay lower insurance premiums. However, policyholders who have been in vehicle accidents and accrued traffic violations may pay for higher insurance premiums. Your insurance provider can increase your premium for:
Speeding tickets
DUIs and DWIs
Parking tickets
Your insurance may provide safe driver discounts to those with good driving records and who are accident-free for a required period. These discounts can decrease your insurance premiums.
3. Coverage Levels and Types
Your insurance rates can be significantly affected by the coverage type and insurance level you opt for. Depending on where you reside, your state has regulations and criteria for minimum policy coverage.
For example, Washington requires drivers to have the following minimum coverage:
$25,000 per person for bodily injury or death in an accident
$50,000 per person for bodily injury or death of any two people in an accident
$10,000 of injury to or destruction of property of others in an accident
Depending on other factors, like your vehicle type and whether it’s leased, you may require additional coverage on top of the minimum state requirements.
4. Claim History
Similar to your driving record, you want to keep your claim history as unscathed as possible. However, accidents happen, whether they result from your actions or those of another driver. Multiple filed claims can impact premium costs, especially if they are large claims, like a totaled vehicle. Plus, claims have a long-lasting impact—an at-fault accident can increase your rates for at least three years following the claim.
5. Location
Insurance premiums can greatly vary by location, especially if you live in a city versus a more rural area. Insurance premiums in each state are affected by various factors, including:
Rate of uninsured motorists
Frequency of filed claims
Minimum insurance limits
Things like road conditions and crime rates can also impact your auto insurance. For example, If you live in an area with high auto theft rates and poorly planned roads that are prone to cause accidents, you’ll likely be paying higher insurance rates.
6. Type of Vehicle
When insurers determine insurance premiums, they consider vehicle types. Certain car models have a lower likelihood of ensuring the safety of passengers or cost more to repair in the case of an accident, leading to higher insurance rates.
Vehicles that typically have higher rates are:
Smaller cars: Compact vehicles sustain more extensive damage in a crash, so they’ll usually have higher coverage rates.
Leased cars: Leasing companies typically require full coverage for leased vehicles, including comprehensive and collision coverage, to cover damage in a potential accident.
Cars with premium features: Trim levels and technological features, such as touch screens, can be expensive to repair when damaged. Providers keep this in mind when providing a premium. However, a vehicle with advanced safety features is at lower risk, resulting in a lower premium.
Vehicles that typically have lower rates are:
Small SUVs and minivans: Safer and bigger cars tend to have the most reasonable insurance rates.
Older cars: Most car values depreciate over time. In the case of an accident, your provider will need to pay out less than a newer vehicle. The exception is collector and classic vehicles.
Overall, newer, luxurious, smaller vehicles tend to have more expensive premiums.
7. Gender or Age
Gender can impact your insurance premiums in the majority of states. However, there are states that have banned gender in insurance rating, including:
California
Michigan
Massachusetts
Pennsylvania
North Carolina
Montana
Hawaii
Your age is another uncontrollable factor that impacts your insurance rates. Your insurer will likely charge you more if you have young drivers under 25 on your insurance policy. This is because they’re viewed as less experienced drivers with a higher risk of filing a claim.
8. Insurance Company
Rates vary across insurance providers. It’s easy to stick to renewing the same policy every year, but you could be losing out on savings by switching insurance companies. Among the leading auto insurance companies across the country, the average annual car insurance rate stands at $1,547 per year. Yet, a driver with identical coverage may pay as little as $1,022 with one company or as much as $2,135.
9. Driving Patterns
When you apply for insurance, expect your insurance provider to inquire about your occupation and residence. How often you drive and how much time you spend behind the wheel can increase your insurance premiums.
Those with longer work commutes increase their risk of being in an accident while they’re on the road. If you work in an expensive city and live in the suburbs outside the city to save on housing costs, you could, unfortunately, be paying a higher insurance rate.
10. Deductibles
Your deductible is the amount you would need to pay if your car is damaged and you file a claim. Your insurance provider pays the remaining total cost to fix your vehicle. For example, if you have a $500 deductible and file a claim for $2,500 in damages, you’ll need to pay the $500 and your insurance will cover the final $2,000.
If you pay for a lower deductible on your policy, there’s more risk for your insurance provider. Therefore, you’ll likely have to pay for higher insurance premiums.
11. Policy Add-ons
Take a look at your policy add-ons. You may be paying for additional coverage you don’t currently need. Evaluate whether it’s necessary to cover items like:
Car rental coverage
Roadside assistance
Comprehensive and collision coverage
While some of these additional coverage items can be beneficial, they aren’t essential expenses.
12. Car Insurance History
Your car insurance history can impact your insurance premium costs. If you have lapses in your insurance history, periods where you didn’t hold insurance, you can be penalized with higher premiums. Reasons for having gaps in your insurance history include:
Being dropped from your insurance provider
Your insurance expires and you can’t review your policy
You don’t have a vehicle and therefore don’t require auto insurance
You should always have auto insurance when you own a vehicle. Consider acquiring nonowner car insurance if you don’t own a vehicle—it provides coverage when driving cars you don’t own and prevents future premium increases when you do own one.
5 Ways to Lower Your Car Insurance Premium
As noted above, various factors can skyrocket your car insurance costs. Luckily, there are steps you can take to help lower your premiums and keep more money in your pocket.
1. Maintain a Good Credit Score
Your credit score can greatly impact how expensive your premium is. Improving your credit can help you find lower premiums in the future. Actions that can potentially improve a credit score is:
Reviewing your credit report for inaccuracies and errors and correcting them
Paying off any outstanding revolving debt
Opening a secured credit card if you don’t qualify for a traditional card
Completing payments on time
Improving your credit takes time, especially if you have multiple derogatory marks on your report. Be patient and smart while building your credit back up.
2. Get Rid of Unnecessary Coverage
Review your current coverage and evaluate whether you’re paying for add-on coverage you don’t need. For example, if you aren’t frequently renting cars, you likely don’t need car rental coverage. If you do rent a car for occasions like a business trip or vacation, your insurance should cover any damage caused to the rented vehicle.
3. Bundle Your Policies
For homeowners, bundling your home and auto policies can help lower your premiums. We recommend comparing bundling quotes from both of the providers before deciding which provider policy to cancel. Not only can you potentially save on both your premiums, but you will also be able to manage these expenses with one provider.
4. Raise Your Deductible
Opting for a higher deductible on your car insurance can help lower your premium rate. Your deductible is what you would pay “out of pocket” in a claim. However, you should be able to pay your deductible in case of an accident. If you increase your deductible too much, your insurance won’t cover smaller damages and repairs.
5. Compare Multiple Quotes
Has it been a while since your insurance premium was set? Shopping around at different insurance providers is the easiest way to get a lower insurance premium. If it’s time to renew your policy and you have a clean driving record, it may be a good time to compare quotes and see if other providers can provide a lower premium.
FAQ
Below are frequently asked questions about car insurance expenses and factors.
Does My Credit Score Affect My Car Insurance Rates?
Your credit score is factored in when your provider calculates your insurance premiums. Those with poorer credit scores (below 580 on the FICO scale and below 601 on the VantageScore® scale) tend to pay higher rates than those with good credit scores. Improving your credit score will help you secure favorable insurance rates and in other financial situations, like when you’re applying for a loan.
How Can I Lower My Auto Insurance Premiums?
There are a few actions you can take to potentially lower your insurance premiums, including:
Purchase a smaller, older vehicle
Remove unnecessary policy add-ons
Improve your credit
Raise your deductible
Bundle your home and auto policies
Shop around for rates
Why Does It Cost More to Insure an Expensive Vehicle?
There are several reasons why auto insurance costs are higher for an expensive vehicle. Luxury cars have more expensive parts, such as high-tech and advanced safety features. Also, if your vehicle is severely damaged and declared totaled, your insurance provider will need to cover the value of your car.
View New Car Loan Rates With Credit.com
Now that you know why your car insurance is so high, it’s time to take steps to reduce your premiums. Credit.com can provide you with a free credit score and credit report so you can see where you need to start working on your credit and lowering your premium rates.
If you’re shopping for a new auto loan, Credit.com offers custom that won’t impact your credit. Get prequalified and see your rates today.
Buying life insurance is a big decision — one that is often a long-term commitment — so you are probably wondering how much it will cost. You want to know your family will be financially stable when you are no longer around, but you may be concerned that the premiums will take a big bite out of your budget. The truth is, there is no one single number for a life insurance premium.
The price varies based on an array of factors, including the kind of policy you buy, the amount of coverage you want, your age, your health, and other attributes, as well as which provider you select. Even if you have a twin, you and your sibling may well be quoted different prices. Life insurance policies are that personalized.
But that doesn’t mean you can’t get a good ballpark! Let us help you get a handle on the range of possible prices.
Average Cost of Life Insurance
To get started, let’s do a quick overview before we get to the dollars and cents. Though rates will vary, some of the key criteria used in calculations include:
• Age. Generally, the younger you are when you sign up for life insurance, the cheaper it will be. The older you are, the shorter your life expectancy is, meaning your insurer is more likely to have to pay your beneficiaries upon your death (sorry! We don’t like saying it either, but that’s the bottom line of life insurance).
• Gender. Women tend to have longer life expectancies, so females almost always have lower premiums than males even if their age and health status is the same. The latest CDC figures put the average life expectancy for men at 73.2 years and women at 79.1 years.
• Smoking status. While the rate of cigarette smoking among U.S. adults is declining, there’s no denying it’s a health risk. In fact, it’s the leading cause of preventable death in America, according to the CDC. Approximately 480,000 deaths (that’s one out of every five deaths) is attributable to the habit.
• General health history. Overall, the healthier a person is deemed to be, the cheaper the premiums tend to be. This means factors like your height and weight, blood pressure, cholesterol levels, and pre-existing conditions will be considered.
How much you’ll pay also depends on whether you get term or permanent life insurance.
As the name implies, term life insurance covers you for a discrete period of time, and then you are no longer insured. This kind of policy can work well for those who want to know their loved ones are financially secure as a mortgage is paid off or a child pays college tuition.
On the other hand, permanent life insurance guarantees that whenever you may die, your designated beneficiaries will receive a lump-sum payment. Permanent life insurance policies also act as a savings vehicle; more on that in a moment.
Okay, here are some numbers to ponder. These rates are based on the healthiest category of applicants taking out a $500,000 policy. In the case of the term policies, the length is 20 years.
Age
Female, Term Insurance per year
Male, Term Insurance per year
Female, Whole Life Insurance per year
Male, Whole Life Insurance per year
30s
$183
$220
$4,015
$4,652
40s
$281
$220
$5,937
$7,028
50s
$641
$817
$9,443
$11,163
60s
$1,656
$2,361
$15,943
$19,150
70s
$8,204
$9,297
$28,093
$33,325
A word about those life-insurance premiums: They are typically paid monthly, though you may be able to save if you pay annually, up front. It’s important to keep up with your life insurance payments so your policy doesn’t lapse and you and your loved ones receive that halo of protection you are paying for. 💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.
Average Cost of Term Life Insurance by Age
Term life insurance tends to be the more affordable option. Permanent life insurance can cost considerably more – from five to 15 times as much. However, the costs will vary based on many factors. One obvious one is that a longer policy will have higher premiums than one with a shorter term. Why? Because it’s more likely that the insurance company will need to pay out on a longer one.
When Business Insider gathered rates, they found that a 30-year old could take out a 30-year term policy for $33.65 per month. The average rates climbed by age — from $33.65 per month at age 30 to $56.21 at age 40, $125.12 at age 50, and $252.26 at age 60.
As you see, you may get much better rates, the younger you sign up.
Average Cost of Whole Life Insurance by Age
Now, let’s take a look at whole life insurance, which will pay a death benefit even if you live to be over 100. One kind of permanent life insurance is whole life. It also accrues “cash value,” which can be a source of funding for future needs. Providers may offer unguaranteed dividends, depending on the particular policy you purchase.
Let’s look at how much this kind of life-insurance policy can cost. Recent annual costs for a $500,000 policy averaged $352 for a 30-year-old female and $394 for a male, and $506 for a 40-year-old female and $564 for a male.
Recommended: 8 Popular Types of Life Insurance for Any Age
Average Cost of Life Insurance Without a Medical Exam
Usually, part of the application process for life insurance involves a medical exam. A medical history is taken, and then there’s a brief visit to a healthcare practitioner (or they may come to you). Your height, weight, pulse, and blood pressure are typically recorded; blood and urine samples may be collected, too. The results allow the life insurance company to gauge your health and contribute to the calculation of the premium you will pay.
Some people, however, don’t want to invest the time in this step; signing up can take 4-8 weeks. Or perhaps they just don’t like medical appointments and blood draws. Others may worry about what will turn up in their testing and worry that they won’t qualify for coverage. Regardless of the reason, there are insurance policies that let you sidestep the medical exam. These are referred to as no-exam policies.
Typically, these types of policies offer lower coverage limits than those that do include medical testing. For instance, they might offer from $5,000 to upwards of $3 million in coverage. To acquaint you with how much this could cost, let’s review some prices, per Policygenius
• For a 30-year-old woman, it would be $22.99 per month for $500,000 in coverage.
• For a 30-year-old man, the cost would be $29.33 per month for $500,000 in coverage.
If you are interested in this type of policy, it is also sometimes called simplified-issue insurance or guaranteed-issue insurance.
Average Cost of Term Life Insurance by Health
Here’s another angle on life insurance: looking at how much it will cost you based on your health. As we mentioned above, the insurance industry uses different terms to describe how healthy a policyholder is. Here are some common terms you may hear as you’re researching policies:
• Super preferred (or preferred plus): This is the healthiest category to be in; statistically, you’re more likely to live a long life, and you will get the best rates. Typically, to qualify, one needs no family history of death from cancer or heart disease before age 60 or 65; no tobacco use in recent years, nor a history of substance abuse; healthy blood pressure and cholesterol levels; no personal history of cancer or heart disease; a clean driving record; and your height and weight must fall in a certain range.
• Preferred: This category is typically a bit more liberal in terms of the height/weight limits, cholesterol numbers (perhaps a total limit of 240), and when one might have last used tobacco. This category also encompasses those who have had a close relative die of cancer or heart disease before the age of 60. Rates will be higher than those in the super preferred category.
• Standard: This is the next category and tends to include those with a history of substance abuse as well as those who use tobacco.
So, now you are probably curious how rates stack up based on these categories. Let’s take a look at costs for $500,000 coverage of 20-year term life insurance:
• For a woman who is age 30, the annual premium for standard health could be $417, with preferred costing $235, and super preferred at $174. At age 40, the annual costs would be approximately $641, $350, and $277 in the same categories.
• For a man who is age 30, the annual premium for standard health could be $506 for standard, $292 for preferred, and $219 for super preferred. At age 40, the premiums would be $778, $421, and $327 in those categories.
Average Cost of Life Insurance by Term Length
As you think about buying life insurance, you may be pondering different versions of term insurance. Perhaps you just took out a 30-year mortgage and want to be sure those payments will be covered if a worst-case scenario happened and you weren’t around to write checks. Or maybe you are about to marry someone with a 10-year-old, and you want to be sure the child’s college expenses will be covered, no matter what may happen.
Term insurance can be the perfect vehicle in situations like these. Term life insurance has a straightforward goal: to provide the policyholder with a certain amount of coverage during a designated time period — perhaps 15, 20, or 30 years. If a person dies within the time frame, then beneficiaries typically receive the payout of the policy. If a person does not die during the time frame, no one receives the death benefit.
As you might expect, the longer the term, the higher the premium. You’re buying into more coverage, so that will cost more. Let’s see how some numbers stack up.
For a 30-year-old man with a preferred health rating, here’s how much a monthly premium would be for $500,000 in coverage:
• 10 years of coverage: $21.13
• 20 years of coverage: $29.32
• 30 years of coverage: $42.45
As you see, extending your coverage term from 10 to 20 years doesn’t mean you will pay twice as much. That’s good news in the affordability department! 💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.
What Factors Determine the Cost of Life Insurance?
You may wonder why rates vary as you price and compare life insurance policies. Let us break down for you some of the most important factors that influence to cost of a policies:
• The kind of insurance: As we have mentioned above, there are two main kinds of life insurance, term (coverage for a specific period of time) and permanent (life-long coverage). Permanent is pricier.
• The amount of coverage: If you buy $250,000 of coverage, it will of course cost less than a policy that pays a death benefit of, say, $2 million.
• Length of a term policy: If you are shopping for a term policy, expect to pay more for a longer period of coverage. If you buy a 20-year policy, for instance, it will be higher in price than a 10-year policy.
• Age and gender: Younger people in general get lower quotes than older people because it is less likely that the insurer will need to pay out in the near future. Women tend to live longer than men, so females can get a lower premium when all other factors are equal.
• Health status: At a minimum, the insurance application will ask health-related questions. Many life insurance companies also require a medical exam, along with the ability to review health records before a policy can be issued. Certain health conditions, such as cancer and heart disease, can increase premiums and may also prevent coverage from being issued. Weight, blood pressure, and cholesterol levels can also play a role. Plus, even if the applicant is healthy, a family history of health issues can impact premium pricing or policy eligibility.
• Lifestyle: Do you have a high-risk job (say, a pilot or police officer) or hobby (skydiving would be a classic example)? Or do you smoke, which carries health implications? Do you have a history of substance abuse or a recent DUI on your record? These factors can raise your insurance rates.
It’s notable that life insurance companies can have different underwriting policies — so questions asked during the application process may vary from provider to provider.
One key point to keep in mind: Obtaining a life insurance policy when younger and healthier could impact the cost of a policy quote in a very good way. With some life insurance companies, the consumer can lock in a set monthly premium upon signing up — in which case the life insurance premiums would remain stable throughout the entire term of policy.
Recommended: Is Employer Life Insurance Enough?
What Factors Don’t Impact Your Life Insurance Rates?
So, that’s quite a list of things that do impact the cost of life insurance. Now, let’s look at what doesn’t influence the price tag:
• Ethnicity, race, and sexual orientation. Insurers can’t discriminate based on these factors.
• Credit score. Yes, your insurer may look at how you rate over the last seven years, but whether you are a 500 or a 700 shouldn’t make a difference. That said, if you have a bankruptcy on your record, that could influence your perceived risk and may affect premiums.
• Marital status. This doesn’t raise or lower your rates (though, yes, it does matter to car insurance quotes).
• How many beneficiaries you have. It won’t impact your rate if you name one person or several.
When Is the Best Time to Buy Life Insurance?
It’s typically a good idea to buy life insurance as soon as you feel you need it. As we’ve discussed, rates are lowest when you are younger, before health issues typically crop up.
In terms of timing it right, many people buy a policy when they know they will have dependents who’ll rely on their earnings. For instance, getting engaged to be married is a good time to consider purchasing a life insurance policy. You would want to know your spouse is taken care of financially if anything were to happen to you.
Similarly, if you are expecting a child, that is another classic trigger moment for buying a life insurance policy. Knowing that you have protection for your kids, from birth through college, can let you rest a lot easier.
There’s another angle to consider: the half-birthday aspect of insurance premiums. If you apply for life insurance six months or more past a birthday, your insurer will round up to the next birthday. This can wind up locking you into a higher rate for the entirety of your policy. So look at the calendar before you commit to a purchase, and check in with your insurer if there’s a way to back-date your policy if you are past your half-birthday.
How to Choose the Best Policy for You
Armed with all of this intel, you’re ready to go shopping. Here are some considerations as you get acquainted with your options, whether you work with an agent or use the easy, one-click options online.
• You’ll need to decide whether term life insurance or permanent coverage best suits your needs and budget.
• You’ll want to determine the amount of coverage to buy. Some people say to multiply your annual salary by 10; others use the DIME method. There’s also the DIME method to calculate the amount of debt, lost income, mortgage payments, and educational expenses that would need to be covered if you weren’t here to pay them. (This could leave you overinsured, so you could subtract your assets from the figure you calculate.)
• You’ll want to check rates from different, well-rated insurance companies to see where you’ll get the most enticing quote. You can look into the details and evaluate whether the premiums are fixed or if they will increase (if the latter, why and by how much?). You can also decide if you want a policy that requires or waives a medical exam, and consider whether a term policy offers renewal options and how costly they would be.
These factors will help you find a policy that says, “Yup, I’m The One!”
The Takeaway
As you have seen, there’s a galaxy of options when it comes to buying life insurance. Not only are there different kinds of insurance (term versus permanent, and many permutations), but there are also a range of rates to suit many budgets. Factors that can impact rates include how much coverage you want, for how long, your age, your health, and other attributes.
Only you can know what policy will be the perfect, personalized fit for you, but do make sure you seriously consider investing in a policy as soon as possible. This kind of protection is a key element of your financial life, and helps give you peace of mind, no matter how uncertain the times.
SoFi has partnered with Ethos to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.
Explore your life insurance options with SoFi Protect.
Social Finance Life Insurance Agency, LLC (SoFi Agency) does not issue or underwrite insurance. SoFi Agency is compensated by Ethos for each issued term life application submitted.
The policies offered are from Ethos Technologies Inc. Coverage and pricing is subject to eligibility and underwriting criteria. Ethos Technologies Inc. (Ethos) operates in some states as Ethos Life Insurance Services. CA license #0L28949; AR license #100164629. Ethos offers policies issued by the carriers listed at www.ethoslife.com/carriers. Products and their features may not be available in all states. To help avoid requiring a medical exam, the Ethos application asks certain health and lifestyle questions.
SoFi Agency does not guarantee the services of any insurance company. Once you reach Ethos, SoFi is not involved and has no control over the products or services involved.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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.
When you rent a car during your travels, you usually aren’t thinking about what happens if you crash your car. that is, until the agent at the rental car desk paints that worst-case scenario during their collision damage waiver pitch.
Should you pay extra to cover your car in the case of an accident? Not if you hold the Capital One Venture X Rewards Credit Card.
If you are involved in a fender bender, you can rely on your credit card coverage to pay for damage to your rental car without making a claim against your personal auto insurance.
Although it’s a great idea to use your Capital One Venture X Rewards Credit Card to book your rental cars, the auto rental collision damage waiver benefit on the card doesn’t cover everything or every trip.
Here’s what you need to know about what the policy covers and how to file a claim.
How the Capital One Venture X Rewards Credit Card rental car insurance works
Every credit card car rental insurance requires you to use the card for your rental transaction and decline the car rental company’s collision damage waiver option. The car rental coverage provided by the Capital One Venture X Rewards Credit Card is no different.
If you want your Capital One Venture X Rewards Credit Card car rental insurance to cover your rental car, here’s what you must do:
You must use your Capital One Venture X Rewards Credit Card to reserve and pay for your entire rental car transaction.
You must decline the car rental company’s collision damage waiver provisions.
Simply being a Capital One Venture X Rewards Credit Card member isn’t enough — you must use the card to cover your rental transaction and decline the collision damage waiver offered by the rental counter.
Be aware that some rates include collision damage waiver insurance. If you book using one of these rates, you won’t be covered by the Capital One Venture X Rewards Credit Card car rental insurance on that rental.
What is covered?
The most important thing to understand about Capital One’s car rental insurance is what it covers. It covers only the following types of losses:
Damage to a rental car caused by a collision.
Loss of a rental car due to theft.
While your card’s insurance coverage will reimburse you for damage to your rental car, an accident can also cause damage to another driver’s vehicle or result in bodily injury.
If you injure someone (including yourself) in an accident or if you damage someone else’s vehicle, the Capital One Venture X Rewards Credit Card car rental insurance won’t cover these losses. Here are some items that are not covered by Capital One’s rental car insurance.
Personal liability.
Loss or theft of personal belongings.
Bodily injuries of any kind to anyone.
Damage to anything other than the rental vehicle.
Wear and tear or mechanical breakdowns.
Most likely, you’ll want travel insurance or personal auto insurance to shield yourself from liability, in case you are involved in an accident that damages someone else’s car or causes an injury.
Finally, Capital One car rental insurance covers rental periods of only 15 or fewer consecutive days within your country of residence. Rentals outside your country of residence are covered up to 31 consecutive days.
Notable exclusions
Certain vehicles
Capital One car rental insurance is meant to cover rentals of non-luxury passenger vehicles. The policy will pay only for the actual cash value of cars with a manufacturer’s suggested retail price (MSRP) of up to $75,000 when new, so extremely expensive luxury cars won’t be covered.
If you’re renting a Toyota Corolla, you’re going to be covered. If you want to drive an Aston Martin, you’ll need to find other insurance. Here are some of the types of automobiles that are excluded:
Expensive automobiles with an MSRP of over $75,000 when new.
Antique vehicles that are over 20 years old or have not been manufactured for 10 years.
Vans, other than those designed for small-group transportation and seat up to nine people.
Trucks and vehicles with an open cargo bed.
Two-wheeled vehicles like mopeds, motorcycles and motorbikes.
Limousines.
Recreational vehicles.
Certain destinations
Most car rental insurance policies provided by credit cards exclude certain countries from coverage. Your
Capital One Venture X Rewards Credit Card car rental insurance does not cover rentals in Israel, Jamaica, the Republic of Ireland or Northern Ireland.
Who is covered?
Capital One provides rental car damage and theft coverage only to you, the person whose name is embossed on your eligibleCapital One Venture X Rewards Credit Card. You must reserve, pick up and pay for the rental car and be listed as the primary driver.
Additional drivers on the rental car are covered by your Capital One car rental insurance, but you (the cardholder) must be the primary renter of the car.
How to file a claim
If you have an accident or your rental car is stolen, you will need to call the car rental benefit administrator to report the incident as soon as possible, regardless of your liability.
Within the U.S., call 800-825-4062. If you’re traveling outside the U.S., you can make a collect call to 804-965-8071. You can also initiate your claim online at https://www.eclaimsline.com/.
🤓Nerdy Tip
Be sure to submit your claim form within 90 days of the date of theft or damage or your claim may be denied. Submit the claim form even if you don’t yet have access to all other requested information.
To prepare to submit your claim, you’ll want to collect documentation that will be needed to process your claim. Here’s what you should collect and be prepared to submit to the benefit administrator.
The accident report form provided by the rental company.
A copy of the front and back of the initial and final rental agreements.
A copy of repair estimates and an itemized repair bill.
At least two photographs of the vehicle.
A police report, if one can be obtained.
A copy of any demand letter you receive from the car rental agency.
You’ll also need to fill out a claim form and submit the above documentation, plus a copy of your credit card billing statement including the rental charge. The benefit administrator may also request additional documentation to validate your claim.
Your claim will usually be processed within 15 days after the benefit administrator has received all requested documentation.
Capital One Venture X rental car insurance recapped
The Capital One Venture X Rewards Credit Card offers car rental insurance that covers damage to or theft of your rental vehicle when you decline the car rental company’s collision damage waiver insurance and charge the entire rental transaction to your credit card.
The coverage does not include liability coverage of any kind or cover trips longer than 15 days in your country of residence or 31 days abroad. Be sure to check your card’s Guide to Benefits for coverage details.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2024, including those best for:
A charge-off can occur when you don’t pay your credit card’s minimum monthly payment or your installment debt like an auto loan or personal loan. If a creditor decides that a debt is unlikely to be paid after a certain period of time, they may count it as a loss. Then it becomes what is known as a charge-off to the account.
And what happens after that? It’s not a “free money” situation for you. Quite the opposite: A charge-off on your credit report is a negative entry that can stick for a while and cause concern for future lenders.
Here, you’ll learn what exactly a charge-off is in more detail, how it affects your credit, and what steps, if any, you can take to resolve the situation.
What Is a Charge-Off?
When a credit card or installment debt goes unpaid for 120 to 180 days and the lender determines that the debt is unlikely to be paid off, the outstanding balance may be counted as a loss, and the account closed.
But a charge-off doesn’t mean the debt ceases to exist and that the borrower no longer needs to pay it off. Instead, typically the lender either hires a debt collector to pursue the money it’s owed or sells the debt to a collection agency.
Though the lender will take a hit on the money owed — the debt collector will either take a share of any funds recovered, or the bank may sell off the debt entirely to the collector at a reduced rate — the story isn’t over for the borrower. 💡 Quick Tip: A low-interest personal loan can consolidate your debts, lower your monthly payments, and help you get out of debt sooner.
How To See if You Have a Charge-Off
Under federal law, a debt collector must send a debt validation notice within five days of first contacting you. The notice will include details about the outstanding debt, including verification that the notice is from a debt collector, the name of the creditor, the amount owed (including any fees or interest), your rights, and how to dispute the debt, and other information.
A charge-off will also be noted on your credit report. The original creditor may close your account and report the payment status as “collection” or “charge-off,” both negative marks on a credit report.
You can get a free copy of your credit report from each credit bureau annually via AnnualCreditReport.com. It’s a good idea to check your credit report regularly to make sure all information is up-to-date and correct. Requesting a credit report from one of the three credit reporting bureaus every few months allows you to check your credit report three times per year. For example, you could check your Experian® report in January, your TransUnion® report in May, and your Equifax® report in September.
What Happens When You Have a Charge-Off?
After you’re notified of the charge-off, a good first step is verifying the debt is actually yours and the charge-off is valid. You can dispute the posting with the credit bureaus and contact the creditor or debt collection agency with proof that the debt was paid if that’s the case. (Any common credit reporting errors can be brought to the attention of the reporting agency, including invalid charge-offs.)
If you do owe the debt, you have a few options:
• You could pay it, including working out a repayment plan with the creditor and attempting to come to a settlement for an amount less than the original debt.
• Doing nothing at all is another option. The collection of debts is subject to a statute of limitations that prevents creditors from pursuing unpaid bills after a certain period of time (the time limit varies from state to state, but is typically between three and six years).
Once that statute of limitations is up, a debt collector can no longer seek court action to force repayment, but the Federal Trade Commission points out that under certain circumstances, the clock can be reset.
Again, though, simply running out the clock on a charge-off does not mean there are no consequences for the cardholder. Read on to learn more about this important aspect of charge-offs.
How Does a Charge-Off Affect Credit Rating?
To understand the implications of a credit card charge-off, it’s worth thinking about how you’re approved for a credit card or loan.
• Individuals have credit scores, which help credit card companies, lenders, and other institutions determine the risk of making payments. Credit scores are one factor among many used to evaluate an individual’s application for a car loan or mortgage — even an application for an apartment rental or new cell phone account.
• Some lenders have minimum required credit scores for personal loans, so a person’s credit score not only helps to determine whether they will be approved but also the interest rate they will pay and other terms.
• A credit score is a snapshot of a consumer’s financial history: their record of bill payments, how much credit they are using, and other such details.
• Building credit scores takes time, reflecting years of credit habits. As such, any past credit card charge-offs are reflected in a person’s credit score and on their credit report. This can lead to a bad credit score and will let future prospective lenders know they have a history of delinquent or unpaid bills.
The Process of a Charge-Off
While parameters for a charge-off vary from lender to lender, here’s what typically happens:
• After an individual does not pay at least their credit card minimum payment for six consecutive months, the account becomes delinquent. After the first month of delinquency, the credit account is moved from the “Accounts in Good Standing” section of their report to “Negative Items” or “Negative Accounts,” along with the outstanding balance.
• If the credit card company decides to charge off the debt at 180 days, this is then noted on the person’s credit report as a charge-off.
• Even with a charge-off, the outstanding balance will remain on one’s credit report (noted as a charge-off), unless it is sold to a collection agency. In that case, the balance reverts to zero but the charge-off remains.
Consequences of a Charge-Off
A charge-off stays on a person’s credit report for seven years from the first delinquent payment date, usually, even if they pay off their debt in full or the statute of limitations runs out. In fact, once consumers have a charge-off on their record, it can be difficult to have it reversed.
Among the consequences of having a charge-off on a credit report: It could result in higher interest rates on future lending products, or even being turned down for a credit card or loan.
There are a few scenarios where cardholders might be able to have a charge-off taken off their credit report. If an individual can prove that the charge-off was inaccurate, they can apply to have it removed under the Fair Credit Reporting Act. It can also be helpful to reach out to the creditor directly to try to reach a resolution.
It may be possible to have the charge-off removed as part of a debt settlement agreement or on a goodwill basis in the event of personal hardship or an honest mistake — though there are no guarantees. 💡 Quick Tip: With low interest rates compared to credit cards, a personal loan for credit card consolidation can substantially lower your payments.
What You Can Do About a Charge-Off
Paying off the charge-off or collection may reduce the negative impact on a credit score. It may also be wise to contact the lender to discuss a payment settlement, which may also reduce the credit impact.
If a credit card account is charged off, it may continue to accrue interest until it is paid. Once the balance is finally paid off in full, it will be noted on the individual’s credit card report.
A credit card charge-off on a credit report can make anyone’s financial life more difficult, so prevention may be the best bet.
Contacting the creditor to arrange a payment plan could be an option to keep a charge-off from being reported on your credit report. Switching to a lower-interest credit card or consolidating debt with a credit card consolidation loan may be steps to consider for managing debts before a charge-off affects a credit report.
Developing habits for using a credit card responsibly by setting a budget and ensuring that there’s enough money on hand to cover necessary and discretionary purchases, keeping a close eye on credit card statements, and adhering to payment schedules is a good way to successfully manage your finances. Even if you can’t afford to pay the balance due in full, it’s a good idea to pay at least the minimum on time.
Disputing a Charge-Off
If you’ve determined that the charge-off is not accurate — whether the debt doesn’t belong to you, the amount is incorrect, or the statute of limitations has passed — you can begin the dispute process.
You can begin by filing a formal dispute with the credit reporting bureau. You can mail a dispute form to each bureau or use their online dispute filing process at the following links:
• Equifax
• Experian
• TransUnion
Each credit bureau has its own process for handling disputes, but generally, you can expect a reply within about 30 days. You’ll be able to check the status of your dispute online after setting up an account with the credit bureau.
The credit bureau will begin by contacting the creditor, e.g., the credit card issuer or the lender, requesting them to check their records. If the information that was reported was incorrect, your credit report will be corrected, while any correct information will remain on your report.
After a dispute is completed, the credit bureau will update your credit report with the final outcome, whether that’s deleting the disputed item or leaving it on your credit report because it was found to be a valid debt.
Paying Off a Charge-Off
If the charged-off debt is yours, you are legally responsible for paying it. You have some options for doing so.
• If the original creditor has not sold the debt to a collector, you can work directly with them to pay the debt. If the debt has been sold to a collections agency, you’ll be working with the agency instead of the original creditor.
• In either case, you can make a payment plan to pay down the debt, or you could also try to negotiate a settlement for less than the amount owed if you’re able to pay some amount in full.
• A paid debt will be reported as “paid collection” on a credit report, and a settled debt will be reported as a “settled charge-off.”
• After the debt is paid in full, asking for a final payment letter is the way to have proof that the debt is no longer outstanding.
A debt being charged off and a debt being sent to collections are related, but different. Here’s a comparison:
Charge-Off
Collections
The creditor removes the debt from its balance sheet because they deem it unlikely to be paid.
The creditor hires a debt collector to attempt collection or sells the debt to a debt collection agency.
Collection attempts may still be made by the original creditor.
Collection attempts are made by the debt collection agency.
Creditor will report the charge-off to the credit bureaus.
Debt collectors must send a debt validation notice within five days of first contacting you about the outstanding debt.
You may be able to work with the original creditor to pay down the debt.
Any payment arrangements or settlement negotiations will be with the collection agency.
The Takeaway
A credit card charge-off may remain on a credit report for years and have a negative impact on your credit score. Preventing a charge-off by developing responsible spending habits, consolidating debt, or trying to arrange a payment plan may be the best bet.
If you are struggling with debt, a debt consolidation loan might help. It’s a personal loan used to consolidate multiple high-interest debts into one with a lower interest rate or with more manageable monthly payments.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.
FAQ
Is paying off charge-offs a good idea?
It can be a good idea, depending on the age of the debt. If the debt is old and beyond the statute of limitations for collection, making a payment on the debt could restart the clock on a time-barred debt.
What is a charge-off vs collection?
A charge-off happens when a creditor deems it unlikely that a debt will be paid. Collections are the next step in the process, whether the original creditor attempts to collect the debt or the debt is sold to a debt collection agency.
How does a charge off affect your credit score?
A charge-off is a negative entry on your credit report which could lower your credit score. It can affect your ability to qualify for future loans, your rental options, and even car insurance rates.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
The Capital One Venture X Rewards Credit Card is a travel credit card offering a long list of benefits for travelers. For the card’s $395 annual fee, you get a lot of perks — an annual $300 Capital One Travel credit, a 10,000-point anniversary bonus and Priority Pass lounge access, among other travel perks.
The card also offers several travel insurance benefits, which makes it a good choice for booking travel. Even if another card offers you more points, paying for travel with your Capital One Venture X Rewards Credit Card might make sense if the other card doesn’t have insurance and you want coverage.
Trip cancellation and interruption coverage
If you pay with the Capital One Venture X Rewards Credit Card you can be reimbursed up to $2,000 per person for any nonrefundable airline, bus, train or ferry tickets if your trip is canceled or cut short for an eligible reason. Only the cardholder, their spouse and any dependent children are covered.
🤓Nerdy Tip
The card’s included trip interruption or cancellation insurance doesn’t provide coverage for prepaid tours or hotel reservations.
The card’s plan only covers trip cancellation or interruption in two specific scenarios:
The death, injury or illness of you or an immediate family member.
Financial insolvency of the common carrier, resulting in default.
If you have to cancel a trip or return home early for any other reason, this policy will not reimburse you the cost of your tickets.
How to submit a trip cancellation or interruption claim
Trip cancellation and interruption protections are managed by an external claims administrator, so you’ll need to work with them to process your request. Claims can be initiated by mail to the following address: CBSI Card Benefit Services; 550 Mamaroneck Avenue, Suite 309; Harrison, NY 10528.
Once you’ve initiated your claim, you’ll use the portal at www.myclaimsagent.com to upload documents and check the status of your claim. Note that you can’t initiate claims online.
You should submit your claim within 20 days of when the incident that cancels or interrupts your travel occurred. Once you’ve received the required forms from the benefits administrator, you’ll need to sign and return them, along with all necessary documentation, within 15 days.
Here are some of the documents you may be required to submit:
Copies of proof of cancellation from the common carrier, as well as an itinerary with the traveler’s names and ticket cost.
Document showing the common carrier’s cancellation policies.
A copy of your credit card statement, showing that the travel was charged to your card.
Confirmation showing the reason for the trip cancellation or interruption.
Other claim documentation, as requested by the benefit administrator.
Trip delay coverage
When you book your airline or other common carrier tickets with your Capital One Venture X Rewards Credit Card, you also receive trip delay coverage.
If your trip is delayed by more than six hours, or requires an unexpected overnight stay, you’ll receive up to $500 per eligible passenger toward any reasonable incurred expenses. This typically includes purchases like hotel accommodations, food, toiletries and other essentials.
Capital One offers trip delay coverage when you use credit card rewards for your travel or pay for all or part of the fare with your Capital One Venture X Rewards Credit Card. Plus, it covers you, your spouse and any children under 22 years of age.
How to file a trip delay reimbursement claim
Within 30 days of your trip, you’ll need to file a claim with the benefits administrator by filling out a form at www.eclaimsline.com or calling 800-825-4062. Be sure to save your receipts and get a statement from your carrier about the reason for the delay.
Here’s what you’ll be expected to provide with your claim:
A copy of your itinerary and common carrier tickets.
Your monthly billing statement, showing that your travel expenses were charged to your account.
A statement from your common carrier stating the reason for the delay.
Itemized receipts for expenses claimed.
Common carrier travel accident coverage
Even with careful planning, accidents can happen when traveling. If you’re injured (or worse) while traveling on a common carrier, you’re protected by up to $1,000,000 of travel accident insurance — as long as you charge your trip to your Capital One Venture X Rewards Credit Card. The coverage protects you against loss of life or specific, significant bodily injuries.
Capital One’s coverage is door-to-door as long as you’ve charged your common carrier fare to your card. This means you’ll be protected from your home all the way to your destination, including any travel by taxi, bus, ferry or other form of public transportation.
How to file a travel accident claim
If you need to file a claim under Capital One’s common carrier travel accident insurance policy, contact Broadspire, the claim administrator for this benefit. Broadspire’s contact information is as follows: Broadspire, a Crawford company; P.O. Box 459084; Sunrise, FL 33345. It can also be reached by phone at 855-307-9248.
During the claims process, you’ll need to fill out a form and provide the requested documentation and proof of loss.
Lost or damaged baggage coverage
When an airline loses or damages your luggage, you may receive some compensation, but it might not cover the total cost of your loss. If you’ve booked your trip with your Capital One Venture X Rewards Credit Card, its lost luggage coverage can make up the difference. This benefit will pay up to $3,000 per passenger to cover the difference between what the airline pays you and the value of your claim.
The lost luggage policy also covers carry-on baggage, but only in cases where it was damaged or mishandled by the common carrier.
How to file a lost or damaged baggage claim
Your first step when you have a lost or damaged bag is to submit a claim with the common carrier. Once you’ve done this, you should contact the benefits administrator at 800-825-4062 or file online at www.eclaimsline.com. You’ll need to do this within 20 days of the bag being lost or damaged.
You’ll also need to provide documentation, including:
A copy of your billing statement showing payment of the common carrier fare.
A copy of your common carrier ticket.
Evidence of any payment provided by the common carrier as a settlement of your baggage claim.
The declarations page of any other applicable insurance policies, plus copies of any settlements from them.
Rental car collision coverage
Rental car insurance, also known as an auto rental collision damage waiver, protects you against the cost of damage to or theft of a rental car.
As long as you charge the rental to your Capital One Venture X Rewards Credit Card and decline the rental company’s collision damage waiver agreement, you’ll receive reimbursement for the cost of theft or damage of the rental car. The coverage is primary and covers the actual cash value of the rental, up to $75,000 when the vehicle is new.
Capital One’s car rental insurance doesn’t cover liability — meaning if you damage property or injure someone with your rental car, they can still pursue a claim against you or your personal automobile insurance. Additionally, the coverage has some exclusions, including rentals in specific countries, antique and luxury cars, motorcycles, recreational vehicles (RVs) and cargo vans, among others.
The rental period cannot be longer than 15 days within your country of residence or 31 days outside your country of residence.
How to submit a rental car insurance claim
If you need to submit a rental car insurance claim, you’ll want to inform the benefits administrator as soon as possible — but no later than 45 days after the incident occured. As soon as you are aware of damage or theft, you should call the benefit administrator at 800-825-4062. You can also start your claim online at www.eclaimsline.com.
During the claim process, you’ll be required to provide documentation:
A copy of the rental company’s accident report form and the rental car agreement.
A copy of a repair estimate and itemized repair bill.
Photos of the damaged vehicle.
A police report, if available and/or applicable.
A copy of the letter from the rental agency showing what costs you are responsible for and what has already been paid.
Capital One Venture X Rewards Credit Card travel insurance recapped
The Capital One Venture X Rewards Credit Card offers a suite of travel protection benefits that can protect you when you’re on the road and encounter unexpected circumstances.
Be sure to read your card’s guide to benefits to understand important benefit limitations and exclusions.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2024, including those best for:
FHA loans have been making homeownership more accessible for decades. Tailored to borrowers with lower credit, the FHA makes it possible to buy a house with a credit score of just 580 and only 3.5% down.
But home buyers aren’t the only ones who can benefit. For current homeowners, an FHA refinance may let you access low rates and home equity, even without great credit.
Not sure whether you’ll qualify for a mortgage? Check out the FHA program. You might be surprised.
Verify your FHA loan eligibility. Start here
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>Related: How to buy a house with $0 down: First-time home buyer
What is an FHA loan?
An FHA loan is a mortgage insured by the Federal Housing Administration (FHA).
FHA insurance protects mortgage lenders, allowing them to offer loans with low interest rates, easier credit requirements, and low down payments (starting at just 3.5%).
Thanks to their flexibility and low rates, FHA loans are especially popular with first-time home buyers, home shoppers with low or moderate incomes, and/or lower-credit home buyers.
But FHA financing isn’t limited to a certain type of buyer — anyone can apply.
Verify your FHA loan eligibility. Start here
How does an FHA loan work?
The first thing to know about FHA mortgages is that the Federal Housing Administration doesn’t actually lend you the money. You get an FHA mortgage loan from an FHA-approved bank or lender, just like you would any other type of home mortgage loan.
The FHA’s role is to insure these mortgages, offering lenders protection in case borrowers can’t pay their loans back. In turn, this lets mortgage lenders offer FHA loans with lower interest rates and looser standards for qualifying.
The one catch — if you want to call it that — is that you pay for the FHA insurance that protects your mortgage lender. This is called “mortgage insurance premium” or MIP for the life of the loan or until the FHA home loan is refinanced into another type of mortgage. We go over this in detail below.
Types of FHA loans
FHA loans offer various options to meet different home buying needs. These government-backed loans are designed to make homeownership more accessible, especially for those with less-than-perfect credit scores or limited savings.
Each type of FHA loan is tailored to different financial situations and home buying needs. Here’s what you can expect.
Compare FHA loan quotes from multiple lenders. Start here
FHA mortgage loan
An FHA mortgage is ideal for first-time home buyers, requiring a minimum credit score of 580 for a 3.5% down payment. Those with credit scores between 500 and 579 can still qualify for a 10% down payment. These loans are popular due to their lenient credit score requirements and low-down payment options.
FHA rate-and-term refinance
An FHA refinance loan is suited for borrowers looking to improve their loan terms or lower interest rates, especially if their credit scores have improved since obtaining their original mortgage. It offers a way to adjust loan terms to better fit current financial situations.
FHA Streamline Refinance
For current FHA loan holders, the FHA Streamline Refinance provides an efficient way to refinance with minimal documentation and underwriting. It often results in lower interest rates and can potentially reduce mortgage insurance premiums. This option is advantageous for those who want to refinance without a complicated process.
FHA cash-out refinance
An FHA cash-out refinance allows homeowners to tap into their home equity, converting it into cash. It requires a minimum credit score of 620, and borrowers must leave at least 15% equity in their home after the refinance. It’s suitable for those needing extra funds for expenses or investments.
FHA Home Equity Conversion Mortgage (HECM)
HECM is a reverse mortgage for homeowners aged 62 and older, allowing the conversion of home equity into cash. It provides financial flexibility for seniors by enabling access to their home equity without selling the home.
FHA 203(k) loan
The FHA 203(k) loan is designed for home purchases requiring renovations. It combines the cost of the home and renovation expenses into one loan. Borrowers must meet specific credit score requirements and ensure that renovations are completed within six months.
FHA Energy Efficient Mortgage
This loan type allows borrowers to include energy-efficient upgrades in their FHA loan. It’s aimed at reducing utility costs and increasing the home’s environmental friendliness, thereby potentially increasing its value.
Section 245(a) loan
The Section 245(a) program is for borrowers expecting an increase in their income. It offers a graduated payment schedule that starts low and increases over time, aligning with anticipated income growth. This loan is particularly beneficial for young professionals expecting career advancement.
Check your FHA loan eligibility. Start here
FHA loan requirements
Homeownership can be a liberating experience, especially for first-time buyers. With their flexible guidelines and government backing, FHA home loans provide a welcoming path.
Understanding FHA loan requirements can make the process much easier, opening the door to a future in your ideal home.
Check your FHA loan eligibility. Start here
To be eligible for an FHA loan, applicants must adhere to specific guidelines:
The property must undergo a home appraisal by an FHA-approved appraiser.
The property must serve as the applicant’s primary residence; investment properties and second homes are not eligible.
Occupancy of the property is required within two months following the closing.
A mandatory inspection is conducted to ensure the property meets FHA’s basic standards.
There are a few more specific conditions to qualify, such as a down payment amount, mortgage insurance, credit score, loan limits, and income requirements.
FHA loan down payment requirements
FHA loans require a minimum down payment, which varies based on credit score. For credit scores of 580 and above, a minimum down payment of 3.5% is required. Borrowers with credit scores between 500 and 579 must make a 10% down payment.
FHA mortgage insurance premiums
FHA mortgage insurance premium (MIP) is what makes the FHA program possible. Without the MIP, FHA-approved lenders would have little reason to make FHA-insured loans.
There are two kinds of MIP required for an FHA loan. One is paid as a lump sum when you close the loan, and the other is an annual premium, which becomes less expensive each year as you pay off the loan balance:
Upfront Mortgage Insurance Premium (UFMIP) = 1.75% of the loan amount for current FHA loans and refinances
Annual Mortgage Insurance Premium (MIP) = 0.85% of the loan amount for most FHA loans and refinances
MIP is split into monthly payments that are included in your mortgage payment. You’ll have to pay FHA insurance for the life of the loan or if you refinance into another type of mortgage loan.
The good news is that, as a homeowner or home buyer, your FHA loan’s MIP rates have dropped. Today’s FHA MIP costs are now as much as 50 basis points (0.50%) lower per year than they were in previous years.
Also, you have ways to reduce what you’ll owe in FHA MIP.
Depending on your down payment and loan term, you can reduce the length of your mortgage insurance to 11 years instead of the entire loan.
Loan term
Original down payment
MIP duration
20, 25, 30 years
Less than 10%
Life of loan
20, 25, 30 years
More than 10%
11 years
15 years or less
Less than 10%
Life of loan
15 years or less
More than 10%
11 years
Or, you could refinance out of FHA MIP at a later date.
With FHA interest rates as competitive as they are today, refinancing could reduce your monthly mortgage payments and cancel your mortgage insurance premium if you have enough equity in the home.
Check your FHA loan rates. Start here
FHA loan credit score minimums
The minimum credit score requirement for an FHA loan is 500. However, a score of 580 or higher allows for a lower down payment. Credit scores directly impact loan terms and down payment amounts.
Debt-to-income ratio
FHA loans consider the borrower’s debt-to-income (DTI) ratio, a measure of monthly debt payments against monthly income. The FHA prefers a DTI ratio of no more than 43%, though exceptions can be made for higher ratios with compensating factors.
Income and employment requirements
There is no specific income threshold for FHA loans, but borrowers must demonstrate steady employment history. Verification includes pay stubs, W-2s, tax returns, and bank statements.
FHA loan limits
Loan limits for FHA loans vary by county. However, starting January 1, 2024, the new FHA loan limit will be $498,257 for a single-family home in most parts of the country. Limits increase for 2-, 3-, and 4-unit properties.
FHA loan rates
Interest rates for FHA loans are competitive and can vary based on factors such as prevailing market rates, borrower’s credit score, income, loan amount, down payment, and DTI ratio. Government backing often enables lenders to offer lower rates compared to conventional mortgages.
Compare your FHA loan rates from multiple lenders. Start here
Today’s rates for a 30-year, fixed-rate FHA loan start at % (% APR), according to The Mortgage Reports’ daily rate survey.
Thanks to their government backing, FHA loan rates are competitive even for lower-credit borrowers. But interest rates can vary a lot from one lender to the next, so be sure to shop around for your best offer.
FHA loan benefits
Check your FHA loan eligibility. Start here
1. Lower down payment: Just 3.5 %
For today’s home buyers, there are only a few mortgage options that allow for down payments of 5% or less. The FHA loan is one of them.
With an FHA mortgage, you can make a down payment as small as 3.5% of the home’s purchase price. This helps home buyers who don’t have a lot of money saved up for a down payment along with home buyers who would rather save money for moving costs, emergency funds, or other needs.
2. FHA allows 100% gift funds for the down payment and closing costs
The FHA is generous with respect to using gifts for a down payment. Very few loan programs will allow your entire down payment for a home to come from a gift. The FHA will.
Via the FHA, your entire 3.5% down payment can be a gift from parents or another family member, an employer, an approved charitable group, or a government homebuyer program.
If you’re using a down payment gift, though, you’ll need to follow the process for gifting and receiving funds.
3. FHA loans allow higher debt-to-income ratios
FHA loans also allow higher debt-to-income ratios.
Your debt-to-income ratio, or DTI, is calculated by comparing two things: your debt payments and your before-tax income.
For instance, if you earn $5,000 a month and your debt payment total is $2,000, your DTI is 40%.
Officially, FHA maximum DTIs are as follows.
31% of gross income for housing costs
43% of gross income for housing costs plus other monthly obligations like credit cards, student loans, auto loans, etc.
However, a 43% DTI is actually on the low end for most FHA borrowers. And FHA will allow DTI ratios as high as 50%. Although to get approved at such a high ratio, you’ll likely need one or more compensating factors — for instance, a great credit score, significant cash savings, or a down payment exceeding the minimum.
In any case, FHA is more lenient in this area than other mortgage loan options.
Most conventional mortgage programs — those offered by Fannie Mae and Freddie Mac — only allow debt-to-income ratios between 36% and 43%.
With down payments of less than 25%, for example, Fannie Mae lets you go to 43% DTI for FICOs of 700 or higher. But most people don’t get conventional loans with debt ratios that high.
4. FHA loans accept lower credit scores
Officially, the minimum credit scores required for FHA mortgage loans are:
580 or higher with a 3.5% down payment
500-579 with a 10% down payment
High credit scores are great if you have them. But past credit history mistakes take a while to repair.
FHA loans can help you get into a home without waiting a year or more for your good credit to reach the “excellent” level. Other loan programs are not so forgiving when it comes to your credit rating.
Fannie Mae and Freddie Mac (the agencies that set rules for conventional loans) say they accept FICOs as low as 620. But in reality, some lenders impose higher minimum credit scores.
5. FHA even permits applicants with no credit scores
What if an applicant has never had a credit account? Their credit report is, essentially, blank.
FHA borrowers with no credit scores may also qualify for a mortgage. In fact, the U.S. Department of Housing and Urban Development (HUD) prohibits FHA lenders from denying an application based solely on a borrower’s lack of credit history.
The FHA allows borrowers to build non-traditional credit as an alternative to a standard credit history. This can be a huge advantage to someone who’s never had credit scores due to a lack of borrowing or credit card usage in the past.
Borrowers can use payment histories on items such as utility bills, cell phone bills, car insurance bills, and apartment rent to build non-traditional credit.
“Not all lenders who are FHA approved offer these types of loans, so check with your loan officer individually,” cautions Meyer.
6. FHA loans can be up to $ in most of the U.S.
Most mortgage programs limit their loan sizes, and many of these limits are tied to local housing prices.
FHA mortgage limits are set by county or MSA (Metropolitan Statistical Area), and range from $ to $ for single-family homes in most parts of the country.
Limits are higher in Alaska, Hawaii, the U.S. Virgin Islands, and Guam, and also for duplexes, triplexes, and four-plexes.
7. FHA also allows extended loan sizes
As another FHA benefit, FHA loan limits can be extended where home prices are more expensive. This lets buyers finance their home using FHA even though home prices have skyrocketed in certain high-cost areas.
In Orange County, California, for example, or New York City, the FHA will insure up to $ for a mortgage on a single-family home.
For 2-unit, 3-unit and 4-unit homes, FHA loan limits are even higher — ranging up to $.
If your area’s FHA’s loan limits are too low for the property you’re buying, you’ll likely need a conventional or jumbo loan.
8. If you have an FHA loan, you can lower your rate with an FHA Streamline Refinance
Another advantage for FHA-backed homeowners is access to the FHA Streamline Refinance.
The FHA Streamline Refinance is an exclusive FHA program that offers homeowners one of the simplest, quickest, and most affordable paths to refinancing.
An FHA Streamline Refinance requires no credit score checks, no income verifications, and home appraisals are waived completely.
In addition, via the FHA Streamline Refinance, homeowners with a mortgage pre-dating June 2009 get access to reduced FHA mortgage insurance rates.
Verify your FHA loan eligibility. Start here
FHA loan disadvantages
What is the downside to an FHA loan? Among the numerous benefits of FHA loans, there are certain disadvantages that potential borrowers should be aware of. These drawbacks can impact the overall cost and flexibility of the loan.
Here are the downsides that you should know about FHA home loans.
FHA loan mortgage insurance premiums
One of the primary drawbacks of FHA loans is the mandatory mortgage insurance premiums. These include an upfront premium at closing, generally 1.75% of the loan amount, and ongoing monthly payments. This additional cost can make FHA loans more expensive over the long term
Loan limits
One notable limitation of FHA loans is the lower loan limits compared to conventional loans, which can be restrictive for higher-income buyers. The FHA mortgage limit for a one-unit property ranges from $ to $ for single-family homes in most parts of the country, which may not be sufficient in areas with higher property values.
Strict property requirements
FHA loans come with stringent property requirements. The purchased home must be the borrower’s primary residence and must meet specific safety and condition standards. This requirement can limit the types of properties that qualify for an FHA loan.
FHA loan alternatives
Alternative loans, like USDA and VA loans, offer distinct advantages, such as no down payment requirements, but come with specific eligibility criteria. Understanding these alternatives ensures you make a well-informed decision about the type of mortgage that’s right for you.
Conventional 97
The Conventional 97 program comes with a down payment requirement of just 3%. It stands out due to the absence of income limits and mandatory home buyer education, making it accessible to a broader range of homebuyers.
Check your conventional loan eligibility. Start here
HomeReady Mortgage by Fannie Mae
The HomeReady mortgage program is designed for low- to moderate-income families, allowing a home purchase with only a 3% down payment. Furthermore, this program permits the entire downpayment and closing costs to be covered by gifts or grants, offering significant financial flexibility.
Freddie Mac Home Possible
The Home Possible loan is notable for its reduced mortgage insurance costs compared to other similar programs. With a 3% down payment requirement and lower ongoing costs, Home Possible is an attractive alternative for those looking to save on mortgage insurance.
USDA loans
USDA loans, backed by the U.S. Department of Agriculture, are an attractive alternative, especially for moderate-income buyers in rural areas. They don’t require a down payment, which is a significant advantage. However, eligibility for USDA loans is restricted based on income and geographical limits, and not every property qualifies for this type of financing.
VA loans
VA loans are another viable alternative, particularly for U.S. military service members, veterans, and certain surviving spouses. Like USDA loans, VA loans also require no down payment. However, eligibility for VA loans is exclusive to the military community, limiting their accessibility to the general public.
FAQ: FHA loans
Can I choose between a fixed rate and an adjustable-rate FHA loan?
Yes, FHA loans offer both fixed-rate and adjustable-rate (ARM) options. A fixed-rate FHA loan provides a consistent interest rate and monthly payment for the life of the loan, ideal for those who prefer stability. An adjustable-rate FHA loan, on the other hand, has an interest rate that can change over time, typically offering lower initial rates.
Do FHA loans have lower interest rates?
FHA loans often have lower interest rates compared to many conventional loan options. This is largely due to the government backing of FHA loans, which reduces the risk for lenders. As a result, lenders are generally able to offer more competitive mortgage rates to borrowers. However, the actual interest rate you’ll receive on an FHA loan can vary based on several factors, including your credit score, loan amount, and the current market conditions. It’s always a good idea to compare rates from multiple lenders to ensure you’re getting the best deal possible for your situation.
Are FHA loans assumable?
Yes. A little-known FHA benefit is that the agency will allow a home buyer to assume the existing FHA mortgage on a home being purchased. The buyer must still qualify for the mortgage with its existing terms but, in a rising mortgage rate environment, it can be attractive to assume a home seller’s loan. Five years from now, for example, a buyer of an FHA-insured home could inherit a seller’s sub-3 percent mortgage rate. This can make it easier to sell the home in the future.
Can you buy a rental property with an FHA loan?
While you can’t buy a true rental property with an FHA loan, you can buy a multi-unit property — a duplex, triplex, or fourplex — live in one of the units, and rent out the others. The rent from the other units can partially, or even fully, offset your mortgage payment.
Are closing costs higher for FHA loans?
Closing costs are about the same for FHA and conventional loans with a couple of exceptions. First, the appraiser’s fee for an FHA loan tends to be about $50 higher. Also, if you choose to pay your upfront MIP in cash (instead of including this 1.75% fee in your loan amount), this one-time fee will be added to your closing costs. Additionally, the fee can be rolled into your loan amount.
What credit score do I need for an FHA loan?
Most borrowers will need a minimum credit score of 580 to get an FHA loan. However, home buyers who can put at least 10% down are eligible to qualify with a 500 score. Yet, each lender may have their own credit score minimums, separate to those established by the Federal Housing Administration.
What is the loan-to-value ratio requirement for FHA loans?
The loan-to-value (LTV) ratio for FHA loans typically cannot exceed 96.5%, meaning you can borrow up to 96.5% of your home’s value. This high LTV ratio is part of what makes FHA loans accessible, especially for first-time homebuyers who might not have substantial savings for a down payment.
How does PMI work with FHA loans?
For FHA loans, the equivalent of private mortgage insurance (PMI) is the mortgage insurance premium (MIP). MIP is required for all FHA loans, regardless of the down payment or loan-to-value ratio. This insurance protects lenders from losses in case of borrower defaults and is included in both upfront and ongoing mortgage costs.
What happens if I default on an FHA loan?
If you default on an FHA loan, the lender can initiate foreclosure proceedings. The FHA loan program, backed by the Federal Housing Administration, is designed to minimize the risk of defaults by offering more lenient qualification criteria. However, consistent failure to make mortgage payments may lead to foreclosure, impacting your credit score and homeownership status.
Today’s FHA loan rates
Now is an opportune time to consider an FHA loan, with current mortgage rates being historically competitive.
FHA loan interest rates are typically among the most competitive. To capitalize on these favorable rates, start by comparing offers from FHA-approved lenders.
Finding the most affordable loan could be just a few clicks away. Begin your journey towards homeownership today by exploring your options and discovering the best rates available for your financial situation.
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