Where Are Young Buyers Relying on Older Co-Signers to Buy Homes?

Couple making a mortgage payment
fizkes / Shutterstock.com

Editor’s Note: This story originally appeared on Porch.

After two years of high competition and fast-rising prices in residential real estate, the market is at last seeing signs of cooling off.

While many buyers may be starting to feel relief, younger buyers have had an especially difficult time in this market and may continue to struggle. The Millennial generation — Americans aged 26 to 41 — are currently in their peak homebuying years, representing 43% of buyers according to recent data from the National Association of Realtors.

Because they are earlier in their working lives, young shoppers may have less saved up to put toward a home, and they also tend to be first-time buyers, which means they do not have existing home equity available to help finance a purchase.

To overcome these challenges, some young buyers have relied on older friends and family members with more financial resources to support a home purchase. Co-signers are people who agree to be responsible for loan payments if the primary signer defaults.

To determine the states with the highest percentage of young homebuyers with an older co-signer, researchers at Porch analyzed the latest data from the Federal Financial Institutions Examination Council’s Home Mortgage Disclosure Act. The researchers ranked states by the percentage of young homebuyers (34 years old or younger) with an older co-signer (55 years old or older). In the event of a tie, the state with the higher median property value for young homebuyers with an older co-signer was ranked higher.

Following are the states where young buyers are most likely to rely on an older co-signer.

15. Illinois

Modern farmhouse
Hendrickson Photography / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 0.919%
  • Median property value for young buyers with an older co-signer: $225,000
  • Median property value across all young buyers: $245,000
  • Median down payment for young buyers with an older co-signer: $30,000
  • Median down payment across all young buyers: $20,000

14. New Mexico

Santa Fe, New Mexico
Sean Pavone / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 0.969%
  • Median property value for young buyers with an older co-signer: $215,000
  • Median property value across all young buyers: $215,000
  • Median down payment for young buyers with an older co-signer: $50,000
  • Median down payment across all young buyers: $30,000

13. Nebraska

Nebraska city scene
Katherine Welles / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 0.997%
  • Median property value for young buyers with an older co-signer: $195,000
  • Median property value across all young buyers: $205,000
  • Median down payment for young buyers with an older co-signer: $20,000
  • Median down payment across all young buyers: $20,000

12. Rhode Island

Home in Providence, Rhode Island
Laura Stone / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.002%
  • Median property value for young buyers with an older co-signer: $315,000
  • Median property value across all young buyers: $295,000
  • Median down payment for young buyers with an older co-signer: $50,000
  • Median down payment across all young buyers: $30,000

11. Massachusetts

Provincetown, Massachusetts
Lewis Stock Photography / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.018%
  • Median property value for young buyers with an older co-signer: $435,000
  • Median property value across all young buyers: $445,000
  • Median down payment for young buyers with an older co-signer: $70,000
  • Median down payment across all young buyers: $60,000

10. Oregon

Oregon rural home in the country
Rigucci / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.059%
  • Median property value for young buyers with an older co-signer: $365,000
  • Median property value across all young buyers: $385,000
  • Median down payment for young buyers with an older co-signer: $50,000
  • Median down payment across all young buyers: $40,000

9. New Jersey

Morristown, New Jersey
mandritoiu / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.079%
  • Median property value for young buyers with an older co-signer: $365,000
  • Median property value across all young buyers: $375,000
  • Median down payment for young buyers with an older co-signer: $60,000
  • Median down payment across all young buyers: $50,000

8. Vermont

House in Derby Line, Vermont, in fall
Richard Cavalleri / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.080%
  • Median property value for young buyers with an older co-signer: $215,000
  • Median property value across all young buyers: $265,000
  • Median down payment for young buyers with an older co-signer: $40,000
  • Median down payment across all young buyers: $30,000

7. Utah

House in 1991
Matthew Thomas Allen / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.081%
  • Median property value for young buyers with an older co-signer: $335,000
  • Median property value across all young buyers: $335,000
  • Median down payment for young buyers with an older co-signer: $40,000
  • Median down payment across all young buyers: $30,000

6. Nevada

MaxFX / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.159%
  • Median property value for young buyers with an older co-signer: $325,000
  • Median property value across all young buyers: $325,000
  • Median down payment for young buyers with an older co-signer: $50,000
  • Median down payment across all young buyers: $30,000

5. Montana

Missoula, Montana
Jon Bilous / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.176%
  • Median property value for young buyers with an older co-signer: $295,000
  • Median property value across all young buyers: $295,000
  • Median down payment for young buyers with an older co-signer: $50,000
  • Median down payment across all young buyers: $30,000

4. New York

Buffalo New York homes
Richard Cavalleri / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.317%
  • Median property value for young buyers with an older co-signer: $425,000
  • Median property value across all young buyers: $335,000
  • Median down payment for young buyers with an older co-signer: $70,000
  • Median down payment across all young buyers: $40,000

3. California

Homes in Sacramento, California
Emmy Bersa / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.358%
  • Median property value for young buyers with an older co-signer: $535,000
  • Median property value across all young buyers: $545,000
  • Median down payment for young buyers with an older co-signer: $100,000
  • Median down payment across all young buyers: $100,000

2. Colorado

Centennial, Colorado
Faina Gurevich / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.361%
  • Median property value for young buyers with an older co-signer: $385,000
  • Median property value across all young buyers: $405,000
  • Median down payment for young buyers with an older co-signer: $60,000
  • Median down payment across all young buyers: $50,000

1. Hawaii

1960s home interior in Hawaii
jr.gardiner / Shutterstock.com
  • Percentage of young buyers with an older co-signer: 1.752%
  • Median property value for young buyers with an older co-signer: $545,000
  • Median property value across all young buyers: $555,000
  • Median down payment for young buyers with an older co-signer: $100,000
  • Median down payment across all young buyers: $80,000

Methodology

Man analyzing data on a laptop
fizkes / Shutterstock.com

To determine the states with the highest percentage of young homebuyers with an older co-signer, researchers at Porch analyzed the latest data from the Federal Financial Institutions Examination Council’s Home Mortgage Disclosure Act. Only conventional, non-commercial, home purchase loans that originated in 2020 were considered in the analysis.

Additionally, data on median home values are from Zillow’s Zillow Home Value Index. The researchers ranked states by the percentage of young homebuyers (34 years old or younger) with an older co-signer (55 years old or older).

Researchers also calculated the median property value for young homebuyers with an older co-signer, median property value across all young homebuyers, median down payment for young homebuyers with an older co-signer, and median down payment across all young homebuyers. In the event of a tie, the state with the higher median property value for young homebuyers with an older co-signer was ranked higher.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

New offer: Earn 60,000 bonus points with the Chase Sapphire Reserve – The Points Guy


New Chase Sapphire Reserve bonus of 60,000 points — The Points Guy


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Editorial Note: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Source: thepointsguy.com

Chase Marriott Bonvoy Boundless FIVE Free Night Certificates (Up To 50,000 Points Each) Bonus

Update 6/2/22: Deal is back and now even better as you can top up certificates with points.

The Offer

Direct link to offer

  • Chase is offering a five free night certificates that can be used on properties costing up to 50,000 points per night when you spend $5,000 within the first three months of account opening on the Chase Marriott Bonvoy Boundless card.

Card Details

  • Annual fee of $95, not waived first year
  • Eligibility for this product: The product is not available to either:
    • current cardmembers of the Marriott Bonvoy™ Premier credit card (also known as Marriott Rewards® Premier) or Marriott Bonvoy Boundless™ credit card (also known as Marriott Rewards® Premier Plus), or
    • previous cardmembers of the Marriott Bonvoy™ Premier credit card (also known as Marriott Rewards® Premier) or Marriott Bonvoy Boundless™ credit card (also known as Marriott Rewards® Premier Plus), who received a new cardmember bonus within the last 24 months.
  • Eligibility for the new cardmember bonus: The bonus is not available to you if you:
    • are a current cardmember, or were a previous cardmember within the last 30 days, of Marriott Bonvoy™ American Express® Card (also known as The Starwood Preferred Guest® Credit Card from American Express);
    • are a current or previous cardmember of either Marriott Bonvoy Business™ American Express® Card (also known as The Starwood Preferred Guest® Business Credit Card from American Express) or Marriott Bonvoy Brilliant™ American Express® Card (also known as the Starwood Preferred Guest® American Express Luxury Card), and received a new cardmember bonus or upgrade bonus in the last 24 months; or
    • applied and were approved for Marriott Bonvoy Business™ American Express® Card (also known as The Starwood Preferred Guest® Business Credit Card from American Express) or Marriott Bonvoy Brilliant™ American Express® Card (also known as the Starwood Preferred Guest® American Express Luxury Card) within the last 90 days.
  • Chase 5/24 rule applies to this card
  • Free award night every anniversary valid at a property costing up to 35,000 points
  • Card earns at the following rates:
    • 6x points per $1 spent at Marriott Bonvoy hotels
    • 2x points per $1 spent on all other purchases
  • Elite status:
    • Automatic silver elite status
    • Gold status if you spend $35,000 or more within a card member year
    • 15 elite night credits towards status each year

Our Verdict

Previously the best bonus was 100,000 points. This obviously has less flexibility but the fact that you get five certificates makes this offer significantly better (worth up to 250,000 points if you use it all on properties costing 50,000 points per night).  There also doesn’t seem to be any weird restrictions on when/where the free nights can be used, as long as the property costs 50,000 points or less it should be valid.  Keep in mind that the certificates are only valid for 12 months, that could be an issue with the current uncertainty and COVID-19. Most people won’t be eligible due to the 5/24 rule and from having previous Marriott/SPG cards (see above under card details). Normally I don’t think Marriott cards are worth burning a 5/24 spot for, but this offer is so good that I do think it’s worth it and will be adding this to our best credit card bonus page.

Hat tip to reader shilph

Source: doctorofcredit.com

Can You Still Get an Adjustable Rate Mortgage?

Yes, adjustable-rate mortgages are still available, even though your lender may have hidden them from you for the past few years.

Ultimately, ARMs just didn’t make sense for most homeowners because fixed mortgage rates were at/near record lows.

This made the ARM argument a poor one, as there’d be no reason to take on the risk for little to no reward.

As such, banks and mortgage lenders rarely touted these seemingly forgotten mortgages.

But with the 30-year fixed now priced above 5% for the first time in a decade, ARMs have returned.

Do ARM Mortgages Still Exist?

  • Banks and mortgage lenders funded over $600 billion in ARM loans last year
  • They accounted for roughly 10% of all mortgages originated in 2021
  • The 30-year fixed was the most popular loan choice with a ~70% share
  • But ARMs are set to surge in popularity now that fixed mortgage rates are much higher

They sure do, and you’ll be hearing a lot more about them in coming months and years.

Why? Because the popular 30-year fixed is no longer on sale. A year ago, it averaged 2.99%, per Freddie Mac.

This week, it was pricing around 5.09%, while the soon to be in fashion 5/1 ARM came in at a much lower 4.04%.

During the last several years, ARMs like the 5/1 were priced higher than their fixed-rate counterparts, making them totally useless.

But the spread has normalized and widened in recent months as fixed-rate mortgages have surged in price.

This makes the ARM argument a viable one again for many prospective home buyers.

Interestingly, banks and lenders still managed to fund over $600 billion in adjustable-rate mortgages in 2021.

However, this only accounted for about 10% of overall loan volume, with the 30-year fixed taking a 70% share.

The top adjustable-rate mortgage issuer was Chase, followed by Bank of America, First Republic Bank, Wells Fargo, and U.S. Bank, per HMDA data.

Notice anything about that list? All depository banks! This counters the trend of nonbank lenders dominating the mortgage landscape.

And it’s typically because depository banks will keep ARMs and others mortgages on their books, as opposed to selling them off to third-party investors.

Is Now a Good Time to Get an ARM Mortgage?

The short answer is yes, it can be. The reason being is that ARMs are now a lot cheaper than fixed-rate mortgages.

So if you want to save money on your mortgage for the first five or seven years, it’s possible to do so with an ARM.

As noted above, the 5/1 ARM is priced at about 4%, while the 30-year fixed is closer to 5.125% or higher.

To put that in perspective, a hypothetical $500,000 loan amount would result in a monthly payment of $2,387.08 on the ARM.

After 60 months, you would have paid $95,462.20 in interest and the principal balance would be $452,237.40.

Yes, ARMs pay down your loan balance, despite having a horribly negative connotation from the prior housing crisis.

That is, if they’re not interest-only, which many are not these days.

The payment would be $2,722.43 on the 30-year fixed set at 5.125%, which is $335.35 more each month. That’s a meaningful difference for most folks.

And the loan balance would be $459,951.93 after 60 months, a full $7,700 higher than the ARM.

The total amount of interest paid during that time would be $123,297.73, nearly $28,000 more.

So we’re talking $20,000 more in your pocket after five years, along with a lower outstanding loan balance.

Sounds pretty good, right? The only issue is that the 5/1 ARM can adjust higher after those first 60 months are up.

This may or may not happen, as nobody can accurately predict the future. But if the ARM does adjust significantly higher at that time, it could make the payments unaffordable.

It may also begin eating into the savings enjoyed during those first five years.

Adjustable-Rate Mortgages Are Back, But Know the Dangers

Next time you request a mortgage rate quote, don’t be surprised if you get pitched an ARM, such as the 5/1 or 7/1 ARM.

Simply put, ARMs will sound a lot more attractive because they’re priced lower than fixed-rate mortgages right now.

This allows a loan officer or mortgage broker to give you a better quote than the competition, assuming the competitor only provided a 30-year fixed quote.

But it’s important to know that there are risks involved with ARMs that don’t apply to FRMs.

Primarily, that the interest rate can adjust higher after the initial fixed-rate period.

The good news is the 5/1 ARM is fixed for a full 60 months before it actually becomes adjustable.

And the 7/1 ARM doesn’t adjust until month 85, which again provides a lot of breathing room.

However, that time can go by faster than you think, and it’s important to have a plan in place when that first adjustment does come along.

Those who know they’ll move within that timeframe needn’t worry, but if it’s a forever home you’ll want to make arrangements.

Options include refinancing the mortgage to another ARM or a fixed-rate mortgage, if attractive.

Just be sure you qualify for a mortgage, as life circumstances can change, as can interest rates.

If you’re stuck with an ARM once it becomes adjustable, paying it off early could lessen the blow, assuming you can afford it.

Those who are completely risk-averse will probably want to pass on an ARM, even if it amounts to significant savings.

Either way, put in the time to compare all the options in front of you and make a plan ahead of time.

Read more: ARMs vs. Fixed-Rate Mortgages

Source: thetruthaboutmortgage.com

[Quarterly Reminder] Chase Sapphire Reserve Offers $5/month DoorDash Account Credit

Update 6/1/22, quarterly reminder: You should now have $15 available for you from April, May, and June if you didn’t use up the April/May credits. These can be used anytime during the month of June.

Update 4/4/22: You should now see the $5 Doordash credits in your Doordash account. (It’s not a credit card statement credit – it’s a Doordash credit for accounts with a linked Sapphire Reserve card.) If you’d like, you can wait until June 1st and you should have $15 accumulated which is easier to use for a meal. We’ll try posting a reminder each quarter on the first of June, September, December, and March to use up the credit.

Update 4/1/22: The $5 benefit and the Dashpass benefit are now live. FAQ

Update 2/1/22: Media sources are confirming both of these things: the $5 monthly credit and the DashPass extension through 2024 (for Chase Sapphire Preferred, Reserve & No annual fee Sapphire). Two additional details on the $5 monthly credit:

  • The $5 credit is for Sapphire Reserve cardholders and it will begin in April 2022 and continue through December 2024.
  • The $5 credit expires after 3 months. This makes it possible to easily use them in $15 increments four times per year. Much more useful than $5 expiring each month.

Update 1/31/22: It has now been confirmed that DashPass has been extended until 2024.

Original post (1/29/22): A Reddit member heard from a Chase rep about a renewal of DoorDash benefits coming to the Sapphire Reserve card:

We’ll have to wait and see exactly which Chase cards will have these offerings, but the Sapphire Reserve will certainly be included, per the report.

Source: doctorofcredit.com

Millennials Want a Different Kind of Retirement

Over the last decade Millennials have gotten a lot of attention (good and bad) for their “slacktivism,” job hopping, mountains of student debt and FOMO culture. But Millennials are growing up, and many of them are prioritizing financial independence and thinking seriously about their path to retirement. Perhaps unsurprisingly, and in contrast to the generations before them, they have different ideas about what that path and the ultimate destination will look like.

According to a new Schwab study, Millennials are more likely to prioritize travel over homeownership in retirement. They want the freedom to use their savings to pursue their desired lifestyle and passions more than chase financial stability. They want flexibility and new experiences more than traditional retirement pursuits.

The Millennial Road to Retirement

As for the path to reach these non-traditional goals, Millennials are looking for flexibility on that front too. They are less focused on a specific retirement savings amount. Instead, they see the accumulation process as more of a continuum, and they want to pursue their passions along the way toward retirement – not just in retirement. Additionally, they are less interested in preserving their wealth in retirement and will not spend as much time managing their investments as Boomers.

Some of these Millennial preferences may seem out of line with responsible retirement goals, but this is a generation of action. Millennials, to their credit, are already starting to save much earlier than their predecessors and over the course of the pandemic, many have stepped up their engagement and focus on financial planning.

It’s also worth noting that Millennials aren’t simply re-writing the script for retirement because they can. Major economic and societal shifts are driving these changes in how younger people approach money, careers and life. They have encountered challenges that are different from the generations before them. The cost of homeownership has risen, pensions plans have dwindled, student debt has risen dramatically – just to name a few. 

Tips to Help Millennials on Their Path

The road to retirement has only gotten more challenging over the course of Millennials’ lifetimes. The good news is that many timeless financial planning strategies can be readily adapted to fit their needs.

Here are the top tips I share with Millennials for reaching the retirement of their dreams:

  • Stash some cash: The first step to planning for the rest of one’s financial future is creating a financial cushion to fall back on in preparation for the inevitable disruptions life will bring. A few months’ worth of savings is a good place to start an emergency fund.
  • Focus on your financial state, not your retirement date: Don’t think of retirement as an arbitrary date when a switch is flipped and retirement begins. Instead, target a financial state that would provide for the flexibility to make work optional. That could look like saving enough by the time you are 60 to be able to stop working if you needed to, but with the idea that you will continue working and saving until you are emotionally ready to retire. It is important to crunch the numbers to figure out how much will be needed to feel comfortable. From there, adjust your savings accordingly to grow that nest egg.
  • Grow it and protect it: We all want to grow our savings and investments to sustain us through our lifetimes. But don’t lose sight of protecting what’s already in place. There’s no such thing as a “sure thing,” and that means that diversification is important to potential growth along with stability. Don’t risk more than you can afford and be ready to re-evaluate your risk tolerance over the course of your investing journey.
  • Don’t be derailed by FOMO: Hot new investment trends can be very enticing, but getting caught up in the rush toward shiny possibilities can lead to setbacks that limit future potential. Remember that investing is about helping grow money over time to reach your goals and not speculating or chasing fads.
  • Think long and short: Retirement planning is a long process that requires time and patience. It also requires flexibility to adapt to changing circumstances. No one can predict all the challenges that lie ahead, or if their future self might look at things a bit differently than their present self. Create a plan and revisit it at least once a year, knowing that there will be changes along the way.

The Bottom Line

Just like Boomers and Gen X’ers, Millennials have distinct generational characteristics that set them apart, but at the same time they are not a monolith. Millennials will take many different approaches and paths to retirement. Their personal lives will take unexpected twists and turns that may change some of their goals along the way.

Sound financial planning that begins early is the key to success no matter the desired destination. That much never changes.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets. Investing involves risk, including loss of principal.

(0522-25L6)

Schwab Intelligent Portfolios Specialist, Charles Schwab

Amy Richardson is a CERTIFIED FINANCIAL PLANNER™ professional and Schwab Intelligent Portfolios Specialist. Amy focuses on providing internal teams, clients and prospects with education, updates and information about Schwab’s investment offerings and philosophy, including Schwab Intelligent Portfolios (Schwab’s automated investing service) and Schwab Intelligent Portfolios Premium (combining automated investing with a comprehensive financial plan and unlimited guidance from a CFP® professional).

Source: kiplinger.com

[Targeted] Chase United: Add Authorized User & Get 2,500 Bonus Miles

Update 5/31/22: Offer going out again now at this link, expires 5/31/22 (ht LionSuneater)

The Offer

Direct link to offer (need to have received a targeted mailer or e-mail)

  • Chase is offering United cardholders 2,500 bonus miles when they add an authorized user

The Fine Print

  • To be eligible for this bonus offer, you must log on to the website referenced in this offer and enroll by the date referenced in the email or mailer.
  • You will qualify and receive your bonus if you then add an authorized user to your United Explorer Card by the date referenced in the email or mailer by calling the Chase number on the back of your credit card.
  • Please allow 6–8 weeks after completed qualifying activity for miles to post to your account.
  • Miles will post directly to the Primary Cardmember’s MileagePlus Account and will not appear on the Primary Cardmember’s credit card statement.

Our Verdict

Being added as an authorized user does affect your 5/24 status, so worth keeping that in mind. Chase used to offer authorized user bonuses as part of the card opening bonuses but we don’t see them anymore.

Hat tip to cityhunter_ny

Source: doctorofcredit.com

How To Stop Paying ATM Fees- Money Under 30

I rarely pull out cash, so when I do, I’m often greeted with a message that lets me know there’s a fee. Like most people, I just click “Yes” and move on with my day. Most of the time I don’t even register what the fee actually was.

It was a major bummer when I started researching this piece and one of the first things I found was that the average ATM fee has increased over the last few years and now sits at $3.08, on average. So every time I take cash out, I’m paying $3. And for some folks, that’s double because they’re paying a fee to their bank, as well as the ATM servicer.

I think it’s time we all decide unanimously to stop paying those pesky fees! Today, I’ll offer a few ways to do just that. Let’s get started!

What’s Ahead:

Use a bank that doesn’t charge ATM fees

How To Stop Paying ATM Fees - Use a bank that doesn't charge ATM fees

An ideal way to avoid ATM fees is to choose a bank that doesn’t charge them, to begin with. While nearly every bank will let you use their in-network ATMs for free, you will get hit with a charge if you use an out-of-network ATM. As you’ll see below, some banks will reimburse those fees, but many do not, and many only reimburse them up to a certain amount.

A few banks charge NO ATM fees and reimburse all fees that you incur when using an ATM, even an out-of-network one. As you’ll see below, I lay out the case for moving away from cash. That is my personal preference and where I see spending going in the future. However, if you are a heavy cash user, I strongly recommend finding a bank that charges no ATM fees, period.

A few banks come to mind, but my favorite and most recommended is Axos Bank. Axos will let you use ANY ATM in the United States, and they will not charge you a fee. Also, if any type of fee is assessed, they will reimburse you up to an unlimited amount. So you can withdraw $20 in cash from an ATM five times a day every day of the week, and you won’t pay a dime for that. 

Find a bank that reimburses ATM fees

Nowadays, most banks have a reasonably sizable ATM network. But that doesn’t mean you won’t get hit with ATM fees. One of the best ways to avoid ATM fees is by using a bank that reimburses any assessed fees.

Remember that just because your bank doesn’t charge you a fee for using an in-network ATM, it doesn’t mean you won’t be hit with a fee for using the machine. For example, some in-store ATMs (though technically “in-network”) will charge a fee to use.

Using a bank that credits these fees back, you’ll easily avoid ATM fees (up to a certain amount, of course). One example is CIT Bank’s Checking account. Not only do they not charge ATM fees, but they’ll reimburse you up to $30 per month on other banks’ ATM fees.

Bank with a credit union

Credit unions are often forgotten about, especially in today’s “next-gen” banking world. Credit unions are often small banks that don’t have a flashy mobile app or effective marketing. That’s because they are nonprofit organizations owned by the members that they serve.

But there are some significant perks to using a credit union. One of those includes ATM usage. If a credit union is part of the co-op ATM network, you will get access to more than 30,000 fee-free ATMs across the United States and nine other countries. It’s the nation’s largest network of free ATMs for credit union members. It even has a more extensive fee-free network for ATMs than Chase bank.

There are downsides to using a credit union, though, so I suggest you do your research first. But if you’re in an area that has a credit union with multiple co-op ATM network ATMs, and you don’t care about having a flashy mobile app, then it might make a lot of sense for you.

Use a rewards credit card instead

As you’ll notice, some of my suggestions involve avoiding cash entirely, and this is another one that I am passionate about. Using a rewards credit card will not only earn you rewards for your spending, but it will also safeguard your money and your purchases. You can quickly lose cash, too. While it may seem unlikely, data shows that over 400,000 pickpocketing incidents occur in the world every single day.

Besides these risks, credit cards are just safer. If you have to dispute the transaction, your credit card will put a hold on that amount so you won’t have to pay for it while that transaction is being disputed. If you try to do this with cash or a debit card, it will be far more complicated, and you won’t have the cash to use if you need it. 

A credit card will also give you extra benefits—for example, extended warranties and purchase protection. Lastly, and going back to my first point, by using a rewards credit card and paying it in full each month, you will not pay interest, and you will earn reward points, which you can exchange for things like cash, gift cards, travel, and more.

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The Chase Sapphire Preferred® Card is an excellent example of a card that offers all of these benefits and much more. 

The Chase Sapphire Preferred® Card offers 5X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining, 2X points on all other travel purchases. Plus, you’ll earn 1 point per dollar spent on all other purchases. And if that’s not enough, know that you’ll also get 80,000 bonus points after you spend $4,000 on purchases in the first three months from account opening. That’s equal to $1,000 toward travel when redeemed through Chase Ultimate Rewards®.

Leverage the mobile app

How To Stop Paying ATM Fees - Leverage the mobile app

If you are using an acceptable bank, chances are they also had an excellent mobile app. Usually, within that mobile app, there is a feature to locate the free ATMs around you by using your location with the GPS in your phone. 

One such example is Chime. Not only does Chime have a fantastic, clean, easy-to-use app, but they have a nice ATM locator feature within the app. The locator will find where you’re currently at and pull up ATMs around you that don’t charge a fee. Chime also has this feature on their website if you’re not on your phone, which is unlikely based on the statistic that I just shared.

Outside of your bank’s mobile app, certain apps are separate from a bank designed just to help you find a fee-free ATM. The Allpoint ATM network, for example, has over 55,000 fee-free ATMs across the world. Allpoint now has an app where you can locate their ATMs based on your current location.

Chime Disclosure – Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC.
1Chime cannot guarantee when files are sent by the IRS and funds can be made available.
^Early access to direct deposit funds depends on payer

Get cash back at the store

Sometimes, moving to a new bank doesn’t make sense. Maybe you’ve been with your bank for years, and you want to stay with them. In that case, a great way to avoid ATM fees is to take advantage of in-store cash back.

To do this, you have to pay with your debit card and make sure you choose “Debit” at the register (instead of swiping it and charging it as a credit card). Assuming you’ve done this correctly, you’ll enter your PIN to pay for your purchase, and the machine will ask if you want cash back. 

This is most often done at the grocery store, and all you need to do is make a small debit card purchase. You can even buy a pack of gum for less than two dollars. After that, you can get cash back up to the amount that your bank allows, which I’ve seen as high as $500 per day. However, Novo enables you to get up to $1,000 per day in-store cash back using your Novo debit card. 

Use a digital wallet instead

A digital wallet is a “wallet” on your phone to store credit and debit cards electronically. The best example is Apple Pay, which is now being accepted by over two million merchants, both online and in-store. If you’ve never used Apple before, it’s quite simple. Instead of swiping a card or using cash, you hold your phone up to a sensor, which will automatically charge your debit or credit card.

And this isn’t just a fad. More and more merchants are beginning to accept digital wallets, and more and more fintech companies are coming up with forms of payment. Some of the more recent ones I’ve seen are Cash App, created by Square; Venmo, which is now owned by PayPal; and Zelle, which many banks already use within their mobile apps (like PNC). This is in addition to Google Pay and Samsung Pay, which are already quite popular.

So there is a legitimate argument that digital wallets could eventually replace cash entirely. While that seems unlikely, I agree with the notion of digital wallets becoming more prevalent as cash usage continues to dwindle. So if you start getting on board now and use your digital wallet, you will rely less on cash from ATMs and thereby pay little to no ATM fees in the long-run.

Skip cash altogether

According to the Diary of Consumer Payment Choice, consumers use cash only 26% of the time when making a purchase. The data also shows that cash usage decreased by one payment per month. All this is to say that, generally, people are using cash a lot less.

So that begs the question, should we even be using cash in 2021? I think there was a time and a place for it, but overall, you have far more security with a credit or debit card, and nearly all places accept those forms of payment anyway. 

In the rare circumstance that a vendor does not accept a card, it’s probably smart to carry a small amount of cash in your wallet. And as you can see throughout this article, there are plenty of ways to get that cash without paying a fee.

Take out the most you can

How To Stop Paying ATM Fees - Take out the most that you can

From a budgeting perspective, this might seem counterintuitive but hear me out. Whether you pay a fee or not, it often makes the most sense to withdraw as much cash as you can from an ATM when you’re going to do it. Even if you don’t use that full amount, you can stash it away in a safe or a dresser drawer for when you need it. This way, you won’t be stuck in a situation where you either have to pay an ATM fee or you have to make another run to a free ATM that may not be near you at the time.

Another nice thing about having a large amount of cash on hand at home or in your wallet is if you are in a situation where cash is your only option. I have had contractors come over, such as plumbers or somebody to fix an appliance, and only accept cash or check.

Summary

Whether you use cash or not is entirely up to you. If you are a cash user, make sure you are using the right bank, and you have an extensive network of free ATMs around you. Also, take advantage of some of the other tips I shared in this article.

However, I would encourage you to explore other options outside of cash, such as a rewards credit card or a digital wallet. There are far more benefits to using these types of payment than cash, and you can accomplish the same thing.

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Source: moneyunder30.com