Good dental health can be essential to your overall well-being, but the cost of dental work — even after dental insurance — can make it challenging to pay upfront. According to the American Dental Association (ADA), the average cost of a porcelain or ceramic crown is $1,213, while the cost of a root canal can range as high as $1,539 for a single session.
A dental credit card is a white-label version of a credit card intended to be used on dental care expenses. It is one way to cover these costs in smaller, more manageable installment payments. Although a credit card for dental work can serve as a useful financing tool, it’s also important to be mindful of the caveats of using credit for dental care.
What Is a Dental Credit Card?
A dental credit card is a credit card that’s designed specifically to pay for your out-of-pocket dental health care costs. These cards are typically offered in dental offices that accept the particular medical card it advertises as a form of payment.
Like a basic credit card, a dental credit card requires patients to undergo a credit check for qualification. The card’s use is limited to dental offices within the card issuer’s network for the purpose of financing your dental bills.
Dental care credit cards typically have high interest rates, even if they offer a temporary deferred interest period.
Recommended: Tips for Using a Credit Card Responsibly
How Do Dental Credit Cards Work?
Your dental provider’s office might mention a dental credit card as a payment option if you’re unable to cover the expense in one lump sum. Typically, the office facilitates the process of completing your application for credit approval, but it is not financing the cost directly. In other words, your dental office isn’t the lender.
Instead, credit for dental care is provided by a third-party credit card issuer. Similar to how a conventional credit card works, your application is reviewed by the issuer’s underwriting team, and your credit history and score are evaluated.
If you’re approved, the card issuer will send you a physical credit card that you can use for services at an in-network health care office up to your approved credit card limit. Your dental provider is paid in full by the card issuer, and you’ll repay the issuer through monthly payments, plus interest if you carry a balance.
Deferred Interest Periods on Dental Credit Cards
Some credit cards for dental work offer zero interest charges for a limited period, also called deferred interest. This option can be advantageous if you’re confident that you can successfully repay the full balance before the deferment period ends.
However, if there’s a remaining balance after the deferment period ends, interest charges that accrued throughout the deferment period are added to the principal balance that’s due. Additionally, the new higher balance continues to accrue interest charges at the dental credit card’s APR, or annual percentage rate.
Because of this, use medical credit cards for dental work cautiously, as it’s a high-interest financing option that can lead to higher medical debt if you’re unable to repay your dental expenses quickly.
Recommended: What Is a Charge Card
Choosing a Dental Credit Card
When applying for a credit card specifically for dental care expenses, make sure you ask about the card’s features, terms, annual percentage rate (APR), and how it calculates interest during and after any deferment period.
If you’re approved, ensure that your dental office provides you with a copy of your dental credit card’s disclosure agreement. Also pay attention to the agreed-upon amount for any dental services you receive so you can verify that the card was charged for the correct amount.
You’ll want to note the deferment dates for your card, if any, and the interest rate you’re offered. That way, you can make enough monthly payments to repay your balance in full before interest kicks in.
Paying for Dental Care If You Have Bad Credit
Getting approved for a dental care credit card might be challenging if you have bad credit. If you’re in a difficult position and need help paying for expensive dental work now, here are some options to explore:
• Inquire about a low-fee payment plan. Even if your dental provider doesn’t typically offer payment plans, it’s worth asking. They might accommodate you.
• Shop around with other dental providers. Prices vary across dental offices, so compare costs across a handful of affordable sources. You might consider a non-profit dental clinic or a dentistry school.
• Seek help from a family member. Ask a relative if they’re willing to offer a low-interest loan for your dental care.
• Explore local government programs. Some state and local governments offer low-cost dental care programs to residents.
Alternatives to Dental Credit Cards
If a dental credit card isn’t an option for you, there are a handful of other financing options to cover dental work, such as the cost of a root canal.
Credit Cards With 0% Interest Rates
Other types of credit cards, like a 0% APR card, are a good alternative to dental care credit cards. They offer a promotional period — sometimes from six months to 18 months — during which you don’t incur interest charges.
This kind of card may differ from deferred interest programs. With some promotional APR cards, interest only starts accruing on your outstanding balance after the promotional period ends. Still, the credit card rule applies to try to pay off your balance in full before the promotional period ends to avoid paying interest.
Payment Plans Through Your Provider
Some medical providers offer a payment plan at no additional cost or at a small installment fee. In this situation, you’re arranging low installment payments directly through your dental office until you’ve repaid your balance in full.
Not all dental offices offer this type of payment plan. But if yours does, it can work with you to create a custom monthly payment amount and due date that’s manageable for your finances.
Personal Loans
Compared to a dental credit card, personal loans might offer lower interest rates for qualified borrowers. A low-interest personal loan achieves the same result as a credit card for dental work in that you can chip away at your outstanding balance in small increments, plus interest.
Among the main differences: You’ll receive a lump-sum loan disbursement from your lender that can be used to pay your dental office upfront. Also, you may find that a personal loan has a lower interest rate than what a credit card would charge you.
Recommended: How to Avoid Interest On a Credit Card
Help From Relatives
Seeking financial assistance from a close relative can help you avoid dental care debt. When asking for help, clarify whether any available funds are a gift or need to be repaid.
If it’s the latter, discuss the repayment window and additional interest (if any). Also talk about expectations if you’re suddenly unable to make payments due to, say, an injury or job loss.
The Takeaway
Getting a credit card designed to pay for dental work can be useful if you’re faced with an urgent oral treatment or procedure and need fast financing. However, the high interest rates of credit cards for dental work compared to other financing options can make it a financially risky option.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
What credit score do I need to get a dental credit card?
Credit score requirements vary by credit card issuer, but generally, you’ll need at least fair credit. However, a higher score can help you qualify for more competitive interest rates.
Is a dental care credit card hard to get?
Dental care credit cards are commonly offered online or at your provider’s dental office, so applying for a card is typically straightforward. However, being approved for a dental credit card involves many factors, like your credit history, income, debt-to-income ratio, and other factors.
Should I pay for dental care with a credit card?
If you don’t have the cash flow to pay for your dental costs upfront, using a dental credit card helps you cover costs in small, monthly payments. That being said, doing so might cause you to incur high interest charges, so evaluate your financial situation and your options.
Can I get a dental loan with bad credit?
Dental loans for patients with bad credit are available, though they might come with high interest rates, low limits, or other restrictive factors.
Photo credit: iStock/zadveri
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 average salary across the United States sits at $63,795, per the Social Security Administration. So an income of $300,000 per year — more than four times that figure — is by most standards a great salary for a single person in 2024.
Of course, even a large amount of money can come up short if you don’t have a solid budget in place or if you lead a particularly expensive lifestyle.
Below, we’ll dive into the various considerations.
Is $300K a Good Salary?
If you’ve just been offered a job with this figure in its compensation package, you may be wondering, “Is $300,000 a good salary for a single person?”
The thing is, there’s really no one-size-fits-all answer to that question. While $300,000 per year is substantially more than most people — or even most U.S. households — make, whether or not it’s comfortable for you depends on your lifestyle choices and expectations.
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Median Income in the US by State in 2024
You may be wondering how much you make compared to your neighbors. Median yearly household income varies significantly by state, ranging from Mississippi’s $52,985 to Maryland’s $98,461. However, nowhere in America does the median household income come anywhere close to $300,000 per year.
State
Median Household Income
Alabama
$59,609
Alaska
$86,370
Arizona
$72,581
Arkansas
$56,335
California
$91,905
Colorado
$87,598
Connecticut
$90,213
Delaware
$79,325
Florida
$67,917
Georgia
$71,355
Hawaii
$94,814
Idaho
$70,214
Illinois
$78,433
Indiana
$67,173
Iowa
$70,571
Kansas
$69,747
Kentucky
$60,183
Louisiana
$57,852
Maine
$68,251
Maryland
$98,461
Massachusetts
$96,505
Michigan
$68,505
Minnesota
$84,313
Mississippi
$52,985
Missouri
$65,920
Montana
$66,341
Nebraska
$71,772
Nevada
$71,646
New Hampshire
$90,845
New Jersey
$97,126
New Mexico
$58,722
New York
$81,386
North Carolina
$66,186
North Dakota
$73,959
Ohio
$66,990
Oklahoma
$61,364
Oregon
$76,362
Pennsylvania
$73,170
Rhode Island
$81,370
South Carolina
$63,623
South Dakota
$69,457
Tennessee
$64,035
Texas
$73,035
Utah
$86,833
Vermont
$74,014
Virginia
$87,249
Washington
$90,325
West Virginia
$55,217
Wisconsin
$72,458
Wyoming
$72,495
Source: U.S. Census Bureau
Average Cost of Living in the US by State in 2024
Just as median income varies significantly depending on which state you’re in, so does the state-by-state cost of living. This means that $300,000 can go a lot further in, say, Arkansas than it would in California.
While these figures are just averages — and the state-wide cost of living can vary substantially depending on which city you live in — here’s the average cost of living in each of the 50 states:
State
Average Cost of Living
Alabama
$42,391
Alaska
$59,179
Arizona
$50,123/td>
Arkansas
$42,245
California
$60,272
Colorado
$59,371
Connecticut
$60,413
Delaware
$54,532
Florida
$55,516
Georgia
$47,406
Hawaii
$54,655
Idaho
$43,508
Illinois
$54,341
Indiana
$46,579
Iowa
$45,455
Kansas
$46,069
Kentucky
$44,193
Louisiana
$45,178
Maine
$55,789
Maryland
$52,651
Massachusetts
$64,214
Michigan
$49,482
Minnesota
$52,849
Mississippi
$39,678
Missouri
$48,613
Montana
$51,913
Nebraska
$37,519
Nevada
$49,522
New Hampshire
$60,828
New Jersey
$60,082
New Mexico
$43,336
New York
$58,571
North Carolina
$47,834
North Dakota
$52,631
Ohio
$47,768
Oklahoma
$42,046
Oregon
$52,159
Pennsylvania
$53,703
Rhode Island
$52,820
South Carolina
$46,220
South Dakota
$48,997
Tennessee
$46,280
Texas
$49,082
Utah
$48,189
Vermont
$55,743
Virginia
$52,057
Washington
$56,567
West Virginia
$44,460
Wisconsin
$49,284
Wyoming
$52,403
Source: U.S. Bureau of Economic Analysis
How to Live on $300K a Year
No matter what you earn, figuring out how to spend (and save) your money takes effort and planning. Although it may seem like, with a six-figure salary, you can just buy whatever you want, if you don’t take the time to lay out how much money you’re actually taking home each month — and how much needs to be set aside for regular, necessary expenses like housing, insurance, food, and utility bills — you could quickly find yourself eating into your savings or even spiraling into credit card debt.
A money tracker is a great way to get a bird’s-eye view of where your funds are really going. This can be a first step toward deciding where you want them to go, rather than letting them whisk themselves away.
How to Budget for a $300K Salary
Whether you’re earning an entry-level salary or sitting in the C-suite, a little bit of budgeting can go a long way. But how?
The first step in budgeting is to determine how much money you make each month, which, in the case of someone earning a $300,000 salary, is about $25,000 before taxes are taken out. Because state taxes can vary significantly, you’ll need to look at your own pay stubs or do the math to determine how much is left afterwards, also known as your “net” income.
Once you know your net income, you can begin to deduct your regular, expected expenses. These include your housing payment (like rent or a mortgage), insurance payments, utility bills, and other recurring regular expenses (like your Netflix subscription). You should also set aside a budget for required monthly expenses that may vary a bit but are still critical, like groceries and fuel, or transportation.
Now, you can subtract your monthly expenses from your monthly earnings to determine how much discretionary income you have to do with what you please, including setting aside at least some of it for savings.
Sounds like too much work to do this all on paper? Fortunately, there are plenty of budget planner apps that can make the process a breeze.
Maximizing a $300K Salary
Just because you earn a lot doesn’t mean you have to spend a lot. And if you’re careful with your over-average salary, you can save money for the future and help safeguard your lifestyle for the long run.
For example, if you saved just 10% of your $300,000 per year salary, that would be $30,000 per year into your emergency fund or investment account. Especially if you choose to invest it, that amount can really add up over a relatively short amount of time — increasing your overall net worth and potentially even giving you the opportunity to retire early!
Quality of Life with a $300K Salary
Because a $300,000 per year salary is so much higher than the average cost of living in most states, most people who earn this much will find themselves able to afford a very comfortable, high quality of living anywhere.
Of course, the money can still go further in some places than others. For instance, on $300,000, you might be able to afford a small mansion in Mississippi — or an 800-square-foot apartment in Manhattan.
Is $300,000 a Year Considered Rich?
Given that the average salary in the U.S. is about 21% of $300,000, yes, many would consider someone earning $300,000 per year by themselves to be rich.
However, in most states, you’d need to make substantially more than $300,000 per year to be in the top 1% of earners. The states where you’d come closest are West Virginia and Mississippi, where the top 1% earn at least $367,582 and $381,919 per year, respectively.
Is $300K a Year Considered Middle Class?
The amount of money you’d need to earn to be considered middle class varies depending on where you live. But according to the Pew Research Center, it’s between about $47,189 and $141,568 per year on average. Which is to say, no, $300,000 per year is not considered middle class in the vast majority of cities and scenarios.
Example Jobs that Make About $300,000 a Year
Don’t make $300,000 per year (yet), and curious about how to make the dream a reality?
You might consider opening your heart to cardiology, which, according to data compiled by SoFi, offers an average salary of $421,330 per year. Medical positions feature prominently among the top-paying jobs, with surgeons, radiologists, dermatologists, emergency medicine physicians, and anesthesiologists all earning more than $300,000 per year.
The Takeaway
A salary of $300,000 is substantially higher than the national average and certainly a “good” salary for a single person in 2024 by most peoples’ reckoning. That said, no matter how much you earn, bad financial habits can bite you in the long run, so don’t forget about your budget.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
Can I live comfortably making $300K a year?
While everyone’s standard of comfort is individual, given how much higher $300,000 per year is than the average U.S. salary, yes, most people would be able to live comfortably on $300,000 per year. Even for high earners, however, having a budget is important. Making a plan for your money helps ensure you know exactly where each dollar is going rather than watching them fly away on their own.
What can I afford with a $300K salary?
With a $300,000 salary, you could afford a lot of things, including, depending on your overall applicant profile, a home priced close to a million dollars. With a high salary and the opportunity to save up money, you could likely afford luxurious vacations or high-end toys and gadgets, too. Again, though, a higher-than-average salary doesn’t preclude you from overspending or going into debt, so be sure to make a budget that accounts for all your necessary and discretionary expenses.
How much is $300K a year hourly?
For those who work 40-hour weeks 50 weeks out of the year, a $300,000 salary comes out to an hourly rate of around $150.
How much is $300K a year monthly?
A salary of $300,000 per year, divided by 12 months, comes out to roughly $25,000 per month.
How much is $300K a year daily?
A gross annual income of $300,000 per year, divided by 365 days, comes out to about $821.92 per day. Of course, most people don’t work every single day of the year. As an estimate for the normal five-day work week, accounting for weekends and typical American public holidays, an employee might work about 250 days per year, in which case a $300,000 salary comes out to approximately $1,200 per day.
Photo credit: iStock/Dusan Atlagic
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Fannie Mae currently expects a quarter-point reduction in December at the earliest, although Duncan stressed that could change between now and next week with the release of its next economic update. Prospects for the housing market appear to be better this year than 2023, although there’s seemingly no prospect of a big upswing in activity. … [Read more…]
Stocks hit fresh all time highs as the latest economic data showed the economy is still holding up as inflation recedes and the Federal Reserve nears a start to rate cuts.
Once again, smaller firms rallied, with the Russell 2000 poised for its biggest five-day run since April 2020. Conversely, the megacap space that has powered the bull market came under pressure. An equal-weighted version of the S&P 500 — where the likes of Nvidia Corp. carry the same heft as Dollar Tree Inc. — largely beat the US equity gauge. That index is less sensitive to gains from the largest companies — providing a glimpse of hope that the rally will broaden out.
The resilience of the equity market has been underpinned by optimism the economy has withstood the worst of Fed tightening. In this regard, Tuesday’s retail sales report was a “healthy” development, according to Bret Kenwell at eToro. It’s better to see the Fed cutting rates on falling inflation than to see the central bank rushing to bolster a weakened economy, he noted.
“While we are not ‘most preferred’ on small caps, they are historically cheap on a relative basis, and could snap back quickly should interest rates fall and growth remain resilient,” said Solita Marcelli, at UBS Global Wealth Management.
The S&P 500 hovered near 5,650. The Dow Jones Industrial Average rose 1.5%. The Russell 2000 gained 2%. The Nasdaq 100 was little changed. Amazon.com Inc., which kicked off its Prime Day event, outperformed. UnitedHealth Group Inc. climbed on strong results.
Traders also waded through financial earnings. Morgan Stanley dropped as results from its key wealth business fell short of estimates. Bank of America Corp. rose after saying net interest income would climb by the end of the year. Charles Schwab Corp. sank as new brokerage accounts missed estimates.
Treasury 10-year yields fell three basis points to 4.20%. Gold hit a record high on bets the Fed will soon be able to pivot.
“Retail spending in June was expected to confirm signs of an economic slowdown, but instead has breathed new life into the argument that Fed officials don’t need to worry about a sluggish real economy yet,” said Mark Streiber at FHN Financial.
U.S. retail sales, excluding the impact of a cyberattack on auto dealerships, rose in June by the most in three months, a sign consumers regained their footing at the end of the second quarter. Total retail sales were unchanged, restrained by a 2% slide in receipts at auto dealers. The figures aren’t adjusted for inflation.
“This report doesn’t negate expectations that the Fed will cut rates at its September meeting, unless of course inflation-related data releases indicate an uptick in prices,” said Quincy Krosby at LPL Financial.
Fed Chair Jerome Powell said Monday that second-quarter economic data has provided policymakers greater confidence that inflation is heading down to the central bank’s 2% goal, possibly paving the way for near-term interest-rate cuts.
Pleasant PPI Paradox Leaves This Week’s Big Victory in Focus
By:
Matthew Graham
Fri, Jul 12 2024, 4:44 PM
Pleasant PPI Paradox Leaves This Week’s Big Victory in Focus
The Producer Price Index (PPI) introduced a brief but disconcerting threat to this week’s relative level of triumph (courtesy of yesterday’s CPI) by suggesting a big, unexpected surge in core inflation at the wholesale level. Bonds initially panicked, but quickly got back on track and never looked back. Thankfully, the components behind the PPI surge are not the same components that would translate to PCE inflation in 2 weeks. We can also consider PPI’s notorious volatility and conclude it would take more than one of these surprises to raise a serious eyebrow. With that, the focus of the week remained squarely on yesterday’s big CPI victory.
Core PPI M/M
0.4 vs 0.2 f’cast
last month revised to 0.3 from 0.0
Core Annual PPI
3.0 vs 2.5 f’cast, 2.3 prev
Consumer Sentiment
66.0 vs 68.5 f’cast, 68.2 prev
Consumer inflation expectations
1yr down 0.1
5yr down 0.1
08:43 AM
Slightly stronger overnight but giving back gains after PPI. MBS unchanged. 10yr up 0.3bps at 4.216.
10:31 AM
healing continues. MBS up an eighth. 10yr down 1.6bps at 4.197
01:07 PM
Flat and sideways at the same levels as the last update.
04:43 PM
Bonds heading out at or near best levels with MBS up nearly 3/4ths and 10yr down 2.6bps at 4.187.
Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.
Favorable economic trends are helping mortgage rates continue the downward trend they’ve been on for the past few months.
HousingWire‘s Mortgage Rates Center showed that the average 30-year conforming loan rate was 7.06% on Tuesday, down from 7.11% a week earlier. The 15-year conforming loan rate showed an even larger pullback, declining from 6.90% to 6.79% during the week.
That data comes on the heels of cooling inflation numbers. Last week, the Consumer Price Index (CPI) showed that prices for goods and services declined by 0.1% from May to June. They rose 3% on an annualized basis, the slowest rate of growth in more than three years.
More good news for the housing and mortgage industries arrived Monday through remarks delivered by Federal Reserve Chair Jerome Powell. At an event in Washington, D.C., Powell indicated that policymakers would not wait for inflation to reach 2% before making cuts to benchmark rates. The federal funds rate has been in a target range of 5.25% to 5.5% since July 2023.
“The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell said, according to reporting by CNBC.
According to the CME Group‘s FedWatch tool, analysts believe there is a 93% chance that rates will remain unchanged after the Fed’s meeting at the end of July. But 100% of analysts have penciled in a cut in September.
HousingWire Lead Analyst Logan Mohtashami believes that mortgage rates could fall to 6% if the 10-year Treasury yield continues to recede. The spread between the 10-year yield and the 30-year rate narrowed to 2.62% last week, down from a recent peak of 3.1% in June 2023.
Mohtashami said that mortgage rates would be 0.48% higher today if the highest levels of spreads from last year were incorporated today. The shrinking spreads are correlating with a rise in purchase mortgage applications.
“The last time we saw 12 weeks of positive trending purchase app growth was when mortgage rates reached 6%,“ Mohtashami wrote Saturday. “Purchase apps have been positive for four out of the last five weeks and mortgage rates aren’t even near 6%. Now, context is critical because we are working from the lowest bar ever, so it doesn’t take much to move the needle higher with purchase apps, as the last five weeks have shown.“
With mortgage rates stubbornly remaining above 7% for all of 2024, home-price growth has cooled and supply has increased in many areas of the country.
According to data released Tuesday by First American, U.S. home prices grew by 5.6% year over year in June. It marked the sixth straight month that the annualized appreciation rate has slowed.
Anaheim, California, led the way among the metro areas analyzed by First American with 10.2% price growth compared to June 2023. Miami (8.9%), Pittsburgh (6.5%), Las Vegas (6.4%) and San Diego (6.2%) each exceeded the national average rate of appreciation.
“Elevated mortgage rates continue to keep homeowners rate locked-in, while reducing affordability for potential first-time home buyers,” Mark Fleming, chief economist for First American, said in a statement. “The resulting pullback in demand coincided with an uptick in supply, which is cooling price growth. However, housing remains fundamentally undersupplied nationally, which will keep a floor on how low house price appreciation can fall.”
Data from Altos Research shows that the supply of single-family homes for sale shrank slightly last week to 651,000. That figure is up 38.5% year over year but is still 32% below the pre-pandemic figure of July 2019. Altos also noted that the share of listings with a price cut has grown to 38.3%.
“If we get lucky and mortgage rates ease from here on out for the rest of the year, then one place we’ll measure a rebound in demand will be fewer price cuts,“ Mike Simonsen, president of Altos Research, wrote on Monday. “When you list your home, if you don’t get the offers, you cut your price. But when a few more offers are made by newly affordably mortgages for buyers, then this stat will plateau and even tick down.“
For a 30-year fixed-rate mortgage, the average rate you’ll pay is 6.94% today, a decrease of -0.14% over the last week. The average rate for a 15-year fixed mortgage is 6.41%, which is a decrease of -0.13% since last week. For a look at mortgage rate movement, see the chart below.
The Federal Reserve has been postponing interest rate cuts because inflation has been slow to improve. While experts still expect mortgage rates to gradually move lower in the coming months, housing market predictions can always change in response to economic data, geopolitical events and more.
Today’s average mortgage rates
Today’s average mortgage rates on Jul. 15, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.
Mortgage rates are expected to slowly decline in 2024. You can take advantage by comparing loan offers from multiple lenders to get the lowest rate. Start by entering your information below to get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
What are the different mortgage types?
Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
30-year fixed-rate mortgages
The average interest rate for a standard 30-year fixed mortgage is 6.94% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
15-year fixed-rate mortgages
Today, the average rate for a 15-year, fixed mortgage is 6.41%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 6.59% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
What’s behind today’s high mortgage rates?
At the start of the pandemic, mortgage rates were near record lows, around 3%. That all changed as inflation began to surge and the Federal Reserve kicked off a series of aggressive interest rate hikes starting in March 2022 to slow the economy, which indirectly drove up mortgage rates.
Now, more than two years later, mortgage rates are still around 7%. Over the last several months, mortgage rates have fluctuated in response to economic data and investors’ expectations as to when the Fed will start to lower rates.
Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.
Will we see lower mortgage rates in 2024?
Most experts predict mortgage rates will fall below 7% in the coming months. However, a sustained downward trend will depend on several factors, including upcoming inflation and labor data.
The Fed hasn’t hiked interest rates in almost a year, but an actual rate cut doesn’t appear imminent. Some experts say the first cut could come as early as July, though it’s more likely we see the Fed lower rates in September or November.
“If the Fed makes any moves later this year, the signal would be sufficient for the mortgage market, and mortgage rates would start falling,” said Selma Hepp, chief economist at CoreLogic. “In that case, we could see the mortgage rates around 6.5% at the year-end.”
One thing is for sure: Homebuyers won’t see lower mortgage overnight, and a return to the 2-3% mortgage rates from just a few years ago is unlikely.
Here’s a look at where some major housing authorities expect average mortgage rates to land.
Calculate your monthly mortgage payment
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
How can I get the lowest mortgage rates?
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
Default servicing experts have been optimistic that affordability concerns will be mild this year, but they consider some of the pressures on homeowners more worrisome than others.
When asked to distribute 100 points of risk among delinquency triggers, respondents to a recent Auction.com survey collectively assigned the greatest share of risk, at 37 points, to the “hidden” housing costs of property taxes and insurance.
Home purchasers often are most focused on upfront price and financing costs when they buy, so they can sometimes overlook ongoing expenses like T&I. That’s a concern for servicers, who often bear some responsibility for helping consumers manage these costs.
“Although the risk of rapidly rising delinquencies in the near term remains low, there are some signs of consumer and homeowner stress emerging,” Daren Blomquist, vice president of market economics at Auction.com, said in a report on the second quarter survey.
The online real estate marketplace surveyed a group of experts from depositories, agencies, government-sponsored enterprises, nonbanks and asset owners/investors for the survey. Auction.com found the first two groups to be particularly concerned about T&I.
Banks, government agencies and GSEs assigned 40 points of risk to taxes and insurance, in contrast to nonbanks, 34; and asset owners/investors, 25.
In addition to T&I, other concerns survey respondents collectively ranked highly included delinquencies rising in consumer debts outside the home loan market, 32; followed by rising unemployment, 15; commercial mortgage defaults, 10; and falling home prices, 6.
While these findings show there are a number of active performance concerns in the market, other answers to the survey explain why most respondents expect them to be mild.
Their projections suggest unemployment, which was pegged at 4.1% in the latest jobs report, will remain historically low.
Over three-quarters of respondents expect home price gains to persist throughout 2024.
As a result, survey participants anticipate high home equity levels that support performance, with serious-delinquent loans having an average combined loan-to-value ratio of 65%.
(Lower CLTVs reflect higher equity levels, and the traditional tolerance for higher ratios at origination is a maximum of 80%; but there are many risk-management vehicles designed to accommodate lower down-payments and elevated ratios above that level.)
Equity levels may shift over time, but right now respondents expect more than half or 51% of loans in loss mitigation to return to performing status given where they stand, with some typical adjustments for different types of mortgages.
Expectations are that 58% of loans purchased by government-sponsored enterprises Fannie Mae and Freddie will return to performing status after going through loss mitigation, followed by a little less than half government insured products at 49%, and 34% for non-agency mortgages.
The survey pegs the average combined LTVs for the different product types as follows: Fannie and Freddie loans, 58%; government insured mortgages, 49%; and non-agency products, 74%.
Around two-thirds or 67% of all respondents expect a rise in foreclosures to materialize this year.
More than half of the total, or 57%, anticipate foreclosures will increase 1% to 4% for their companies. Only 10% of the total project a foreclosure increase of 5% to 9%, with another 10% forecasting a drop of 5% or more. The rest of respondents anticipate foreclosures will either remain stable or decline by no more than 4%.
Survey participants in the non-agency market were unified in expectations that foreclosures will rise, with two-thirds anticipating an increase in the 1% to 4% range, and others anticipating a jump of 5% to 9%.
Sign in the window of a mortgage lender’s office in Lake Oswego, Oregon. 2020.
Anyone shopping for a house can attest that mortgage rates remain high in the U.S. In June 2024, the 30-year fixed rate mortgage rate was around 6.9 percent. For comparison, it was around 3.6 percent in January 2019, just prior to the pandemic. Will mortgage rates come down from their current high levels? While no forecast of the future can be certain, lower mortgage rates are in fact quite likely.
Given recent monetary policy, it is reasonable to think that inflation will eventually return to two percent per year, or at least to the neighborhood of two percent. Current short-term Treasury rates are about 5.25 percent per year. With inflation at 2 percent, a 5.25 percent nominal Treasury bill rate would imply a historically very high real Treasury rate—that is, the Treasury rate net of inflation. Not that long ago, the real rate on Treasury bills was negative. The real rate on Treasury securities is temporarily high due to the Federal Reserve’s policy goal of lowering the inflation rate.
Inflation is down substantially from two years ago. The Personal Consumption Expenditures Price Index grew 2.6 percent over the twelve month period ending May 2024. It grew 6.7 percent over the twelve month period ending May 2022. There is no indication that inflation will increase and, given the Federal Reserve’s determination so far, it is reasonable to think that the inflation rate will settle down somewhere between 2 and 3 percent per year, if not at 2 percent. Given a historical average real rate on short-term Treasury bills near zero, the short-term Treasury rate is likely to be in the neighborhood of 3 percent.
If short-term Treasury rates decrease, why would housing mortgage rates decrease? Part of the reason is because long-term Treasury bond yields will decrease. Long-term Treasury rates reflect expectations of future short-term rates; lower expected future short-term rates lower long-term Treasury rates. Lower long-term Treasury rates will result in lower long-term mortgage rates, but that is nowhere near all the story.
Figure 1 shows the 30-year mortgage rate and the 10-year Treasury yield separately. Figure 2 shows the spread, or difference, between the two. The 10-year Treasury yield commonly is used for comparisons to mortgage rates because the actual terms of mortgages are shorter than 30 years and because the 10-year Treasury security is traded more frequently than 30-year Treasury securities, making its price and yield more informative.
The 30-year mortgage rate and the 10-year Treasury yield have both increased since 2020, but the increase in the spread is quite notable. The spread can be interpreted as a risk spread, because Treasury securities are risk free in terms of paying the promised number of dollars. (They are nominally risk free but not really risk free.) Why has the risk spread increased?
A risk lenders face is the risk of prepayment of the mortgage. Prepayment of the mortgage is a risk because it generally is associated with the borrower purposefully refinancing the mortgage to obtain a lower interest rate. That lower interest rate for the borrower also is a lower interest rate for the lender if the lender replaces the refinanced mortgage with another mortgage.
Prepayment risk is the largest single risk for lenders. When, as now, interest rates are temporarily high, prepayment risk on new mortgages is high because rates are likely to be lower in the future, which will make it profitable for borrowers to refinance at those lower rates. Effectively, the expected terms of mortgages decrease.
Another risk frequently mentioned, foreclosure due to a recession, actually doesn’t create a risk for lenders. The large majority of mortgages in the United States are guaranteed by the federal government agencies popularly known as Fannie Mae, Freddie Mac and Ginnie Mae. If a borrower defaults, the federal agency guaranteeing the mortgage pays off the mortgage and absorbs the loss after the home is foreclosed and sold. Voila, default risk doesn’t matter to lenders!
Foreclosure creates a different risk, though, than default risk and loss. Foreclosure of a mortgage backed by the Federal government results in prepayment. Default still is a risk but it is not a risk of loss; it is a risk of prepayment. Even if the foreclosure is not motivated by a relatively high interest rate, the lender always has the risk that the rate will be lower on another mortgage it might acquire to replace the foreclosed mortgage.
Prepayment is not the only risk associated with mortgages. The Federal Reserve acquired a very large portfolio of mortgages as part of its policy of Quantitative Easing. Mortgages are bundled into securities called Mortgage Backed Securities (MBSs) which can be traded after the mortgages are issued. For some time, the Federal Reserve was acquiring amounts of MBSs equal to the new issues of mortgages. The rationale of these purchases was to lower mortgage rates. While not unequivocal, statistical evidence indicates that these purchases did lower mortgage rates.
The Federal Reserve now is selling MBSs as it unwinds Quantitative Easing. These sales account for some part of the increase in the mortgage rates and in the spread between the mortgage rate and the yield on Treasury securities.
Lower long-term Treasury rates and lower spreads in the near future will translate into lower mortgage rates. A lower-inflation environment will be associated with lower short-term interest Treasury rates if the Federal Reserve continues pursuing its current policy of lowering the inflation rate. Lower short-term interest rates will translate into lower long-term rates because long-term rates will reflect expectations of these lower short-term interest rates. These lower interest rates will create prepayments but will lower the risk of future prepayments, causing the spread between mortgage and Treasury rates to decline. In addition, the Federal Reserve eventually will stop selling MBSs, which also will lower the spread. In sum, mortgage rates will decrease because of lower inflation and lower risk-free interest rates, less prepayment risk and fewer sales of MBSs by the Federal Reserve.
Gerald P. Dwyer
Gerald P. Dwyer is a Professor and BB&T Scholar at Clemson University. From 1997 to 2012, he served as Director of the Center for Financial Innovation and Stability and Vice President at the Federal Reserve Bank of Atlanta. Dwyer’s research has appeared in leading economics and finance journals, as well as publications by the Federal Reserve Banks of Atlanta and St. Louis. He serves on the editorial boards of the Journal of Financial Stability, Economic Inquiry, and Finance Research Letters. He is a past President and member of the Executive Committee of the Association of Private Enterprise Education. He is also a founding member of the Society for Nonlinear Dynamics and Econometrics, an organization for which he served as President and Treasurer.
Dwyer earned his Ph.D. in Economics at the University of Chicago, his M.A. in Economics at the University of Tennessee, and his B.B.A. in Business, Government, and Society at the University of Washington.
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Are you ready to save money in advance for Christmas this year? Then, you are in the right place.
With this Christmas Budget Challenge, you will be prepared for holiday spending and not be scrambling at the last minute.
Get prepared for a debt free Christmas!
Tired of overspending? This challenge is perfect for you.
Tired of the post-Christmas debt hangover? This is exactly what you need.
The Christmas Budget Challenge is wonderful for someone who wants to take control of their life both their time and their money. Plus enjoy a debt free holiday season!
In 2019, the average family spent $900 on Christmas, according to Statista. Do you have $900 lying around for just Christmas gifts, decor, food and any other miscellaneous Christmas items?
Be honest with yourself.
If the answer is no, don’t fret. That is probably 90% of society. Keep reading and you can change that.
In order to have a debt free Christmas, you must save up in advance and plan your Christmas budget.
If the statistics hold true, then collectively over one trillion will be spent on the holiday season. So, you need to be prepared for next Christmas.
Remember, saving money is setting money aside today to be used for a future purpose.
So, what are the tips and tricks on how to have a debt free Christmas?
We want a Debt Free Christmas!
In order to have less stress around Christmas, the goal is to fund your Christmas money envelopes the week of November 1st.
That way you have plenty of time to shop around, get the best deals, and be the first one with wrapped presents.
Let’s talk about Christmas money envelopes… They are the perfect place to put your cash so you have money saved when the holiday comes. No paying on credit cards and having the January debt hangover.
If you prefer an online option, then use a savings builder account.
We want a debt free holiday season!
Even a smaller holiday that you can afford is better than a huge holiday that you can’t afford. Period.
Please note… Just because you may finish your Christmas shopping early, doesn’t mean it is a free pass to keep spending on those last minute items. That will wreck every Christmas budget.
Download the Christmas Budget Tracker and Gift Planner now.
Celebrate a debt free Christmas
It’s that time of the year again. The Christmas budget is looming and you’re scrambling to find a way to pay for it, or at least limit how much it will cost.
Christmas is a time of giving, family fellowship, and memories.
Christmas is not an unexpected expense.
You don’t want to be stressed or worry about how you are going to pay for it.
Debt Free Christmas tips: Plan ahead and use these money saving tips.
How to have a Debt Free Christmas
Christmas is financial stress and debt, but there are ways to plan for it so that you can have a debt-free Christmas. By saving up now, you will be able to afford the things you want without having to worry about repaying loans in January.
You need these debt-free holiday tips in your life! This is exactly how to enjoy Christmas with no money – specifically NO DEBT.
A debt free Christmas!
Also, once you enjoy living a debt free Christmas, you have learned many of the millionaire habits that will help you all year round.
1. Save Up Money Early
The sooner you start saving for Christmas, the better off you will be when the holiday gets closer.
As with any of our money saving challenges, it takes a little discipline to set money aside for a specific purpose and only use it for that purpose.
Shortly, we will go into detail on how much money to save based on your budget for Christmas.
In our household, we have a sinking fund that each month we add a pre-determined amount towards. It is a lean $50 per month because we prefer a minimalist home and choose experiences over gifts.
2. Implement the 3 Gift Rule
This is the best way to make a minimalist Christmas a possibility by limiting the number of gifts each person gets – especially the kids.
Let’s be honest… so times, it is hard to limit ourselves to only buying a few items.
With the 3 gift rule at Christmas, you are able to stay with your Christmas budget. Plus you will be able to buy high-quality gifts instead of purchasing a bunch of small gifts (to make it seem like you are making Christmas gift-giving bigger and better).
For our household, our 3 gift rules follow this:
Something to wear
Something to read
And don’t forget the fun!
3. Plan Ahead
There are two ways to plan ahead.
First, use our Christmas Budget template to help you decide how much you need to spend and how much you can spend. This will help you to plan in advance the best gifts for your loved ones.
Second, to shop off-season or on clearance. Our perfect example was our oldest needed new snowpants, so I bought them in June for the upcoming winter. I paid pennies compared to the retail price and had an awesome much-wanted present.
By planning ahead, it will also take off much of the stress that you are experiencing around the festive holiday parties.
4. Pick Your Traditions
Have you ever considered which traditions are your favorites? Which do you do because they are your traditions even if you don’t enjoy them and they are costly?
One year, I decided to poll my own family on their favorite family traditions. Their top five list were all things that were frugal, didn’t cost much money, or were volunteering to help others.
This is where family politics can become friction between families.
You have to choose what works for you and your family and your budget. (Not theirs!)
5. Be Brave and Say No
Let’s face it. Saying no is hard and sometimes isn’t fun.
But, you desire a debt free Christmas more than anything else this year.
Your personal financial future is more important than spending money you don’t have.
Quick example: you are invited to 5 parties with family and/or co-workers. Each party has a $20 gift limit for each person attending. So, you are dropping $200 as a couple on parties that aren’t your first priority.
It is okay to opt-out of gift exchanges. Be clear with your reasons and tame their expectations of you.
Make it is time to find a community that shares some of the same money values as you!
Christmas Budget Challenge for a Debt Free Christmas
All of the Christmas Budget Challenges will be based on the average Christmas budget each year. (That number from above is based on average spending.) Just remember that number is a collective of gifts, food, decorations, and any miscellaneous holiday items.
Because every family and their personal finance situation is unique, we will break this Christmas Budget challenge up into various spending levels.
You choose which will work best for your family.
Related Resource: 8 Simple Tips to Stay on Budget at Christmas
Let’s discuss how these numbers we decided on for the Christmas Budget Challenge. First, the average family spent $900 on Christmas in 2019, according to Statista. Regardless of whether you think that number is jaw-dropping high or way too low. That was the average amount spent. Those are the statistics.
So, for this challenge to have a debt free Christmas, we are going to break that into three different levels.
Christmas Budget Challenges Levels:
Average Christmas Budget – $900
Frugal Christmas Budget – $450
Luxury Christmas Budget – $1,800
Just a side note…The average spending of $900 at Christmas includes amounts put on credit cards that weren’t able to be fully paid off.
The goal is to save $900 by the week of November 1st. (Don’t worry about counting weeks. The key dates and weeks are listed below.)
That means saving money for Christmas weekly.
This challenge is about having a debt-free Christmas and holiday season.
Don’t think it is possible to have a fabulous holiday season without debt?
Let me tell you… IT IS POSSIBLE!
We have done it each and every year. There is no post-hangover stress or guilt on how much was spent.
Also, makes sure to check the end of the post for the dates for 2020!
Average Christmas Budget – $900
For the first challenge, we are going to be average. Plain, old average. Nothing fancy here. Also, we are assuming the average spending is the same as the average Christmas budget.
We are making the assumption that you plan to spend the average amount as each American family did in 2017.
Average Plan
Weekly Amount to Save
44 Weeks
$20
30 Weeks
$30
23 Weeks
$40
18 Weeks
$50
15 Weeks
$60
9 Weeks
$100
Frugal Christmas Budget – $450
Next, the frugal Christmas budget is half of the average amount spent on the holidays. A fabulous Christmas put together for under $450. Personally, we have always limited the number of gifts.
Think outside the (Amazon) box!
Or take on a frugal lifestyle or thrifty lifestyle.
Simplicity is key.
Frugal Budget
Weekly Amount to Save
44 Weeks
$10
30 Weeks
$15
23 Weeks
$20
18 Weeks
$25
15 Weeks
$30
9 Weeks
$50
Luxury Christmas Budget – $1,800
Lastly, the luxury Christmas budget is for someone who has the capability to spend more and wants to make sure it is done without debt. By saving in advance, there are so many more options available when the holidays roll around.
You plan to save $1,800 for the holiday season.
Luxury Plan
Weekly Amount to Save
44 Weeks
$40
30 Weeks
$60
23 Weeks
$80
18 Weeks
$100
15 Weeks
$120
9 Weeks
$200
Key Dates:
Based on when you are reading this post will determine how much to start saving by date.
Don’t just pin this post later… be prepared!!
52 Week Savings Plan: November 1st 40 Week Savings Plan: January 25th 30 Week Savings Plan: April 5th 23 Week Savings Plan: May 24th 18 Week Savings Plan: June 28th 15 Week Savings Plan: July 19th 9 Week Savings Plan: August 30th
Download the Christmas Budget Tracker and Gift Planner now.
Where to Save Christmas Money
Now, it is one thing to say, “I’m going to start saving money for Christmas this year.”
It is completely different to actually act on it.
The BIG recommendation is to get it outside your temptation to spend!!
There are two options on where to save your Christmas budget money.
Savings Option 1 –
The first option is an online account.
Personally, this is my favorite. Simple reason on why. It is harder to access the money (it takes 2-3 days for the money to be transferred back to your local bank account). Plus, it is simple to set up an automatic transfer and forget. Then, money is set aside in a separate account until you need the funds.
Every month, we add the same amount to our sinking fund.
Savings Option 2 –
The second option is to use a cash envelope.
This one comes with the temptation to dive into the money set aside for a debt free Christmas. Personally, I think the prettier the envelope, the likelihood to actually use it goes up, too.
Check out the list of Best Cash Envelopes. Pick up your Christmas money envelope now!
Large family: How to have a debt-free Christmas
In order to avoid a debt-free Christmas, you need to start the year by saving your first paycheck. The rest of the money from that point on went towards Christmas expenses and was budgeted for that holiday.
The key is you cannot spend money set aside for this purpose.
By doing this, you are able to have an exciting Christmas without any debts.
Still, stressed about giving the best gifts for your large family? Here are great gift ideas that are affordable and thoughtful.
Enjoy These Debt Free Holiday Tips?
That is a bunch of simple and easy tips to make sure you learn how to have a debt free Christmas!
Are you up for the challenge? Make this year your first debt-free holiday season.
Start saving now in order to have a debt free Christmas.
And enjoy a stress-free holiday!
More Christmas Resources for you!
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.