Apple Card Review – Does It Live Up to the Hype?

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Apple Card immodestly claims to “completely [rethink] everything about the credit card.” Is it correct? Maybe.

Backed by the Mastercard network, Apple Card certainly has a host of innovative features that old-fashioned credit cards don’t, such as daily cash-back and numberless physical cards. And it’s a harbinger of the cashless, contactless payments landscape to come. No serious observer can dispute that Apple Card is ahead of its time.

But any product that’s truly ahead of its time must also be competitive in the present. And beyond its novel features, Apple Card works pretty much like any other credit card. Indeed, in spite – or perhaps because – of its novel additions, it lacks some consumer-friendly features common to other popular cash-back cards and general-purpose rewards cards.

Here’s a closer look at what sets Apple Card apart, and how it stacks up against other credit cards.

Things to Keep in Mind About Apple Card

Before we dive into Apple Card’s details, two points bear mentioning.

First, though cardholders who don’t pay their statement balances in full each month are subject to interest charges that vary with their creditworthiness and prevailing benchmark rates, Apple Card charges none of the fees typically levied by credit card companies: no annual fee, no late fee, and no over-limit fee.

Second, Apple Card is designed to work with Apple Pay, which runs on Apple (Mac) hardware only. If you’re one of the many millions of iPhone users in the United States, this card is for you. If you’re an Android loyalist, you’re out of luck.

Key Features

Here’s a closer look at Apple Card’s most notable features.

Earning Cash Back

Apple Card has a three-tiered cash-back program:

  • 3% Cash Back. All purchases from Apple earn unlimited 3% cash back. These include, but are not limited to, purchases from Apple.com, physical Apple Stores, the iTunes Store, the App Store, and in-app purchases. Certain non-Apple purchases made using Apple Pay earn 3% cash-back rewards as well.
  • 2% Cash Back. All other purchases made using Apple Pay (including through your Apple phone or Apple Watch) earn unlimited 2% cash back. Hundreds of major retailer chains and brands, encompassing more than 2 million individual merchant locations online and off, accept Apple Pay. These include but aren’t limited to Walgreens, Nike, Uber Eats, Duane Reade, Amazon, and thousands of gas stations. If you’re not familiar with how Apple Pay works, see its site for details.
  • 1% Cash Back. Purchases made with merchants – online, offline, and in-app – that don’t accept Apple Pay earn an unlimited 1% cash back.

Redeeming Cash Back

Cash back earned through Apple Card purchases accrues daily. Each day a purchase posts to your account, you’ll receive the requisite cash back on your Apple Pay Cash card in the Apple Wallet app.

From there, you can use it to pay for purchases within or without the Apple ecosystem or to make payments on your Apple Card balance.

If you don’t have an Apple Pay Cash card and aren’t interested in getting one, you must accept cash back earned to your Apple Card via statement credits, which may not be much of a sacrifice.

Apple Pay Integration

Apple Card is essentially an offshoot of Apple Wallet. It’s designed for use in conjunction with Apple Pay – or, more specifically, as the user’s default Apple Pay payment method. Apple clearly expects most Apple Card transactions to be contactless, executed through a Web portal or with the tap of an iPhone.

Beyond Apple Card’s novelty as the first truly “contactless first” credit card, users benefit from Apple Pay’s stringent security features. These include:

  • Unique Device Number. Your Apple Card is issued with a unique number that’s stored in your iPhone’s Secure Element, the secure microchip that hosts the phone’s most sensitive functions.
  • Two-Factor Purchasing. Every purchase requires your unique device number, plus a unique one-time code generated on the spot.
  • Purchase Authorization Via Face ID or Touch ID. This renders stolen phones all but useless for making purchases.

Apple Card also takes data security seriously. Apple and Goldman Sachs, the card’s issuer, vow never to share customer data with third parties. Only Goldman Sachs has access to users’ transaction histories and personal information.

Physical Credit Card

Apple Card isn’t 100% virtual. The physical Apple Card is a titanium card that looks and feels just like any other premium credit card, except that it’s much sleeker. The card face is a minimalist triumph, with no cardholder name, card number, or CVV and virtually no marks to mar its metallic hue.

Apple and Goldman Sachs tout the security benefits of Apple Card’s featurelessness. Without any information to identify the card, it’s useless in the wrong hands.

Real-Time Fraud Protection

Apple Card’s real-time fraud protection feature notifies you every time your card is used to make a purchase. If something doesn’t seem right about a transaction, or you know for a fact that you didn’t make it, you can immediately initiate the dispute process by tapping the notification.

Purchase Organization and Mapping

Apple Card automatically organizes purchases by purchase category – entertainment, food and drinks, and so on – and merchant. Categories are color-coded for easy visualization and totaled monthly for easy budgeting. With features like that, who needs a paid budgeting app?

Apple Card also automatically maps purchases, showing you where you’ve spent money recently, literally. If a real-time fraud protection notification slips your notice, perhaps seeing a purchase in a city you’ve never visited will jog your memory.

Spending Summaries

Apple Card’s spending summaries, visible in the Wallet app, reveal how much you’re spending, and on what, in any given week or month. You can view spending trends over time here too, which comes in handy for the periodic budget reviews you should be doing.

Payment Due Dates & Frequency

By default, Apple Card statements are due at the end of the month. If you prefer to pay balances more frequently – and reduce interest charges when you can’t pay off your balance in full before the statement due date – you can set weekly or biweekly payments too.

Interest Calculator

Apple Card’s built-in interest calculator automatically tallies expected interest charges when you pay less than the full balance due on your card before the end of the grace period.

Credit card issuers are required to reveal on each statement the true cost of making only the minimum payment due in comparison with at least one larger monthly payment.

However, this is a far more robust and interactive interest calculator that’s significantly more likely to nudge you to boost your monthly payment.

Interest-Reduction Suggestions

If the interest calculator isn’t enough, Apple Card also provides “smart payment suggestions” that encourage cardholders to increase their monthly payments, thereby decreasing their total interest liability.

It’s not clear how Apple Card arrives at these suggestions, but they appear to be based on cardholders’ spending patterns and payment history.

Interest-Free Installment Payments

Apple Card offers interest-free monthly installment payments for select Apple products purchased through the company’s sales channels. You can easily see the size of your installments and how much you have left to pay in the app.

Text-Based Support

Apple Card has a text-based support system that’s available 24/7. If you run into an issue with the card or have a question that doesn’t concern a disputed charge, which you can handle through the real-time fraud protection interface, this is your ticket to a resolution.

Important Fees

Apple Card charges no fees to cardholders: no foreign transaction fees, balance transfer fees, or annual fees.

Advantages

These are among Apple Card’s principal advantages.

1. No Fees

Apple Card doesn’t charge any fees to cardholders. This makes it all but unique, as even avowedly low-fee cards assess fees for less common occurrences such as late and returned payments.

2. Cash Back Accrues Daily

Apple Card is among the only widely available credit cards to accrue cash back on a daily basis, rather than at the end of the statement cycle.

Although the accrual frequency doesn’t affect net cash-back earnings or cash back earning rates, it’s certainly nice to see your spending subsidized in near-real-time.

3. Solid Cash Back Rates on Apple & Apple Pay Purchases

This card earns 3% cash back on virtually all purchases within the Apple ecosystem, excluding purchases with Apple Pay merchants. This 3% category covers, but isn’t limited to, the following:

  • Apple.com purchases
  • Purchases at physical Apple Stores
  • iTunes Store purchases
  • App Store purchases
  • In-app purchases

Apple Card also earns 2% cash back on purchases made with Apple Pay merchants. So if you’re able to limit your spending to the Apple and Apple Pay ecosystems, you’ll net somewhere north of 2% cash back on this no-annual-fee card, depending on your exact spending mix.

4. Above-Average Security Features

Apple Card is more secure than your average credit card. The physical card doesn’t have a card number or CVV, so you won’t have to worry about what could happen between the moment you lose your card and the moment you freeze your account.

The virtual card is denoted by a unique device number locked away in your iPhone’s Secure Element, far from prying eyes.

Perhaps most consequentially, Apple has a strict privacy policy that forbids data sharing with third parties. There’s no need to opt out, which is often easier said than done, and only Goldman Sachs has access to your transaction history.

5. Real-Time Fraud Protection

Apple Card has another security feature worth touting: real-time fraud protection that alerts you whenever your card is used to make a purchase and lets you flag potentially fraudulent transactions with a single tap.

Compared with the traditional dispute resolution process, this is a snap, even when flagged charges turn out to be legitimate.

6. Easy, Flexible Payments

Apple Card’s default payment due date – the last day of the month – is easy to remember, even without the helpful reminders.

If you’re trying to budget on an irregular income and prefer not to wait until the end of the month to pay off your entire balance, Apple Card’s customized weekly and biweekly payment intervals have you covered.

Other credit cards let you pay off balances throughout the month, but few make it as easy as Apple Card.

7. Interest-Reduction Features

Apple Card’s interest calculator and interest-reduction suggestions are classic examples of “nudge” theory in action. By revealing just how much you’ll save over time by paying a little more upfront, these features nudge you to make smart financial decisions.

Of course, it’s always best to pay off your balance in full by the statement due date, but when unexpected expenses make that impossible, it’s nice to feel like your credit card issuer is on your side.

8. Useful Budgeting and Spending Control Features

With so many budgeting and spending control features, Apple Card feels like a personal budgeting suite with a spending aid built in.

Maybe that’s the point. Though most small-business credit cards have basic expense tracking and reporting features, Apple Card’s package is unusually robust for a consumer credit card.

If what’s keeping you from building and sticking to a household budget is the inconvenience inherent in standalone budgeting software, this is a potential game-changer.

9. Text-Based Customer Support

Apple Card’s text-based customer support is a low-friction alternative to menu-laden, over-automated phone support and unpredictable email support.

Whether this feature is as efficient as Apple and Goldman Sachs promise remains to be seen, but it’s difficult to see it being worse than the status quo – for relatively simple issues, at least.

10. No Penalty Interest Charges

Apple Card doesn’t charge penalty interest. While it’s best never to find yourself in a position where penalty interest would apply, the assurance that you won’t be unduly penalized for a lapse beyond your control is certainly welcome.

Disadvantages

Consider these potential disadvantages before applying for Apple Card.

1. Requires Apple Pay and Apple Hardware

Apple Card’s biggest drawback is its exclusivity. The card requires Apple Pay, which runs exclusively on Apple hardware, meaning it’s not appropriate for Android or Windows device users.

If you’re set on applying for Apple Card but don’t have an iPhone or other compatible Apple device, Apple Watch is your most cost-effective option. Apple Pay runs on Apple Watch just fine, and you can pick up refurbished older versions – Series 1, 2, and 3 – for less than $100.

That’s still a significant outlay, though, and no other credit card on the market requires compatible hardware.

2. Only 1% Cash Back on Non-Apple Pay Purchases

Apple Card earns just 1% cash back on non-Apple Pay purchases. If your daily, weekly, and monthly consumption habits involve merchants that mostly accept Apple Pay, you shouldn’t have trouble earning the higher 2% cash-back rate, but not all merchants do.

Square has a non-exhaustive list of major merchants that do accept Apple Pay. Do yourself a favor and review it before applying for this card.

3. Goldman Sachs’ First Credit Card

Apple Card is the first consumer credit card issued by Goldman Sachs Bank. Apple touts this as an advantage, arguing that Goldman Sachs isn’t bound by the constraints of legacy credit card issuers such as Chase and Barclays.

And it’s not as if Goldman Sachs is entirely new to the consumer finance realm. Its Marcus by Goldman Sachs loan and savings products are innovative and well-liked.

That said, it’s not hard to imagine a first-time credit card issuer experiencing some growing pains, especially given Apple Card’s novelty. At a minimum, don’t be surprised to see iterative changes to Apple Card as Goldman Sachs figures out what works and what doesn’t.

Final Word

If you’re a committed Apple Pay user with the hardware to back it up – an iPhone, Apple Watch, or maybe an iPad – then it might make sense for you to ditch your traditional credit cards and going all-in on Apple Card.

Users who restrict their spending to Apple Pay merchants only stand to earn 2% cash back across the board, about as good as it gets on a consistent basis for premium cash-back credit cards. To do better than that, you’ll need to upgrade to a premium travel rewards credit card with a hefty annual fee.

Source: moneycrashers.com

10 States with the Highest Gas Taxes

Road trips are fun until you have to stop and get gas. Fortunately for drivers, the federal government’s gas tax hasn’t budged from 18.4 cents per gallon since 1993. However, states and the District of Columbia levy their own gas taxes. 

And thanks to the pandemic, folks have been using their cars a lot more since public transportation and flying are viewed as hot-spots for COVID-19. But if you’re traveling cross-country, filling up in certain states can cost you more than others. Here are the 10 states with the highest gas taxes, including a look at how the states do on other big tax metrics, such as sales tax. (A reminder, though: U.S. gas taxes are still among the world’s lowest.)

Gas and diesel prices are from the American Petroleum Institute. Sales taxes are from the Tax Foundation and, when listed as “average,” represent a population-weighted value meant to capture local option taxes. Tobacco and vapor taxes are from the Campaign for Tobacco-Free Kids as well as individual state tax websites.

1 of 10

Indiana

picture of man at gas pumppicture of man at gas pump

State Fuel Tax: 42.16¢  per gallon of gasoline, 52¢ per gallon of diesel

State Sales Tax: 7% state levy. No local taxes.

Tobacco Taxes:

  • Cigarettes: $1 per pack
  • Snuff: $0.40 per ounce
  • Other tobacco products: 24% of wholesale price
  • Vapor products: Starting July 1, 2022, 15% of gross retail income

For details on other state taxes, see the  Indiana State Tax Guide for Middle-Class Families.

2 of 10

Florida

picture of man at gas pumppicture of man at gas pump

State Fuel Tax: 42.46¢ per gallon of gasoline, 35.27¢ per gallon of diesel (both gasoline and diesel taxes will increase by 0.3¢ per gallon in 2021)

Average Sales Tax: 6% state levy. Localities can add as much as 2.5%, and the average combined rate is 7.08%, according to the Tax Foundation.

Tobacco Taxes:

  • Cigarettes: $1.34 a pack
  • Cigars: no tax
  • All other tobacco products: 85% of the wholesale price

For details on other state taxes, see the Florida State Tax Guide for Middle-Class Families.

3 of 10

New York

picture of cars at gas pumppicture of cars at gas pump

State Fuel Tax: 42.7¢ per gallon of gasoline, 43.43¢ per gallon of diesel

Average Sales Tax: 4% state levy. Localities can add as much as 4.875%, and the average combined rate is 8.52%, according to the Tax Foundation. In the New York City metro area, there is an additional 0.375% sales tax to support transit.

Tobacco Taxes:

  • Cigarettes and little cigars: $4.35 per pack (in New York City, an extra $1.50 per pack)
  • Snuff: $2 per container one ounce or less, $2 per ounce for larger containers
  • Cigars and other tobacco products: 75% of the wholesale price
  • Vapor products: 20% of retail price

For details on other state taxes, see the  New York State Tax Guide for Middle-Class Families.

4 of 10

Hawaii

picture of gas stationpicture of gas station

State Fuel Tax: 46.84¢ per gallon of gasoline, 49.55¢ per gallon of diesel

Average Sales Tax: 4% state levy. Localities can add as much as 0.5%, but the average combined rate is only 4.44%, according to the Tax Foundation.

Tobacco Taxes:

  • Cigarettes and little cigars: $3.20 per pack
  • Large cigars: 50% of the wholesale price
  • Other tobacco products: 70% of the wholesale price

For details on other state taxes, see the  Hawaii State Tax Guide for Middle-Class Families.

5 of 10

Washington

picture of gas stationpicture of gas station

State Fuel Tax: 49.4¢ per gallon of gasoline, 49.4¢ per gallon of diesel

Average Sales Tax: 6.5% state levy. Municipalities can add up to 4% to that, with the average combined rate at 9.23%, according to the Tax Foundation.

Tobacco Taxes:

  • Cigarettes and little cigars: $3.03 per pack
  • Cigars: 95% of sale price, with a cap of $0.75 per cigar
  • Moist snuff: $2.53 per 1.2-ounce container
  • Other tobacco products: 95% of sale price
  • Vapor products: Closed products, $0.27 per ml. Open containers greater than 5 ml, $0.09 per ml

For details on other state taxes, see the  Washington State Tax Guide for Middle-Class Families.

6 of 10

Nevada

Las Vegas sign at night with via of stripLas Vegas sign at night with via of strip

State Fuel Tax: 50.48¢ per gallon of gasoline, 28.56¢ per gallon of diesel

State Sales Tax: 6.85% state levy. Localities can add as much as 1.53%, and the average combined rate is 8.23%, according to the Tax Foundation.

Tobacco Taxes:

  • Cigarettes: $1.80 per pack
  • Other tobacco products: 30% of wholesale price
  • Vapor products: 30% of wholesale price

For details on other state taxes, see the Nevada State Tax Guide for Middle-Class Families.

7 of 10

New Jersey

picture of gas stationpicture of gas station

State Fuel Tax: 50.7¢ per gallon of gasoline, 57.7¢ per gallon of diesel

State Sales Tax: 6.625% state levy. That rate is cut in half (3.3125%) for in-person sales in designated Urban Enterprise Zones located in disadvantaged areas. Salem County, which borders no-tax Delaware, also charges the reduced 3.3125% rate.

Tobacco Taxes:

  • Cigarettes: $2.70 per pack
  • Moist snuff: $0.75 per ounce
  • Other tobacco products: 30% of the wholesale price
  • Vapor products: $0.10 per ml for closed containers. Bulk nicotine liquid is taxed at 10% of retail price.

For details on other state taxes, see the  New Jersey State Tax Guide for Middle-Class Families.

8 of 10

Illinois

picture of gas stationpicture of gas station

State Fuel Tax: 52.16¢ per gallon of gasoline, 59.98¢ per gallon of diesel

Average Sales Tax: 6.25% state levy. Localities can add as much as 4.75%, and the average combined rate is 8.82%, according to the Tax Foundation.

Tobacco Taxes:

  • Cigarettes and little cigars: $2.98 per pack, Cook County has an additional tax of $3. Three localities, all in Cook County, add to that. According to the Campaign for Tobacco Free Kids, a pack purchased in Chicago has the highest total tax in the country: $7.16.
  • Snuff: $0.30 per ounce
  • Other tobacco products: 36% of the wholesale price
  • Vapor products: 15% of wholesale price; localities have additional taxes

For details on other state taxes, see the  Illinois State Tax Guide for Middle-Class Families.

9 of 10

Pennsylvania

picture of gas stationpicture of gas station

State Fuel Tax: 58.7¢ per gallon of gasoline, 75.2¢ per gallon of diesel

Average Sales Tax: 6% state levy. Philadelphia has a local sales tax of an additional 2%, and Allegheny County (Pittsburgh’s home county) adds a local sales tax of 1%, and the combined rate is 6.34%, according to the Tax Foundation.

Tobacco Taxes:

  • Cigarettes and little cigars: $2.60 per pack. The City of Philadelphia levies an additional $2 local tax per pack of cigarettes
  • Other tobacco products: 55 cents per ounce. Additional taxes due in Philadelphia.
  • Vapor products: 40% of wholesale price

For details on other state taxes, see the  Pennsylvania State Tax Guide for Middle-Class Families.

10 of 10

California

picture of car at gas stationpicture of car at gas station

State Fuel Tax: 63.05¢ per gallon of gasoline (63.65¢ effective July 1, 2021), 83.06¢ per gallon of diesel (83.46¢ effective July 1, 2021)

Average Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.68%, according to the Tax Foundation.

Tobacco Taxes:

  • Cigarettes: $2.87 per pack
  • All other tobacco products: 56.93% of manufacturer’s price
  • Vapor products: $0.05 per ml of consumable product

For details on other state taxes, see the  California State Tax Guide for Middle-Class Families.

Source: kiplinger.com

Couponing Do’s & Don’ts — How to Save Money Shopping With Coupons

You’ve probably already used coupons at some point in your life. According to a 2020 survey by Statista, almost 90% of respondents reported having used coupons for shopping. Considering that coupons provide a fast, free way to reduce spending on groceries and essentials, it’s clear why coupons are so popular.

But to make your couponing efforts more successful, it’s crucial to familiarize yourself with the tips and tricks successful couponers use. The last thing you want to do is waste time collecting coupons only to realize none of them is valid when you’re checking out.

If you’re relatively new to couponing, start slowly by bringing a few paper coupons to your next shopping trip. Over time, you can incorporate more of these couponing do’s and don’ts to save more.

Couponing Do’s

Couponing doesn’t have to feel like a marathon or take up hours of your week. By following one or more of these couponing do’s, you can start to trim your monthly spending — and ultimately save more money.

1. Do Know Where to Find Coupons

The most basic step in starting to coupon is to collect them. Ideally, you can gradually build a stash of coupons for the stores and brands you frequently shop so you can always find some savings at the register.

To begin your coupon hunt, plan your weekly meals around sale products if possible. That helps you find discounts without even having to coupon. To find in-store sales, look for digital flyers on grocery store websites.

Another resource is Flipp, a free app that provides weekly flyers, deals, and online coupons for over 2,000 stores. Flipp has weekly flyers for stores like Aldi, Kroger, and Walmart. You can clip deals you find to the in-app shopping list to help you keep track.

Once your virtual or paper shopping list has all the food you need for the week, finish the list with any household essentials you need to restock, like toilet paper or cleaning supplies. You’re now ready to track down coupons for everything on your shopping list.

There are several free websites you can use to print paper coupons. These websites include coupon databases and brand websites like:

Coupons.com, Coupon Sherpa, RetailMeNot, and Valpak also have mobile apps that let you find and redeem digital coupons at the register. If you don’t want to spend time and money printing coupons, apps are your best resource. You can also try other mobile coupon apps like Grocery Pal and The Coupons App, which have digital coupons for grocery stores like Aldi, Albertsons, Kroger, Food Lion, Safeway, and Publix.

Between paper and digital coupons, you should find savings on some of the products on your weekly shopping list. If you can’t track down a specific coupon, searching online for the product name plus “coupon” is another tactic to try.

Finally, if you subscribe to a Sunday paper or get coupons and ad flyers in the mail, take a few minutes to scan for coupons you need. If you spot an incredible coupon for a product you buy regularly, you can scoop up a few extra newspapers on discount at a dollar store the following day or look online for the same coupon.

Also, don’t forget to check out those coupons they print out at the register after checkout (sometimes called Catalina coupons). Those are typically based on your specific purchases, so there may be something in there you can use. Others may be percent-off discounts on your total sale price if you spend over a certain amount.

You don’t have to go overboard and find duplicates of every coupon for your shopping list. Find as many as you can, and remember to check expiration dates so you shop in time to save.

2. Do Combine Coupons With Cash-Back Rewards Apps

Coupons usually provide a percent discount or certain dollar-off amount to let you save. But if you want to save even more on your weekly grocery haul, you can use cash-back rewards apps to earn rebates for buying certain products.

Just like searching for coupons, you can research rebate opportunities before heading to the store to earn cash back for products you were going to buy anyway. Popular rewards apps you can use include:

  • Ibotta. Earn cash back for buying specific products from Ibotta partners and uploading your receipt to the app for proof of purchase. Ibotta works with over 1,000 brands, and there are always offers on groceries and everyday essentials. You can redeem cash back through PayPal, Venmo, or free gift cards when you reach $20. Read our Ibotta review for more information.
  • Fetch Rewards. If you like Ibotta, Fetch Rewards is another must-download app. With Fetch Rewards, you earn points for buying products from dozens of popular brands. An advantage of Fetch Rewards is that you can redeem many free gift cards once you reach $3, which is possible in a single shopping trip. Read our Fetch Rewards review for more information.
  • Checkout 51. Checkout 51 is similar to Ibotta. Download Checkout 51, select offers to shop for, and upload your receipt to earn rewards. Checkout 51 works at stores like Aldi, Albertsons, Costco, Kroger, Meijer, and Walmart. You get a check when you earn $20 in cash back. Read our Checkout 51 review for more information.

There’s still nothing wrong with using paper coupons or mobile coupon apps if that’s all you have time for. But to save even more, it’s worth trying cash-back rewards apps alongside your couponing efforts.

3. Do Sign Up for Store Savings Cards

Sign up for rewards cards at the stores where you shop. Store rewards cards typically provide shoppers with additional savings in the form of reward points or discounts. Plus, some loyalty programs also send additional coupons in the mail.

Reward cards also help you earn more with Ibotta since you can connect cards from retailers like Meijer, Kroger, and Wegmans to your account. Once you connect a card, Ibotta automatically detects whether your purchase qualifies for cash back and pays you.

4. Do Stay Organized to Maximize Savings

Organize coupons to keep them easily accessible when you shop. The last thing you want is to miss a coupon when checking out or — even worse— forget your coupons at home.

Your organizational system doesn’t have to be complex or expensive. For casual couponers, a coupon wallet on Amazon costs around $10 and comes with dividers to group coupons into different sections, like meat or produce.

If you prefer managing everything from your smartphone, you can also use the free SnipSnap app to transform paper coupons into digital ones. Once you snap a picture of a paper coupon, Snip Snap uploads it to its database so you can use it while on the go. The app also tracks expiration dates and sends reminders about expiring coupons.

5. Do Know Your Store’s Coupon Policy

Does your grocer double coupons, price-match, accept competitor coupons, or give rain checks if sale goods are out of stock? If you don’t know, research coupon policies online. Grocery stores and general retailers like Walmart and Target outline coupon rules on their websites. To find a policy, use a browser to search for the name of your store of choice plus “coupon policy” (for example, “Kroger coupon policy”) or look for a frequently asked questions section on the website. These policies help you save even more money, and they aren’t always prominently advertised. Things to stay informed about include:

  • Price Matching. Stores don’t like losing a potential sale because a competitor has a slightly lower price tag, so many are willing to price match. Price matching is when a store adjusts its price to match a sale at another local store.
  • Competitor Coupons. Your store may accept competitors’ coupons, but you should clarify who their competitors are. For example, Publix accepts coupons for competitors’ private-label products, whereas Meijer doesn’t take competitor coupons at all. But some stores are more specific than Publix. Lowes Foods accepts competitor coupons only from select competitors, like Aldi, Food Lion, Target, and Walmart.
  • Rain Checks. When you want to buy an out-of-stock product, some stores issue rain checks, which guarantee the current price when it’s back in stock. But many stores have specific rules for rain checks. For example, Publix only issues one rain check per household per day (in addition to other, sometimes product-specific restrictions).

6. Do Know Local Stores’ Best Deals & Sale Patterns

You can get the most out of any coupon when you shop at the stores with the best deals for that product type, such as canned goods or toiletries.

That requires paying attention as you shop around. Over time, you learn each local store’s pricing quirks and sale patterns. For example, perhaps your local Walmart’s bakery section regularly puts bread and bagels on sale during certain days of the week. Or maybe your town’s Kroger has better prices and more frequent discounts on frozen meals than your local Publix.

As you learn this type of information, you can be more selective about where you shop for individual products. You don’t have to waste time and gas shopping at multiple stores for a single grocery trip, but for specific products, it can make sense to coupon at stores that are more likely to have deals or just better prices on that product category.

7. Do Start Slowly

When you first start couponing, it feels intimidating if you’re redeeming dozens of coupons and have a lot of numbers to crunch.

For your first few shopping trips, focus on the highest-value coupons, the ones you know are worth using. That might look like bringing three 50%-off coupons or your highest-dollar-value-off coupons.

You can even try using coupons on sale products, but don’t get too creative until you’re comfortable calculating whether things are good deals and handing over coupons at the register.

8. Do Try Stacking Coupons

Combining a coupon with a store sale is a simple way to stack savings. But you don’t have to limit yourself to just stacking coupons with sale prices. Stores like Dollar General, Meijer, and Target let you stack a manufacturer’s coupon and store coupons to save even more.

For example, if Target has Planters peanuts on sale for $2, you can use a $1 Target coupon for Planters products and a $1 Planters manufacturer’s coupon to score a free can of peanuts. You can find store coupons online or in your favorite store’s weekly flyers.

If you can’t get something for free, try stacking coupons with store sales and apps like Ibotta to maximize savings.

For example, there’s a 50%-off clearance sale on a $3.99 Red Baron pepperoni pizza, bringing the price down to $2. If you have a $1 manufacturer coupon, the price is just $1. But since Ibotta has a $0.75 rebate on Red Baron pepperoni pizza, you just scored an entire pizza for only $0.25.

To top it all off, shop with a cash-back credit card to earn even more. The goal of couponing is to find deals whenever possible and get creative to stretch the value of every dollar you spend.

9. Do Use the Overage

When your coupons exceed the sale price of a product, it produces an overage. While that doesn’t invalidate the coupons, most often, that means you get the product for $0.

However, certain retailers apply overages toward other products in your shopping cart. For example, say you get an overage of $0.50 on a box of Betty Crocker chocolate cake mix by using a manufacturer coupon and sale price. Overage-allowing retailers apply the $0.50 overage to another product in your cart.

Walmart and Kroger are two major retailers that apply overages to your cart. And Walmart is one of the few retailers that pays cash back for overages (except on purchases made using government benefits, so save coupons for purchases you make when you’re not using your SNAP and WIC benefits). Kroger issues overages on a merchandise return card (essentially, a Kroger gift card). If you’re in doubt, look up your store’s coupon policy online to learn about overage rules.

10. Do Present Coupons in the Right Order

You can maximize your savings by handing the cashier your coupons in a specific order. For example, if you have a store coupon for $5 off a $20 purchase, use that coupon first. Otherwise, your other coupons might negate the $5 coupon by discounting the total amount of the sale to less than $20.

Some stores automatically apply your coupons correctly, so the order doesn’t always matter. But to be safe, give the cashier the price-minimum coupon before you use any other coupons.

11. Do Get in & Get Out

Know what you plan to buy before you go to the store, and stick to your shopping list.

If you stay in the store too long, you become susceptible to their marketing ploys, and you may end up spending more money. Get in, get the deals, and then get out.

If you shop during less busy grocery shopping hours, like during the week or at night, your trips will also be faster than battling weekend shopping crowds.

12. Do Stock Up

If you spot an incredible couponing opportunity on nonperishable goods or products you use frequently, it’s generally a smart move to stock up. It ensures you benefit from the deal as much as possible and lets you use more coupons before they expire. It’s an excellent way to set up long-term emergency food and supply storage.

Stacking coupons and store sales lets you score the lowest price possible when stocking up. For example, if Green Giant canned corn is on sale for $0.99 per can and you have several BOGO coupons or manufacturer coupons for $0.50 off per can, you can stock up on as many cans as possible to build your food storage for less than half the regular price.

Some stores limit the number of sale products you can purchase at once. If a store puts a limit on something and you need more of it, visit other store locations to create your stockpile.

Stocking up also lets you be pickier about when you use coupons. For example, if you run out of toilet paper, shop your emergency pantry first. You can replace your emergency supplies when you’re able to stack a sale and a coupon rather than buying full-price TP without a coupon.

That’s especially important for edible pantry goods. Canned and dried foods last a long time, but even they eventually go bad. This method ensures your emergency supplies are always safe to eat. If you have to throw them away, you won’t save any money (and may be in trouble if you need them during a bona fide emergency).

But before you come home with 30 cans of creamed corn, make sure you have a place to store it. You can convert a small area of your home, like a guest room closet or second bathroom linen closet, into your emergency pantry.

13. Do Donate the Excess

When couponing, you sometimes encounter scenarios where you can get so much of a free or cheap product that you can’t even use it all before it expires. It’s still a better deal than purchasing without a coupon, but the thought of letting all that product go bad doesn’t sit well with most people.

Instead of turning down an incredible deal, look into ways to donate excess couponing successes to people in need. Charities like homeless shelters, food banks, and women’s shelters make excellent candidates for donations. You can also reach out to local churches and community outreach programs to see if they need certain supplies.

You may even be able to take a charitable contribution tax deduction.


Couponing Don’ts

If you ever watched shows like TLC’s “Extreme Couponing,” successful couponing looks like hours of dumpster diving for coupon flyers, endless clipping, and (in some cases) being way too frugal.

But couponing doesn’t have to become your full-time job. You don’t need to make things overly complex either. As long as you follow couponing best practices and avoid some common couponing mistakes, your savings can benefit without transforming your living room into a coupon-clipping factory.

1. Don’t Shop Without a Meal Plan

Shopping with a meal plan is an often overlooked couponing tip, but it’s crucial to saving money. If you don’t have a plan to use the products you’re buying each week, you’re more likely to waste food.

Additionally, shopping without a menu makes you more likely to buy convenience food: frozen pizzas, hot dogs, and other fast meals. While these are delicious, they’re not conducive to eating healthy on a budget.

When building your shopping list, plan dishes that line up with products you have coupons for. For example, you find a $1-off coupon for two bags of Sargento cheese, a $0.25 coupon for Classico pasta sauce, and a coupon for $1 off two boxes of Mueller’s pasta. You can plan to make lasagna for dinner one night that week and macaroni and cheese as a side for another meal.

Or perhaps you find a coupon for an ingredient that’s central to many dishes, like chicken or ground beef, that also happens to be on sale. You can plan to make several recipes that use that ingredient, then stack the sale and coupon for even more savings.

If that sounds intimidating, affordable meal-planning services like $5 Meal Plan provide a month’s worth of dinner recipes and various breakfast and lunch ideas for only $5 per month.

2. Don’t Use a Coupon on a Full-Price Product

If you use a $1-off coupon on a full-price two-pack of SlimFast protein drinks for $5.68, you still pay $2.34 per beverage. But if you wait until SlimFast is on sale, you can save even more money. For example, if SlimFast goes on sale for 20% off, you can buy two drinks for $4.54, use your coupon, and pay $3.54, or $1.77 each, saving nearly 40% on your purchase.

That’s why operating with an emergency pantry is such a good idea. If you need to restock on an ingredient or product that day, you have to use coupons even if you miss a sale (or worse, pay full price without a coupon). But if you can afford to wait, you can save money in the long run by shopping during sale periods and with coupons more often.

3. Don’t Buy Something Just Because It’s on Sale

Don’t let sale prices trick you into buying something you don’t typically use just because it looks like a deal. If you use coupons without thinking, you inevitably buy things that are a waste of money or products that expire before you have a chance to use them.

Jumping on every great deal out there significantly lightens your wallet and defeats the whole purpose of couponing. That said, if you find a fantastic deal on something you can donate, there’s nothing wrong with couponing for charity.

4. Don’t Be Brand-Loyal

Prego or Ragu spaghetti sauce? Skippy peanut butter or Jif? Which brand should you buy? The answer: whichever one you can get the cheapest using your coupons.

Many people start couponing because of a major life event, like job loss, pregnancy, or too much debt. Those aren’t the times to be brand-loyal. You need to save money, and you can’t do that if you pass on deals because you prefer specific brands.

And sometimes, the cheapest bet is to go with the store brand, even if it means passing up on a coupon or sale for another brand.

For example, at Walmart, the Great Value line is extensive, covering a range of affordable grocery products and everyday essentials. If your coupons can’t beat Great Value, it’s probably best to save them for another time.

Plus, many retailers give coupons for their own brands through register coupons and coupon mailers, so you can still find ways to save on already affordable store brands.

5. Don’t Use Every Coupon

Some coupons don’t represent real savings. For example, a coupon for $0.50 off two boxes of brand-name cereal doesn’t result in much savings. That’s only $0.25 off each box. Even during a good sale, the coupon may not take the total price down to a better deal than the store brand. Wait for a better coupon and another sale.

Sometimes, you also have good coupons nearing their expiration dates but no sales on the goods you need. Let them expire. You don’t have to use the coupons, especially if you have to buy a brand name at full price to do so.

Couponing is about saving money, not getting good deals on brand-name products.

If you really need something, buy one or two of them now and wait for a sale to buy in bulk.

6. Don’t Waste Time

It’s easy to fall into the couponing trap of spending so much time searching for deals and preparing to shop that you’re turning couponing into a part-time job (there are better side gigs to make extra money).

Start by asking yourself how much time you want to dedicate to couponing. The answer could be 15 minutes on Sunday to look through coupon apps or a couple of hours every week to do more thorough research.

With a time commitment in mind, you should also work efficiently. Some tips to save time when couponing include:

  • Only clipping paper coupons you know you’re going to use
  • Turning clipping into a family activity (don’t forget safety scissors for the younger ones)
  • Linking store loyalty cards with apps like Ibotta to avoid preselecting rebates before shopping

You can also order groceries online and use coupons to save both time and money. Online grocery shopping gives you plenty of time to scout deals and coupons and do the math without feeling pressured. It also saves you from clever marketing tactics that induce impulse buys. They try to do the same things online, but you have more time to talk yourself out of it. And you can typically use the same or similar coupons online you do in stores.

For example, at Kroger, you can load digital coupons onto your Kroger Plus card and have them automatically apply to your online grocery order. And if you pick up the order, you can also use paper coupons (Kroger only accepts their own digital coupons for delivery). Just make sure you hit any free pickup minimums to ensure you’re really saving.

As long as couponing is enjoyable and effective, you’re on the right track. Plus, as you gain experience, you’ll find certain coupon apps or websites work best for your shopping habits and become even more efficient at growing your coupon supply.

7. Don’t Print Coupons You Don’t Use

Online printable coupons from websites like Coupons.com can save money. But you still use computer paper and ink to print the coupons, which costs money and wastes paper.

Many people print every online coupon available and then throw most of them away. Print online coupons as you need them. Save any you’re interested in but don’t need as a PDF or browser bookmark.


Final Word

In many ways, learning to coupon is a series of stages. At first, you use a few tips that are convenient to save, like buying products you have coupons for. As you become more comfortable, you start to mix in tricks like coupon stacking and simply using more coupons per shopping trip. If you start loving the process, you eventually graduate to extreme couponing, where it’s possible to score entire grocery hauls for almost pennies on the dollar if you get it right.

Whatever stage you’re in, the goal of couponing is to save more of your money. How much time you spend on it is up to you.

Source: moneycrashers.com

The Average Cost of Home Insurance

We’ll get straight to the point: The cost of home insurance varies widely, but the average American homeowner pays $1,249 a year in premiums, according to the Insurance Information Institute’s 2018 figures, the most recent available.

(This is based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. It provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.)

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Home insurance premiums can vary widely in part because of:

  • Your location
  • Your history of claims
  • Your credit score
  • The age and condition of your home

However, there are ways that homeowners can save money on their insurance costs, which we’ll get into. We’ll also walk through which areas in the U.S. are the cheapest and most expensive, typical coverages and more.

[ Read: Home Insurance Quotes, Explained ]

How much does home insurance cost by state?

As you can see below, the average home insurance premium varies widely by state. As you might expect, weather events figure big in the average annual premium by state, although there are other factors, of course, such as your credit score and the age of the home. The figures in this table come from 2018 data provided by the Insurance Information Institute.

State Rank Average annual premium State Rank Average annual premium State Rank Average annual premium
Ala. 13 $1,409 Ky. 26 $1,152 N.D. 18 $1,293
Alaska 36 $984  La. 1 $1,987 Ohio 44 $874
Ariz. 46 $843 Maine 42 $905 Okla. 4 $1,944
Ark. 12 $1,419 Md. 32 $1,071 Ore. 51 $706
Calif. 31 $1,073 Mass. 10 $1,543 Pa. 40 $943
Colo. 7 $1,616 Mich. 38 $981 R.I. 5 $1,630
Conn. 11 $1,494 Minn. 14 $1,400 S.C. 19 $1,284
Del. 45 $873 Miss. 8 $1,578 S.D. 20 $1,280
D.C. 21 $1,264 Mo. 15 $1,383 Tenn. 23 $1,232
Fla. 2 $1,960 Mont. 22 $1,237 Texas 3 $1,955
Ga. 17 $1,313 Neb. 9 $1,569 Utah 50 $730
Hawaii 27 $1,140 Nev. 48 $776 Vt. 41 $935
Idaho 49 $772 N.H. 36 $984 Va. 34 $1,026
Ill. 28 $1,103 N.J. 24 $1,209 Wash. 43 $881
Ind. 33 $1,030 N.M. 30 $1,075 W.Va. 39 $970
Iowa 35 $987 N.Y. 16 $1,321 Wis. 47 $814
Kansas 6 $1,617 N.C. 28 $1,103 Wy. 25 $1,187

Based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. Provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.

Most expensive states in home insurance premiums

Below are the most expensive average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within the state, and of course, there are more factors in your premium than the location of your home.

  • Louisiana: $1,987
  • Florida: $1,960
  • Texas: $1,955
  • Oklahoma: $1,944
  • Rhode Island: $1,630

Cheapest states in home insurance premiums

Below are the cheapest average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within each state, and of course, there are more factors in your premium than the location of your home.

  • Wisconsin: $814
  • Nevada: $776
  • Idaho: $772
  • Utah: $730
  • Oregon: $706

What determines the cost of homeowners insurance?

The cost of an individual homeowners insurance policy is determined by a wide range of factors. Some of those factors are within your control, and some of them are not. 

For instance, home insurance can be more expensive in areas with a high risk of flooding or fires than in places where natural disasters are uncommon. Newer homes often cost less to insure than older dwellings — especially those in need of repairs. Insurance companies also look at your personal credit history before covering your home, so people with good credit histories could receive a lower premium than those with poor credit histories.

Every insurance company calculates rates differently. Some carriers place a higher value on credit score and claims history, while others look more closely at the condition and age of the home. Below is a more comprehensive list of the considerations that might determine your homeowners insurance premium.

[ Read: The Best Homeowners Insurance Companies ]

  • State, city and neighborhood: Some states are more prone to wildfires, earthquakes, and hurricanes than others.
  • Location of home: This information is pulled for crime and claim statistics in your home’s area.
  • Construction of the home: Is the home made out of wood, brick, or vinyl siding?
  • Heating system: Is the home heated with an HVAC or wood stove?
  • Security system: Homes with security systems might be less likely to be broken into.
  • Previous claims on the home: If the home has a history of water and electrical issues, then the homeowner may be more likely to file a future claim.
  • Homeowner’s previous claims: If the homeowner has a history with other insurance companies, he or she may be more likely file a claim again in the not-so-distant future.
  • Credit score: People with low credit scores may be more likely to file a claim.
  • Nearest fire station: The distance between your home and the nearest fire station can be a factor.
  • Marital status: Married couples are statistically less likely to file claims with insurance companies.
  • Replacement cost: The cost to replace an older home and bring it up to code can be more expensive than replacing a new home.
  • Pets: Certain animals might be considered a greater risk for liability claims.
  • Outside structures: Things like pools, sheds or greenhouses can also affect your policy rate.

Aside from these factors, the cost of an individual policy can also be determined by which features you chose to include in your coverage. A few of the options that can affect the cost are:

  • Deductible amount
  • Extra coverage add-ons
  • Bundled insurance policies
  • Discounts

[ More: Complete Guide to Home Insurance ]

Types of coverage

There are many different types of homeowners insurance coverage. Some coverages, like dwelling and liability coverage, can come standard with most policies. But insurance companies also often sell add-on policies that offer protection in certain areas. Here are some of the most common home insurance coverages you might find:

  • Dwelling coverage is insurance that covers qualified damages to the home itself. If the siding of your home tore off in a major storm, dwelling insurance might cover the cost of repairs. Insurance companies might sell add-ons for roof damage, water back/sump pump overflow, flood insurance and earthquake insurance.
  • Personal property coverage pertains to the cost of replacing possessions in your home, such as furniture. If someone broke into your home and stole personal items, personal property coverage might reimburse you. If you need to protect valuables, your agent might recommend you purchase a scheduled personal property endorsement for higher coverage limits.
  • Personal liability coverage protects against lawsuits for property damage or injury. If a delivery driver slipped and fell on your icy driveway, liability coverage might pay for their medical expenses and court costs if they sued you. Some insurance companies offer add-on policies that extend your liability coverage limits.
  • Loss of use coverage might cover additional living expenses you have after your home has been damaged. This might include hotel stays, groceries and gas while your home is being repaired. If your house is under construction after a covered claim, loss of use coverage might pay for your temporary hotel and food expenses up to your policy’s limit.

Generally speaking, your agent may recommend that your home insurance coverages be based on your lifestyle, where you live and the value of your assets.

Keep in mind that your agent may recommend you add coverage as time goes on. If you adopt a puppy six months after you purchase your home insurance policy, your agent may recommend you add pet coverage when the time comes. Or, if you take on a remote job, you can contact your insurance company and see if you should add home business coverage for a small fee.

Every home insurance coverage has a policy limit. A policy limit is the highest amount of money your insurance company will give you after a covered loss. For example, if your dwelling coverage limit is $400,000, that may limit how much is paid out if your home is damaged or destroyed by a covered peril to no more than $400,000, although factors like your deductible may come into play.

When you purchase a home insurance policy, you may be able to set your own policy limits. As a rule of thumb, you may be recommended to have enough dwelling coverage to rebuild your home in its current state, enough personal property coverage to cover the full value of your personal items and enough liability coverage to protect your personal assets.  

[ Read: What is Dwelling Insurance? ]

Reimbursement coverage types

There are three different coverage options commonly provided by home insurance companies. Each option affects your premium differently.

  • Actual cash value (ACV) is based on the current market value, or how much your home and personal property is worth, with depreciation factored in. Most home insurance policies offer ACV reimbursement by default. It can be the lowest option.  
  • Replacement cost value (RCV) works in the same way as ACV, but without depreciation factored in. That means you might get a higher payout after a covered claim. RCV home insurance policies can be more expensive than ACV policies, and you may need to purchase an endorsement to get it. Your agent may recommend this if you own valuables or have an expensive home.
  • Guaranteed replacement cost (GRC) is also referred to as extended replacement cost (ERC), and this option can cover the complete cost of rebuilding the home, even if that cost exceeds the policy limit. GRC can be the most expensive replacement cost type, and not all insurance companies offer it. Your agent may recommend this if you live in areas with extreme weather, wildfires, earthquakes or any place where home destruction is more likely. 

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Discounts and ways to save on home insurance

Homeowners insurance can be costly, so before selecting a plan, shop around to find the best deal based on your needs. It can be helpful to consult an insurance agent, read consumer reviews and check online insurance quotes to find companies with the lowest rates. Here are some other ways to save money on home insurance:

  1. Ask about available discounts: Some companies offer discounted policy rates if your home is in a gated community, if you bundle with your car insurance or if you’re part of a homeowner’s association.
  2. Bundle your insurance policies: Oftentimes, companies that sell home, auto and life coverage may deduct up to 15% off your premium if you buy two or more policies from them.
  3. Make your home safer: Some providers may offer a discount if you install fixtures that make your home safer, such as smoke alarms or a security system, that reduce the likelihood that damage or theft will occur in the first place.

How do past claims impact home insurance cost?

It depends on the nature of the claim. Just how much a claim raises your premium varies in part on the provider and the nature of the claim.

There are also further complications when you make the same type of claim twice. Not only can this increase what you pay each month, but, depending on you and your home’s history, it’s possible the provider may even decide to drop you.

Though your premium may increase if you are found at fault, it’s also possible for your monthly bill to increase even if you’re not found to be liable. Your home may be considered riskier to insure than other homes.

Home insurance cost FAQs

No, states do not require homeowners to get insurance when they purchase a home. However, if you choose to get a mortgage loan, most lenders will require you to have some insurance.

To determine how much coverage you should purchase, talk to your agent about your home inventory, your overall worth, and of course, comfort level. Also discuss factoring in the location of your home, and evaluate risks based on weather, fires and other events that could potentially damage or destroy your home.

There are a few ways to potentially get home insurance discounts. Discount options include things like:

  • Bundling your home insurance policy with another policy (such as auto).
  • Going claims free for extended periods of time.
  • Making certain home improvements.
  • Living in a gated community.
  • Installing a security system.

In 2018, 34.4% of home insurance losses were wind and hail related, 32.7% were fire or lightning related and 23.8% were water damage or freezing claims. Only 1% of claims were related to theft, and less than 2% of losses were liability claims. These figures are according to the Insurance Information Institute.

In Florida the most common claims may be related to hurricanes, wind damage, water damage and flooding. In California, earthquake, flood and wildfire claims may be more common. When you purchase insurance, talk to an agent about the specific risks in your area and ask about separate insurance policies you might need, like flood or earthquake coverage.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

15 types of credit cards

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Whether you’re a seasoned cardholder or a first-timer, you may be surprised at how many types of credit cards are available. Depending on your credit score and the length of your credit history, you may not be able to qualify for the ones with the most favorable terms and lowest interest rates. But chances are, there’s a card that fits your needs and—if used responsibly—may help you build credit.

Broadly speaking, there are four different types of credit card categories:

  1. Cards That Help Build Credit
  2. Cards That Can Save You Money
  3. Cards That Offer Cash Back and Rewards
  4. Cards for People With Bad Credit

Here, we’ll break down each category, discuss the specific card types and explain each one’s unique benefits so that you can make the most of your card.

Cards That Help Build Credit

If you’re new to the world of credit, you may be wondering how to build credit quickly, without going into debt. If you’re in college, you may have the added load of student debt. When you’re just starting out, it’s important to find a card that’s right for you and manage it carefully to start your credit health out on the right foot. You may even be able to earn some rewards along the way.

Cardholders ages 18 – 22 have an average credit score of 672.

1. Student Credit Cards

Student credit cards operate exactly the same way that standard credit cards do. The main difference is that their total credit limits tend to be lower. Additionally, since they are marketed toward students who likely don’t have much of a credit history, the requirements for approval are typically more lenient. 

Benefit: Some student cards offer incentives for good grades, like a small cash reward for each school year that you earn a GPA of 3.0 or higher.

Example: Discover it® Student Cash Back

2. Starter Credit Cards

Starter credit cards are designed for those with little to no credit history. Consider getting one if you’ve never had a line of credit, or if you have one that hasn’t been open very long. These cards typically don’t offer great rewards programs or cash-back incentives, and they come with high interest rates. However, if you can find one with no annual fee, it can be a great option to begin building credit.

Benefit: Establish your credit and build a solid payment history with this type of credit card, which is generally easy to qualify for.

Example: Capital One Platinum® Credit Card

3. Joint Credit Cards

Unlike authorized user credit cards, joint credit cards require both parties to apply together. Both parties are equally responsible for paying the balance. Therefore, late or missed payments may ding both credit scores—while consistent, on-time payments will benefit both scores. 

Benefit: If a person doesn’t have a high enough credit score to qualify for a good credit card, they may consider applying with their partner for a joint credit card with more favorable terms.

Example: Bank of America® Cash Rewards Credit Card

Cards That Can Save You Money

Sometimes applying for a credit card is a strategic move. Maybe you want to transfer your balance to a card with a lower interest rate, avoid paying interest for an introductory period or customize features for your business. These cards can help you save money—your way.

Approximately 74% of credit cards have no annual fee.

4. Zero Percent Purchase APR Credit Cards

Sometimes cards will offer temporarily lower APRs for an introductory period. Cards that boast zero percent APR don’t require you to pay interest on new purchases for a set amount of time, usually about 12 months. 

Benefit: Save money on interest by borrowing money essentially for free. Just make sure to pay off your balance by the time your introductory period is over to avoid interest charges.

Example: U.S. Bank Visa® Platinum Card

5. No Annual Fee Credit Cards

Many credit cards charge annual fees for the convenience of having the card and for the benefits and rewards they offer. Depending on how elite the card is, these fees can be up to $450 or more. However, almost three-fourths of cards offer no annual fee—and many of these still come with decent cash back programs. Scan your credit card offer or the terms and conditions to make sure your card has no annual fee. 

Benefit: Save an average of $58 each year by avoiding unnecessary annual credit card fees.

Example: Citi® Double Cash Card

6. Balance Transfer Credit Cards

Similar to zero percent purchase APR credit cards, balance transfer cards offer temporarily low introductory rates—but specifically for balance transfers. This is a great option for those who want to save money on a high-interest credit card. Rather than closing the unfavorable card—which may lower your credit score—a balance transfer may be a better option.

Benefit: Avoid paying hefty amounts of interest by transferring your balance to a card with a much lower introductory rate. 

Example: Wells Fargo Platinum Card

7. Business Credit Cards

If you’re a business owner, you may want to apply for a credit card specifically for business use. This will help you separate personal and business expenses, and the rewards may help your business save money. You’ll then begin to build business credit. To apply you’ll need decent credit and either a federal tax ID or employer identification number (EIN).

Benefit: Enjoy business-specific perks like higher credit limits, expense management reports and the ability to add more cards for employees. 

Example: Costco Anywhere Visa® Business Card by Citi

Cards That Offer Cash Back and Rewards

In order to get the most out of their spending, most cardholders gravitate toward credit options that offer cash back and rewards. 

Cardholders carry an average of 4.1 cards, 2.4 of which are rewards-based.

8. Cash Back Credit Cards

Cash back credit cards allow you to earn a certain percent—typically ranging from one to five—of the money back every time you make a purchase with the card. Some issuers will pay this amount annually, while others pay monthly.

Benefit: Find a card that allows you to customize where you get your cash back. For example, certain cards allow you to earn five percent cash back in a store category of your choice.

Example: Chase Freedom Unlimited®

9. Retail Credit Cards

Retail or store credit cards are offered by specific businesses and can only be used to make purchases with that store. While these cards aren’t ideal for everyday purchasing needs, they’re a great way to earn generous rewards with stores that you frequently shop at. There are over 300 store credit cards available, from Walmart and Target to Lowe’s and JCPenney. 

Benefit: Store cards typically don’t charge annual fees, don’t require excellent credit and offer substantial first-purchase discounts as well as long-term cash back rewards.

Example: Amazon Prime Store Card

10. Hotel Credit Cards

Hotel credit cards are affiliated with a specific hotel chain and offer rewards on a “points” basis. Typically, they’ll offer some points for purchases made at unrelated businesses such as grocery stores, gas stations and restaurants. But the main attraction is the bonus points earned on eligible purchases made directly with the hotel. 

Benefit: Earn generous sign-up bonuses, rewards when you spend money on hotel bookings and yearly free nights. 

Example: Hilton Honors American Express Surpass® Card

11. Airline Credit Cards

Certain credit cards offer rewards on purchases made with a specific airline, while others allow you to earn rewards with any airline or travel-related expense. These rewards rack up in the form of “miles.” For example, many cards offer two miles for every one dollar spent on flights. 

Benefit: For frequent travelers, airline credit cards are a great way to score free and discounted flights.

Example: Delta SkyMiles® Gold American Express Card

12. Gas Rewards Credit Cards

Not to be confused with gas station credit cards—which operate like retail cards—a gas station rewards card offers cash back when you pay at the pump. It can be used anywhere, but you’ll enjoy bonus rewards at gas stations.

Benefit: Earn up to three to five percent cash back on gas purchases, often with no annual fee and a zero percent introductory APR. 

Example: PenFed Platinum Rewards Visa Signature® Card

13. Charge Cards

Charge cards operate in exactly the same manner as regular credit cards, except for one major caveat: you must completely pay off the total balance each month. Failure to do so results in late fees and penalties and will cause a drop in your credit score. On the flip side, they typically come with sizable initial bonuses and rewards.

Benefit: Enjoy higher credit limits and generous point systems—oftentimes offering up to five points per one dollar spent.

Example: ThePlatinum Card® from American Express

Cards for People With Bad Credit

If you’re struggling to get approved for credit cards, loans or other lines of credit because of bad credit, don’t be discouraged. There are credit cards with terms designed specifically for those with poor credit. 

Approximately 12% of Americans have a FICO score below 550.

14. Secured Credit Cards

Most credit cards are unsecured. This means that you are not required to put up a security deposit. Secured cards, on the other hand, require an up-front payment to act as collateral in the event that you can’t pay your balance. Credit card issuers see borrowers with bad credit scores as riskier, so this deposit helps mitigate some of that risk. 

Benefit: Secured cards give borrowers with poor credit access to credit when they otherwise wouldn’t be able to qualify for a card.

Example: Capital One® Secured Mastercard®

15. Prepaid Cards

Prepaid cards aren’t technically credit cards, because they don’t involve borrowing money. Instead, a cardholder loads a set amount of money onto the card, and purchases are subtracted from the card’s balance, similar to a gift card. The spending limit then renews if and when the card is reloaded. 

Benefit: Prepaid cards help you stay within a budget and avoid getting into credit card debt.

Example: American Express Serve® FREE Reloads

What Type of Credit Card Is Best?

Ultimately, the decision for which card to get is up to your personal preferences and financial goals. However, there are a few good rules of thumb when looking for the best credit cards. Remember to read the terms and conditions carefully before signing up. Generally, cards with any of the following perks may be worth pursuing:

  • Zero percent introductory APR
  • Low APR after the introductory period
  • Sign-up bonus
  • Solid rewards or cash-back program
  • No annual fee

All of the different types of credit cards may seem daunting at first, but once you understand the unique benefits of each one, you’ll be able to find a card that fits your needs. Remember that—regardless of credit card type—good credit management is the key to keeping your credit healthy. After years of on-time payments, low credit utilization, a good mix of credit and few hard inquiries, you’ll be well on your way to your best score yet.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Dear Penny: Am I Wrong to Make My Unemployed Niece Pay Rent?

Dear Penny,

Recently, we had to move our mom to a nursing home. Prior to the move, my niece had moved in with her. My mom has dementia and is not likely to return to living at home. 

The niece was living rent-free when Mom was here. She is still staying here and still not paying. She is unemployed but has been getting unemployment. She has been there since last September. Mom went to the nursing home in February.

My brother is the durable power of attorney and in charge of expenses. We are hoping to hang onto the house. There are some savings to pay for the nursing home for a few years. When the savings are gone, we will have no choice but to sell the house.

My niece was paying a roommate a substantial sum before she moved in with Mom. She has had many months to save, and her expenses are low since she pays no rent or utilities. My brother turned off the cable, but the internet is still on. Plus there are expenses for gas, oil, electric, property taxes and maintenance. I live out of state but come back for extended visits and work remotely while I am there. I plan to send a check for the internet, electric etc. to my brother. I usually stay for three weeks or so.

Someone needs to tell the niece she needs to start paying for some of the expenses. I don’t quite know how to bring it up to her. When I mentioned it to my sister (the niece’s mother’s twin), she seemed indignant that we would expect money from an unemployed person. 

I guess I need to figure out how to bring it up to her. Before Mom went to the nursing home, there was a big argument because after Mom said she could move in, Mom then decided she didn’t want her here. After Mom was moved to the nursing home, it was my idea for the niece to be able to stay. So, I feel like I should be the one to tell her the free ride is over.

-L.

Dear L.,

When you offered to let your niece stay in your mom’s home, you didn’t absolve her of rent for life. The conversation you’re about to have shouldn’t come as a shock. Note that I say “shouldn’t” rather than “won’t” here. I suspect shock is exactly the reaction you’ll get.

Think about it from your niece’s perspective. After eight months of living rent-free, why should she have different expectations for months nine or 10?

I do think that since this arrangement was your idea, you should be part of this conversation. But as durable power of attorney, your brother is the one making the decisions. So I think the two of you should talk to your niece together.

What’s good is that you seem to be feeling moderate frustration, rather than full-blown rage at this point. Don’t let things reach a boiling point with your niece. This conversation needs to happen soon.

First, talk with your brother on what a good outcome looks like. Do you want your niece out altogether? Are you OK with her staying if she pays for upkeep and utilities, even if she wouldn’t pay rent? Or are you hoping she’ll stay and eventually pay rent at fair market value?

I’m guessing the ideal scenario is somewhere between the second and third options. It’s reasonable to expect her to pay something for rent but probably not what you’d charge a stranger, especially since you stay at the home on occasion. You and your brother should agree on a dollar amount that she’ll be responsible for and any other duties you need her to take on.

Regardless of your ideal outcome, give her a heads-up that this discussion is coming. Schedule a time to talk about how to handle expenses moving forward so that she doesn’t feel blindsided.

Try not to lecture her about all the money she should have been saving since September. I get your frustrations. But really, it’s irrelevant at this point.

Keep the conversation forward looking. Show your niece what it’s costing to maintain the home and ask her what she can afford to contribute. She’s getting unemployment, so she should be able to kick in something, even after groceries and other expenses. You can offer to help her make a budget or revamp her resume. But ultimately, you need to set a very clear expectation for what you need from her going forward.

What I’m hoping is that a little pressure will give your niece some much-needed motivation and that more extreme measures, like eviction, won’t be necessary. Sometimes a looming deadline forces us to act.

This will be a tough conversation. You had good intentions, but now you have to be the bad guy. Please don’t kid yourself by thinking this situation will change on its own.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

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Source: thepennyhoarder.com

15 types of credit cards – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Whether you’re a seasoned cardholder or a first-timer, you may be surprised at how many types of credit cards are available. Depending on your credit score and the length of your credit history, you may not be able to qualify for the ones with the most favorable terms and lowest interest rates. But chances are, there’s a card that fits your needs and—if used responsibly—may help you build credit.

Broadly speaking, there are four different types of credit card categories:

  1. Cards That Help Build Credit
  2. Cards That Can Save You Money
  3. Cards That Offer Cash Back and Rewards
  4. Cards for People With Bad Credit

Here, we’ll break down each category, discuss the specific card types and explain each one’s unique benefits so that you can make the most of your card.

Cards That Help Build Credit

If you’re new to the world of credit, you may be wondering how to build credit quickly, without going into debt. If you’re in college, you may have the added load of student debt. When you’re just starting out, it’s important to find a card that’s right for you and manage it carefully to start your credit health out on the right foot. You may even be able to earn some rewards along the way.

Cardholders ages 18 – 22 have an average credit score of 672.

1. Student Credit Cards

Student credit cards operate exactly the same way that standard credit cards do. The main difference is that their total credit limits tend to be lower. Additionally, since they are marketed toward students who likely don’t have much of a credit history, the requirements for approval are typically more lenient. 

Benefit: Some student cards offer incentives for good grades, like a small cash reward for each school year that you earn a GPA of 3.0 or higher.

Example: Discover it® Student Cash Back

2. Starter Credit Cards

Starter credit cards are designed for those with little to no credit history. Consider getting one if you’ve never had a line of credit, or if you have one that hasn’t been open very long. These cards typically don’t offer great rewards programs or cash-back incentives, and they come with high interest rates. However, if you can find one with no annual fee, it can be a great option to begin building credit.

Benefit: Establish your credit and build a solid payment history with this type of credit card, which is generally easy to qualify for.

Example: Capital One Platinum® Credit Card

3. Joint Credit Cards

Unlike authorized user credit cards, joint credit cards require both parties to apply together. Both parties are equally responsible for paying the balance. Therefore, late or missed payments may ding both credit scores—while consistent, on-time payments will benefit both scores. 

Benefit: If a person doesn’t have a high enough credit score to qualify for a good credit card, they may consider applying with their partner for a joint credit card with more favorable terms.

Example: Bank of America® Cash Rewards Credit Card

Cards That Can Save You Money

Sometimes applying for a credit card is a strategic move. Maybe you want to transfer your balance to a card with a lower interest rate, avoid paying interest for an introductory period or customize features for your business. These cards can help you save money—your way.

Approximately 74% of credit cards have no annual fee.

4. Zero Percent Purchase APR Credit Cards

Sometimes cards will offer temporarily lower APRs for an introductory period. Cards that boast zero percent APR don’t require you to pay interest on new purchases for a set amount of time, usually about 12 months. 

Benefit: Save money on interest by borrowing money essentially for free. Just make sure to pay off your balance by the time your introductory period is over to avoid interest charges.

Example: U.S. Bank Visa® Platinum Card

5. No Annual Fee Credit Cards

Many credit cards charge annual fees for the convenience of having the card and for the benefits and rewards they offer. Depending on how elite the card is, these fees can be up to $450 or more. However, almost three-fourths of cards offer no annual fee—and many of these still come with decent cash back programs. Scan your credit card offer or the terms and conditions to make sure your card has no annual fee. 

Benefit: Save an average of $58 each year by avoiding unnecessary annual credit card fees.

Example: Citi® Double Cash Card

6. Balance Transfer Credit Cards

Similar to zero percent purchase APR credit cards, balance transfer cards offer temporarily low introductory rates—but specifically for balance transfers. This is a great option for those who want to save money on a high-interest credit card. Rather than closing the unfavorable card—which may lower your credit score—a balance transfer may be a better option.

Benefit: Avoid paying hefty amounts of interest by transferring your balance to a card with a much lower introductory rate. 

Example: Wells Fargo Platinum Card

7. Business Credit Cards

If you’re a business owner, you may want to apply for a credit card specifically for business use. This will help you separate personal and business expenses, and the rewards may help your business save money. You’ll then begin to build business credit. To apply you’ll need decent credit and either a federal tax ID or employer identification number (EIN).

Benefit: Enjoy business-specific perks like higher credit limits, expense management reports and the ability to add more cards for employees. 

Example: Costco Anywhere Visa® Business Card by Citi

Cards That Offer Cash Back and Rewards

In order to get the most out of their spending, most cardholders gravitate toward credit options that offer cash back and rewards. 

Cardholders carry an average of 4.1 cards, 2.4 of which are rewards-based.

8. Cash Back Credit Cards

Cash back credit cards allow you to earn a certain percent—typically ranging from one to five—of the money back every time you make a purchase with the card. Some issuers will pay this amount annually, while others pay monthly.

Benefit: Find a card that allows you to customize where you get your cash back. For example, certain cards allow you to earn five percent cash back in a store category of your choice.

Example: Chase Freedom Unlimited®

9. Retail Credit Cards

Retail or store credit cards are offered by specific businesses and can only be used to make purchases with that store. While these cards aren’t ideal for everyday purchasing needs, they’re a great way to earn generous rewards with stores that you frequently shop at. There are over 300 store credit cards available, from Walmart and Target to Lowe’s and JCPenney. 

Benefit: Store cards typically don’t charge annual fees, don’t require excellent credit and offer substantial first-purchase discounts as well as long-term cash back rewards.

Example: Amazon Prime Store Card

10. Hotel Credit Cards

Hotel credit cards are affiliated with a specific hotel chain and offer rewards on a “points” basis. Typically, they’ll offer some points for purchases made at unrelated businesses such as grocery stores, gas stations and restaurants. But the main attraction is the bonus points earned on eligible purchases made directly with the hotel. 

Benefit: Earn generous sign-up bonuses, rewards when you spend money on hotel bookings and yearly free nights. 

Example: Hilton Honors American Express Surpass® Card

11. Airline Credit Cards

Certain credit cards offer rewards on purchases made with a specific airline, while others allow you to earn rewards with any airline or travel-related expense. These rewards rack up in the form of “miles.” For example, many cards offer two miles for every one dollar spent on flights. 

Benefit: For frequent travelers, airline credit cards are a great way to score free and discounted flights.

Example: Delta SkyMiles® Gold American Express Card

12. Gas Rewards Credit Cards

Not to be confused with gas station credit cards—which operate like retail cards—a gas station rewards card offers cash back when you pay at the pump. It can be used anywhere, but you’ll enjoy bonus rewards at gas stations.

Benefit: Earn up to three to five percent cash back on gas purchases, often with no annual fee and a zero percent introductory APR. 

Example: PenFed Platinum Rewards Visa Signature® Card

13. Charge Cards

Charge cards operate in exactly the same manner as regular credit cards, except for one major caveat: you must completely pay off the total balance each month. Failure to do so results in late fees and penalties and will cause a drop in your credit score. On the flip side, they typically come with sizable initial bonuses and rewards.

Benefit: Enjoy higher credit limits and generous point systems—oftentimes offering up to five points per one dollar spent.

Example: ThePlatinum Card® from American Express

Cards for People With Bad Credit

If you’re struggling to get approved for credit cards, loans or other lines of credit because of bad credit, don’t be discouraged. There are credit cards with terms designed specifically for those with poor credit. 

Approximately 12% of Americans have a FICO score below 550.

14. Secured Credit Cards

Most credit cards are unsecured. This means that you are not required to put up a security deposit. Secured cards, on the other hand, require an up-front payment to act as collateral in the event that you can’t pay your balance. Credit card issuers see borrowers with bad credit scores as riskier, so this deposit helps mitigate some of that risk. 

Benefit: Secured cards give borrowers with poor credit access to credit when they otherwise wouldn’t be able to qualify for a card.

Example: Capital One® Secured Mastercard®

15. Prepaid Cards

Prepaid cards aren’t technically credit cards, because they don’t involve borrowing money. Instead, a cardholder loads a set amount of money onto the card, and purchases are subtracted from the card’s balance, similar to a gift card. The spending limit then renews if and when the card is reloaded. 

Benefit: Prepaid cards help you stay within a budget and avoid getting into credit card debt.

Example: American Express Serve® FREE Reloads

What Type of Credit Card Is Best?

Ultimately, the decision for which card to get is up to your personal preferences and financial goals. However, there are a few good rules of thumb when looking for the best credit cards. Remember to read the terms and conditions carefully before signing up. Generally, cards with any of the following perks may be worth pursuing:

  • Zero percent introductory APR
  • Low APR after the introductory period
  • Sign-up bonus
  • Solid rewards or cash-back program
  • No annual fee

All of the different types of credit cards may seem daunting at first, but once you understand the unique benefits of each one, you’ll be able to find a card that fits your needs. Remember that—regardless of credit card type—good credit management is the key to keeping your credit healthy. After years of on-time payments, low credit utilization, a good mix of credit and few hard inquiries, you’ll be well on your way to your best score yet.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Barclays 70,000 Hawaiian Airlines Bonus – Annual Fee Not Waived First Year

The Offer

Direct link to offer

  • Receive 70,000 Hawaiian Airline miles after $2,000 in purchases within the first 90 days of account opening on the Barclaycard Hawaiian Airlines credit card

Card Benefits & Details

  • Annual fee of $99
  • Card earns at the following rate:
    • 3x miles on all Hawaiian Airlines purchase
    • 2x Hawaiiamiles on gas, dining and grocery store purchases
    • 1x miles on all other purchases
  • No foreign transaction fees
  • ShareMiles, ability to share miles with friends & family HawaiianAirlines.com
  • Discounted Award Travel
  • Get $100 companion discount off one coach companion ticket for roundtrip travel between Hawaii and North America on Hawaiian Airlines on each account anniversary upon payment of annual fee
  • Free first checked bag

Our Verdict

Previous deal was 60,000 miles but with the annual fee waived for the first year. 70,000 offer is better as long as you value points at 1¢ or more. Some redemption options:

  • You can get flights for 35,000 miles round trip with the card from mainland USA to Hawaii, but there isn’t a lot of space available.
  • Intra island flights are 7,500 miles one way
  • They also sell sunglasses (I forget the brand and amount, but seems to be a popular redemption)

Before applying read these things everybody should know about.

Hat tip to @uponarriving

Source: doctorofcredit.com

16 Hidden Freelancer Expenses & Costs That Contractors Have to Cover

Deciding to become a freelancer may seem as simple as choosing to make a go of it on your own and riding off into the freelance sunset. But there are a variety of factors you should consider before making it your full-time gig — not least of which are the expenses you have to cover out-of-pocket.

While employees don’t need to worry about calculating their taxes or budgeting for sick time, freelancers do. And they also have to cover office supplies, health care, and accounting fees as well as a variety of other business-related costs. All of these play into the hourly rate they charge their clients.

Before you make the decision to go from being an employee to a freelancer, here are some of the expenses and costs you should be aware of.

Freelancing Expenses Contractors Have to Cover

From basic office supplies to legal fees, freelancers have to cover a lot of different business expenses that employees don’t. Here are some of the most common costs to take note of before deciding whether the freelance life is for you.

1. Office Space

Many freelancers can work from home or even from a coffee shop, but those who don’t have room for a home office or who frequently need to meet with clients may need to rent out a commercial office space. The costs can vary greatly between cities and buildings, but some affordable options include:

  • Coworking spaces
  • Daily office rentals
  • Sharing a private office with another freelancer

The size, type, and location of the office space you choose will depend on your budget and needs. Unlike employees, you will be responsible for researching, negotiating, and paying for office space if you need it to provide your freelance work to clients and customers.

2. Office Supplies

Whether your office is in your home or in a commercial building, you’ll need to pay for supplies and furniture to fill it. Start with basics such as:

  • A comfortable office chair
  • A desk
  • Business cards
  • Pens, pencils, and notepads
  • A desk or floor lamp
  • A filing cabinet
  • Printer paper and ink

As you grow your business, you can upgrade items to better suit your needs and budget. For example, once you have a few contracts under your belt, you may consider purchasing a standing desk or an ergonomic chair.

3. Hardware and Electronics

One of the biggest costs freelancers have to cover is the hardware and electronics they need to do their jobs. Depending on the services you offer, you may need to purchase:

  • A desktop computer and monitor
  • A laptop
  • A tablet
  • A keyboard and mouse
  • Speakers
  • Headphones
  • A smartphone
  • A camera and microphone
  • A printer

Fortunately, many of these items last for at least a few years, so you won’t have to repurchase them on a regular basis. As an added bonus, they’re typically tax deductions, which means they can help to reduce the overall tax amount you have to pay the IRS.

4. Software, Licenses, and Subscriptions

Once you have hardware, you need to purchase any software required to provide your freelance services to clients and customers. For example, depending on what you do, you may need to purchases licenses or subscriptions for:

Keep in mind that most platforms offer discounted pricing to individuals, so do your research before committing to an annual subscription or license with a hefty price tag. Look for free alternatives to traditional platforms, like Word Online or Google Docs to cut costs while still benefiting from the tools you need to do your job.

5. Advertising

While employees don’t typically have to worry about paying for advertising costs, freelancers do. In order to get new clients and build up a full-time roster, freelancers have to spread the word about their services. You can do so by advertising your business through:

  • Social media ads on Facebook, Twitter, Instagram, or LinkedIn
  • Pay-per-click (PPC) ads on Google, Bing, or other search engines
  • Newspapers, magazines, and other print publications
  • Websites such as Craigslist
  • Professional associations

Before emptying your wallet for expensive ads and self-promotion, research the options available to you and select the method you think will get you the best return on your investment.

There are a number of free options you can choose from, such as joining a virtual or in-person networking group, posting in professional forums, or creating professional social media profiles and sharing information about your services and availability.

You can also post your services on freelancer websites such as Upwork, which typically allow freelancers to post their professional profiles at no cost.

6. Professional Website

Most freelancers need a professional website that prospective clients can visit to learn more about their skills, experience, and services. This could be a basic website similar to a digital portfolio, or it could include a number of additional features such as online booking and digital payments.

Whatever type of functionality you choose, your website will come with some standard costs, including:

  • Design
  • Development
  • Hosting
  • Domain name registration

Although you can reduce your expenses by choosing a free website building platform like WordPress or Wix, you’ll still have to pay for your domain and hosting at the very least. If you want to include a blog, you’ll also need to consider the costs associated with hiring a freelance writer or editor unless you plan to provide your own content.

7. Self-Employment Taxes

Because taxes don’t automatically come out of your freelance invoices, you are responsible for calculating and setting aside your self-employment taxes throughout the year, the current rate of which is 15.3%.

Thankfully, many of your expenses will count as write-offs, which you can include in your annual tax returns, reducing your total amount you owe. However, it’s still a good idea to calculate an approximate tax amount from each invoice and to keep the cash in a separate account, so you aren’t left owing an unexpected amount with no way to pay for it come tax time.

8. Health Benefits

From glasses and prescriptions to medical appointments and emergencies, freelancers are responsible for their own medical costs — either by securing their own health insurance or paying out of pocket.

Fortunately, you have options when it comes to self-employed health insurance that can save you money and stress. Be sure to do your research and choose an option that works for you both practically and financially to support personal and professional health.

9. Retirement Savings

As with taxes, freelancers don’t have the same retirement plans to contribute to as employees. Instead, freelancers must plan and save for retirement on their own. For example, you can choose to set up a solo 401(k) or an IRA, similar to how you would if you were working for a company.

Unfortunately, you won’t benefit from having an employer match your contributions, but you will be setting yourself up for future financial security while still owning your own business.

10. Professional Development

Seminars, conferences, courses, and certifications are all an important part of staying up-to-date in your profession. And they all cost money. Small-business owners like freelancers don’t have employers with perks like professional development budgets, so they have to cover these costs on their own.

But even though these endeavors come with upfront costs, they can end up providing you with a lot of long-term benefits. After all, the more you hone your skills, network with others, and expand the services you offer, the better chance your freelance business has to succeed.

While you may be more cost-conscious about how you approach professional development when you’re footing the bill, it should still be something you budget for and make a point of pursuing. Some professional development options are relatively low-cost or even free, but still offer new information that can help you to learn more about industry trends and best practices.

11. Vacation and Sick Time

One of the biggest hidden costs of freelancing is budgeting for time off. Many freelancers inadvertently overlook the fact that they have to set aside money to cover any vacation or sick time they take throughout the year. Because they don’t have an employer paying for time off, it’s up to them to calculate and set aside the appropriate amount.

You have a couple of options when it comes to saving up for sick time and vacation days. For example, you can:

  • Take a small amount from each freelance job you complete and save it in a separate account
  • Calculate the amount you need to make to live and then use extra income as vacation pay
  • Work additional hours to cover the amount of time you want to take off each year

As a new freelancer, you’ll probably be starting out with no vacation or sick time, but as you get more clients and start to build up your average monthly income, you’ll have a better idea of how to start banking extra hours and saving for some well-deserved time off.

12. Accounting and Legal Costs

When you’re an employee, it’s easy to take your accounting and legal departments for granted. They track your hours, deposit your paychecks, and provide your employment contract, all without you having to lift a finger. Freelancers have to handle their own accounting, develop their own contracts, and keep track of their own records — or else pay someone to do it for them.

If you aren’t comfortable managing the financial and legal aspects of your freelance business alone, you may want to hire someone to do it for you or, at the very least, purchase software that will help you to do accounting tasks like:

  • Invoicing
  • Drafting quotes and contracts
  • Tracking your billable hours
  • Monitoring payment statuses
  • Documenting business expenses

13. Administrative Tasks

Freelancers don’t typically get paid for the time they spend completing the routine administrative tasks that come with doing business like responding to emails, listening to voicemails, or talking to customer service about a technical issue. That means they need to consider how to cover their non-billable hours so they don’t end up working for free.

The best way to do this is to calculate non-billable work into your hourly rate. That way, you don’t get paid directly for your administrative tasks, but you still make enough money to cover the time you spend doing them.

14. Business-Related Bills

Whether you have a home office or you rent an office space somewhere else, you still have to pay for utilities, Internet, and a phone to run your business. Even if you decide to freelance from home, you could be looking at higher bills due to:

  • Being at home more often
  • Needing an upgraded Internet connection speed or data plan
  • Using more cellphone data at coffee shops or other remote workplaces

Expect an increase in any business-related bills when you start freelancing, regardless of whether you choose to work from a home office, rent a space, or take advantage of a public workspace.

15. Travel

Business travel is expensive but sometimes necessary. From transportation and event tickets to meals and lodging, making a trip to attend a conference or to meet a client can be a pricey undertaking that freelancers typically have to cover on their own.

Occasionally, clients may pitch in or even pay for costs if they require the freelancer to travel specifically for their project. Depending on the freelance work that you offer, you may not have to travel at all. However, if your services require you to fly or drive to meet clients, don’t be surprised if you have to pay your own way.

When possible, take advantage of video conferences and phone calls to get some of the benefits of face-to-face meetings without the associated costs.

16. Transportation

If your freelance business requires you to visit client homes or businesses on a frequent basis, you’ll need to pay for your own transportation costs. For example, you’ll need to have enough to cover your:

  • Vehicle payments
  • Fuel
  • Insurance
  • Bus or transit pass
  • Parking fees
  • Repairs and maintenance

If you’re used to having a company vehicle and credit card to cover gas expenses as an employee, having to pay for these yourself can be a tough pill to swallow — especially if you’re new to freelancing. But these are important costs to include in your pricing calculations and quotes to help you avoid losing money on your freelance jobs.


Final Word

Before making the decision to go from being a full-time employee to pursuing a freelance career, it’s important to understand exactly what you’re getting into. There’s a big difference between taking advantage of the gig economy and starting a sustainable and profitable freelance business of your own.

Consider all the expenses you will have to pay and whether you can afford to cover them based on the clients and contracts you have lined up. If you can’t, don’t give up hope. You can always start by offering your services on the side and gradually move toward a full-time freelance career in the future.

Source: moneycrashers.com