PNC has increased the signup bonus on the Cash Rewards Visa card to $200 after $1,000 spend (previously $100) within the first three billing cycles. You can see that offer on PNC here.
Additionally, there is an in-branch offer which will offer double cashback during the first year. PNC will automatically post any earned double cash back to your account one year after opening.
Offer is valid 9/6/23 – 11/6/23
You can try calling into a banker at a PNC branch to see if they can process the branch offer over the phone, just make to get confirmation that it’s for the double cash back offer.
You can see an image of the offer on this website.
Card Details
No annual fee
Sign up bonus of $100 after $1,000 in purchases
Card earns at the following rates ($8,000 annual cap on the 2%/3%/4% categories):
4% cash back on gas purchases
3% cash back on dining purchases
2% cash back on grocery purchases
1% cash back on all other purchases
Introductory 0% APR on balance transfers for the first 12 billing cycles following account opening when the balance is transferred within the first 90 days following account opening
You can redeem for cash back when you have $25 or more in your account
Applications restricted to the following states: AL, DC, DE. FL, GA, IL, IN, KY, MD, MI, MO, NC, NJ, OH, PA, SC, VA, WI, WV
Read our full review here.
Our Verdict
The $200 signup bonus can be done online, and for the hassle of going in branch you’ll hopefully be able to get this offer with the double cashback. If someone can max out the $8,000 on gas, that would get you an extra $320 in cashback (that’s in additional to the generous 4% regular earn rate on gas).
PNC branches are around in many states, listed above. I can see this being a nice deal for someone who can max out the gas category, and possibly even for the other categories. Some people might also consider signing up for the online offer to get the $200 signup bonus. The ongoing rate of of 4% on gas is pretty nice too, irrespective of any signup bonus.
It’s now possible to activate all 5% category credit cards for the fourth quarter of 2023, including the Chase Freedom, Chase Freedom Flex, Discover IT, Citi Dividend, US Bank Cash+ and some smaller cards. In this post we’ll provide the activation link for each card and links to track your spend, along with strategies to help increase spend in these categories.
Dates: October 1st – December 31, 2023. Store purchases can usually be done until the last minute while online purchases should be given a buffer zone of a day or two.
Activation Link / FAQ / Sample Stores & Exclusions / Our original post
With the Freedom and Freedom Flex cards, activate to earn 5% back this quarter on up to $1,500 in spend at PayPal, Wholesale Clubs, and at Select Charities.
Paypal – Should work for any purchase with Paypal payment. This is always a easy and useful category given that many/most online retailers accept Paypal, e.g. Walmart, Target, Best Buy, etc.
I sometimes pay my taxes with a credit card via Paypal to trigger this category, read more about paying taxes with a credit card in this post.
Some people might find it worthwhile to swallow the 2.9% Paypal fee and max out this category by paying family or friends with their Freedom card. Just note the fine print technically excludes this: “Person-to-Person (P2P) transactions made with your Chase Freedom card on PayPal may be prohibited or not eligible for 5%.”
You can also do your year-end charitable giving with Paypal payments on many charities, or to almost any charity with Paypal Giving Fund.
Readers note that if you use the Freedom Flex via Paypal at Dining or Drugstores you’ll end up getting 7x due to the extra 2x bonus the card has on those categories.
Wholesale Clubs – Should work for Costco, Sam’s Club, BJs, and similar.
Bear in mind, Costco in-club only accepts Visa cards; online you can use Mastercard as well, and you can even order Costco Cash cards for use in-club. Also note, gas at Costco will not work to earn the 5x; the workaround is to buy Costco Cash cards in-club and use those to purchase gas.
You can buy Sam’s Club gift cards at the club or online which can then be used at Walmart or Walmart.com or Walmart gas. (Or you can buy Walmart e-gift cards from Paypal Digital Gifts which also earns 5x as part of the Paypal category.)
Some wholesale clubs sell third-party gift cards or even Visa gift cards.
Exclusions: “Gas, fuel, wholesale specialty service purchases such as travel, insurance, cell phone and home improvement will not qualify in this category. Mastercard not accepted at Costco warehouses or at gas stations.”
Select Charities – includes: American Red Cross, Equal Justice Initiatives, Feeding America, Habitat for Humanity, International Medical Corps, International Rescue Committee, Leadership Conference Education Fund, NAACP Legal Defense and Educational Fund, National Urban League, Thurgood Marshall College Fund, United Negro College Fund, UNICEF USA, United Way, World Central Kitchen GLSEN, Out and Equal, Sage.
Tip: Click this link (login required) to check how far you are along the $1,500.
Discover – Amazon, Target
Activation Link / Our original post
With your Discover card, activate to earn 5% back this quarter on up to $1,500 in purchases on Amazon.com and at Target.
Amazon.com
Target – Not very useful for someone who already has the 5% Target REDcard. It can still be useful for buying Target gift cards at Target which do not earn 5% on the Target REDcard.
Activate to earn 5% Cashback Bonus at Amazon.com and Target from 10/1/23 (or the date on which you activate 5%, whichever is later) through 12/31/23, on up to $1,500 in purchases. Amazon.com purchases include those made through the Amazon.com checkout, like digital downloads, Amazon Fresh orders, Amazon Local Deals, Amazon Prime subscriptions, and items sold by third party merchants through Amazon.com’s marketplace. This also includes purchases in-store at Amazon Go. Amazon, the Amazon.com logo, the smile logo and all related marks are trademarks of Amazon.com, Inc. or its affiliates. Target purchases include those made in store at Target, Target.com, or through the Target app. Purchases from individual merchants and stand-alone stores within physical Target locations may not be eligible for this promotion. Purchases made online or through the Target app from Target affiliates, individual merchants or stand-alone stores may not be eligible for this promotion, including, but not limited to, targetoptical.com and targetphoto.com.
Tip: Login, then click this link to see you how far along the $1,500 you are.
Citi Dividend – Add Me
Landing Page | Our Original Post
With your Dividend card, activate to earn 5% back this quarter at ADD ME. Citi is different than the other cards in that you have a $6,000 annual cap rather than a $1,500 quarterly cap. You can get 5% back on up to $6,000 in this quarter or you can save the entire amount for a different quarter, or you can use part up each quarter.
US Bank Cash+/Elan – Select your Categories
Activation link | Merchant List | Our Original Post
U.S. Bank Cash+ and Elan Max offer 5% cash back in two categories, up to $2,000 combined total per quarter. Keep in mind that Car Rentals was recently replaced with TV, Internet, and Streaming Services.
Here are the current options:
TV, Internet, and Streaming Services
Home utilities
Select clothing stores
Cell phone providers
Electronic Stores
Gyms/Fitness
Fast food
Ground Transportation
Sporting goods
Department Stores
Furniture Stores
Movie theaters
Tip: Login here, then scroll down and click on the red “View Your Cash+ History” button.
Bank of America Customized Cash Rewards
Our Original Post
The Cash Rewards card from Bank of America offers 3% back on one selected category, up to $2,500 per quarter. If you don’t select anything it defaults to gas. Once you selected a category for one quarter, that remains your category in the future unless you change it. Each calendar month you can change it if you’d like, but you’re always limited to $2,500 for the entire quarter.
Gas and EV charging stations (default category)
Online Shopping; this category also includes cable, streaming, internet, and phone plan
Dining
Travel
Drug Stores
Home Improvement/Furnishings
This category is especially lucrative for those who have Preferred Rewards status with Bank of America which can get you 5.25% back on one of these categories at the higher relationship level.
Lots of useful categories here. Important note: the Cash Rewards card also offers 2% back at grocery stores and wholesale clubs up to $2,500 per quarter, and that $2,500 limit combines with the Category Selection limit. After spending $2,500, you’ll earn 1% back on everything.
Other Cards with 5% Category
Nusenda FCU – Retail, Online, Restaurants
Landing Page | Our Original Post
Earn 5% this quarter on up to $1,500 in purchases on Retail Stores, Online Retail Purchases, Restaurants.
This is on top of the regular 1% for a total earn of 6% back.
Abound CU – Amazon
Landing page | Our Original Post
Abound Credit Union Visa Platinum card offers 5% on up to $2,000 on Amazon purchases.
Langley FCU – Grocery, Streaming, Cable, Department Stores
Landing Page | Our Original Post
Langley Federal Credit Union offers 5% back each month in one selected category, on up to $100 cash back total ($2,000 spend).
The category options at time of this writing: Streaming, Cable & Internet services, Grocery, Department Stores.
Vantage West [AZ] – Select your Category
Landing Page | Our Original Post
Get 5x points on the category of your choice, up to $1,500 per quarter. Eligible categories:
Safe Credit Union Cash Rewards Visa card offers 5% this quarter on your choice of one category each quarter (with no apparent limit). This quarter the categories are:
A good credit score will make your life a lot easier; it will help you qualify for loans, apartments and even jobs. But you’re not born with a credit history. Much like you have to spend money to make money, you need to borrow money to prove you’re good at borrowing (and paying back your debts). In fact, according to Nationwide, credit scores help insurance companies predict future losses. So, how can you start your credit-building journey? Here are ways new cardholders can build credit.
Understanding Credit Score Perks
Your credit score is woven into almost every area of your life. “Crummy credit can cost you a fortune throughout your life,” explains Matt Schulz, chief credit analyst at LendingTree. “It’s as simple as that. It’ll lead to higher interest rates and fees on mortgages, credit cards and loans. It can keep you from getting the apartment you want. It can lead to higher insurance premiums. It’s a big, big deal.”
There are two main types of credit scores: your FICO Score and your VantageScore. Most lenders review your FICO Score when making a financing decision. It ranges from 300 to 850, with a “good” score starting in the high 600s. It’s calculated based on a variety of factors, including payment history, credit usage, the length of your credit history, and more. The VantageScore follows similar metrics but focuses less on payment history, allowing scores to be generated faster than FICO. Regardless of the type of score, a proven record of responsible borrowing shows lenders that you’re more likely to pay back your debt, and then they can offer you lower interest rates and charge fewer fees.
Related Read: 7 Unexpected Benefits of a Good Credit Score
New to Credit? Here’s How to Build Your Score Quickly
Get a secured credit card. A secured credit card is a great way to build credit from scratch. It works just like an unsecured card, except that you make a security deposit that is equal to the amount of the credit limit. For example, if you deposit $500, your credit limit is also $500. “Consumers love these cards because they’re easy to get and their low credit limits mean there’s no danger of going too wild on a spending spree,” says Schulz. “Banks love them because there’s no risk. If someone doesn’t pay their bill, the bank simply takes the security deposit. It’s a win for everyone involved.” Before applying for a secured card, make sure the lender reports your usage to the three credit bureaus–Equifax, Experian and TransUnion. If it doesn’t, you won’t build credit. Also, check to see if the lender offers an upgrade to an unsecured card.
Make timely payments. Once you have your first credit card–be it secured or unsecured– focus on paying your bill in full on time, every time. Payment history is a big component of your credit score. Each month you pay your full balance on time, you’re proving your creditworthiness. “Think about it like borrowing the car keys from your parents,” explains Schulz. “The first time you do it, they’re not going to let you do much. Once you’ve shown you can handle a little responsibility, they’ll give you more, though. Eventually, they’ll hand over the keys without thinking much of it.”
Use your card often. The more you use your card, the better. The key, though, is to use it smartly. Pick up the check when you’re out to dinner with friends, knowing they’ll reimburse you for their meals. Use it for everyday expenses like groceries and gas. You can even use your card to pay rent, though there will usually be processing fees added on by your landlord. Just remember: Pay the bill in full, every month. You should also never max out your card. Your credit utilization ratio–how much credit you’re using compared to the total credit available to you–is another aspect of your credit score.
Become an authorized user. If you can’t open a credit card yourself yet, become an authorized user on someone else’s account. Ultimately, they will be responsible for the charges on the account, so you need to have a good relationship with this person. Becoming an authorized user allows you to link to this person’s good credit and thus build yours with steady payments.
Apply for a credit-builder loan. A unique way to build credit is to apply for a credit-builder loan. With these loans, you make monthly payments to the lender for a set period of time. The deposits are kept in a savings account or a certificate of deposit. Once the payment period ends, you get the money back, sans fees or interest charged.
Be determined. Building credit can be daunting, but don’t give up. With each passing month, your timely payments will boost your score. Use texts or autopay features to make sure you’re paying your bills on time. Do whatever you need to do to keep at it. Different apps and some credit cards offer estimates of your credit score, but know that you’re entitled to one free credit report every year from AnnualCreditReport.com. Get in the habit of checking your report every year to make sure there are no lingering issues that are hampering your credit-building endeavors.
About the Author
Chris O’Shea is a freelance writer whose work has appeared in GQ, NerdWallet, Esquire, New York Magazine, and more.
Congratulations! You’re officially an adult. Turning 18 opens a world of possibilities and freedom, but it also comes with additional responsibilities. One important responsibility to start thinking about is building your credit profile.
Credit can be a critical resource. A good credit score helps you get approved for loans and credit cards. It also helps reduce the expense associated with your debts, as you’re more likely to get approved for lower interest rates if your credit is better.
Your credit score and history can also help—or hinder—you when you’re applying for certain types of employment, a new apartment, utilities, or auto insurance. Find out more about credit and how to build credit at 18 in the guide below.
How to Start Building Credit at 18
1. Learn How Credit Works 2. Monitor Your Credit Score and Reports 3. Sign Up for ExtraCredit 4. Become an Authorized User 5. Get a Secured Credit Card 6. Apply for a Credit Builder Loan 7. Understand How Student Loans Can Help Your Credit 8. Don’t Try to Overdo It 9. Make a Budget and Stick to It
1. Learn How Credit Works
You know that knowledge is power, and understanding how to get credit and how it all works can make a big difference. Here are a few basics.
Your Credit Score
There are multiple scoring models, but they all work to provide a numerical score that tells lenders how likely you are to pay back your debts. Higher credit scores are more attractive to lenders and creditors. Five main factors influence your score:
Your Credit Report
Your credit reports are maintained by three major credit bureaus—Experian, TransUnion, and Equifax. They contain data on your current and past debts, payment history, residential history, and other information about your credit history. This data is supplied by lenders, creditors, and businesses where you have accounts. The information on these reports is fed into the credit scoring models to determine your credit score.
Here’s where it starts getting complex. The information on those reports isn’t always the same. Some businesses and lenders only report to one or two of the credit bureaus. Some don’t report to any.
So, your credit report can be a little different with each of the bureaus. That means your credit score can also vary depending on which report and scoring model is being used.
2. Monitor Your Credit Score and Reports
Once you understand some basics about credit, you should take a look at your own credit reports. Monitoring your credit is one of the best ways to learn what will positively or negatively impact your scores. It also helps you catch inaccuracies or signs of identity theft sooner. Is there an account on your report that’s not yours? It could be bringing your score down even before you learn how to start building credit! If you find inaccurate negative information on your credit report, you can challenge it.
There are a few ways to check your credit reports.
AnnualCreditReport: You can request one report per year from each of the three bureaus at AnnualCreditReport.com. The bureaus are allowing you to request your reports weekly due to the effects of coronavirus through April 2022.
Credit Report Card: You can also get information about your credit reports via the free Credit Report Card at Credit.com. This is a breakdown of how you’re doing with each of the five major factors that impact your credit score. Your personal Credit Report Card can help you understand where you might need to work to positively impact your credit.
ExtraCredit: If you’re really serious about understanding your credit reports and scores, sign up for ExtraCredit. The Track It feature lets you see 28 of your FICO® scores and credit reports from all three credit bureaus. These scores are ones that lenders look at when making approval decisions.
ExtraCredit does more than just show you your credit scores. Have you recently started paying rent or utilities? The Build It feature lets you add them as tradelines with the TransUnion and Equifax credit bureaus. That means you’ll get credit for bills you’re already paying—building your credit profile each month that you pay those bills.
This is important, because rent and utility payments don’t usually show up on credit reports. That’s simply because utility companies and landlords don’t tend to bother to report them. ExtraCredit helps you ensure you’re getting credit for those on-time payments anyway.
4. Become an Authorized User
If a friend or family member has a credit card and is an account holder in good standing—meaning they pay their bills on time—ask if they’ll add you as an authorized user. Make sure that their credit card company reports to the credit bureaus for authorized users first or this is a pointless exercise.
You don’t even need a card or to use their account. If the credit card company reports on authorized users, you’ll get their on-time payments posted to your credit reports if your friend or family member makes them.
If you’re looking for how to start building credit at 18, this can be a quick method. However, it does come with some potential risk. If that person doesn’t pay on time or runs up their credit card balance, your credit score could suffer from the negative reports too.
5. Get a Starter Credit Card
For those who want to know how to start credit building without someone else, a secured credit card might be a good place to start. Some credit card companies also offer unsecured credit cards for those with no credit. These tend to have low credit limits and may have high interest rates.
If you can’t find an unsecured credit card, though, a secured card is much easier to get in general. You have to secure it with a deposit—typically in the amount of the credit limit. For example, if you put down a $250 security deposit, your initial credit limit is $250.
You build credit by using the card and paying the bill on time each month. Make sure you opt for a credit card that reports to all three of the bureaus to maximize the benefits to your credit history. Usually after a certain number of timely payments, you get your security deposit back and may even be eligible for an increase in credit limit.
Two options you might consider are the OpenSky Secured Visa and UNITY Visa Secured card.
OpenSky® Secured Visa® Credit Card
No credit check to apply and find out instantly if you are approved
OpenSky gives everyone an opportunity to improve their credit with an 85% average approval rate for the past 5 years
Get considered for a credit line increase after 6 months, with no additional deposit required
You could be eligible for the OpenSky Gold Unsecured Card after as few as 6 months
Reports to all 3 major credit bureaus monthly, unlike a prepaid or debit card. Easy application, apply in less than 5 minutes right from your mobile device
View your FICO® Score through your OpenSky account, an easy way to stay on top of your credit
Nearly half of OpenSky cardholders who make on-time payments improve their FICO score 30+ points in the first 3 months
Your refundable* deposit, as low as $200, becomes your OpenSky Visa credit limit
Offer flexible payment due dates which allow you to choose any available due date that fits your payment schedule
*View the cardholder agreement
UNITY® Visa Secured Credit Card – The Comeback Card™
Unlike your Prepaid Card, UNITY Visa secured card can help you build your credit. Apply online in less than 5 minutes, and you could be approved today!
No Minimum Credit Score required; low fixed interest rate of 17.99%; Fully refundable FDIC security deposit* required at time of application; if you have a min of $250 to deposit immediately, you can start now!
No application fee or penalty rate
Monthly reporting to all 3 major credit bureaus
24/7 online access to your account
*See the Cardholder Agreement for more details.
6. Apply for a Credit Builder Loan
Remember that credit mix is important to your credit score. That means you can’t just have one type of credit—such as a credit card—for maximum impact. You may also want an installment loan on your account.
A credit builder loan is one way to get an installment account on your credit history. These work like a traditional loan in reverse: if you’re approved, your funds get placed in a secured certificate of deposit and are given to you after you’ve paid off the loan.
>> Read our Review of Self Credit Builder Accounts
As you pay the loan as agreed, you’ll enjoy the benefit of positive payment history building on your credit report. Once you pay off the loan, the savings account is unlocked and you gain access to the money.
7. Understand How Student Loans Can Help Your Credit
If you have a student loan in your name, you may already have an installment loan on your credit history. This is true whether your parents acted as guarantors or cosigners or not, but it’s not true if your parent simply took the loan out for you. In that case, the lender would only report on your parent’s credit history.
As with any type of debt, student loans can help you start building credit if you pay them on time. So make sure you keep up with your loan status. If you use options such as deferment—especially during COVID-19—keep an eye on your credit report. Make sure your lender doesn’t report you as paying late when you’re within an agreed-upon deferment period.
8. Don’t Try to Overdo It
Building credit is a marathon, not a 100-yard dash. While some actions can positively impact your credit quickly, as a young person you’re unlikely to have a super robust credit history in just a few months.
Take your time and don’t try to engage in every credit-building tactic at once. You certainly don’t want to max out your debt in an effort to build credit. That could leave you unable to make your payments, which tanks your credit score before you have time to really build it.
9. Make a Budget and Stick to It
Finally, make a budget and stick to it. Spend what you can afford, and don’t take on debts you can’t pay fairly easily. You have years to continue building your credit, and a history of smart decisions and timely payments is one of the best things for your score long-term.
Start Building Credit Now
Building your credit at 18 is possible. It just takes time, commitment to making smart money decisions and an understanding of how credit works.
While tax planning is a year-round task, real estate agents can take some specific actions before the New Year to significantly cut their taxable income. Use these seven strategies to avoid overpaying taxes, save money, and better manage your business.
1. Identify business deductions
Every business has ordinary and necessary costs, such as office equipment, marketing, accounting, and insurance, that are tax-deductible. If you don’t flag them throughout the year, take the time to identify them now so you’ll have less work to do later.
Run reports to double-check that you’ve categorized costs correctly and adjust if needed. Note that tax-deductible business expenses can change from year to year. So, familiarize yourself with the list of allowable deductions in Publication 535, Business Expenses.
2. Claim the home office deduction
In addition to deductible business expenses, you can claim the home office deduction if you primarily run your business from a dedicated home office. Many entrepreneurs don’t realize that even if you have a day job and run a part-time business from home, you qualify to claim the deduction whether you’re a homeowner or renter.
Your home office doesn’t have to be the only place you work or meet customers to qualify for the deduction. For instance, you might also work at a coffee shop, co-working space, and meet clients in their homes.
Direct expenses for your office area, such as flooring, furniture, window treatments, or an additional phone line, are 100% deductible. However, exterior improvements, such as landscaping or installing a pool, typically aren’t deductible.
You may also deduct a portion of expenses for your home, such as rent, mortgage interest, property taxes, insurance, cleaning, and utilities, known as indirect office expenses. They’re partially deductible based on your home office size and calculation method.
The standard method requires you to calculate the size of your office as a percentage of your home and apply it to your expenses. For example, if your office is 10% of your home, you can attribute 10% of qualifying expenses (such as your homeowners insurance and power bill) to business use.
Or, you might choose the simplified method, which allows you to claim $5 per square foot of your office area, up to 300 square feet. It eliminates having to keep detailed records but won’t give you the largest deduction if your office exceeds 300 square feet.
If you’re eligible to claim the home office deduction, it’s a terrific way to make certain personal expenses partially deductible. Use Form 8829, Expenses for Business Use of Your Home, to determine the allowable costs and enter them on Schedule C, Profit or Loss From Business, when you file taxes. See Publication 587, Business Use of Your Home,for more details.
3. Claim business vehicle use
Most real estate professionals use their personal vehicle for business, allowing you to deduct expenses based on mileage. That means keeping detailed records to allocate business versus personal miles driven. However, if your vehicle is used exclusively for business, you can deduct all its costs.
Your deduction depends on your chosen calculation method, using actual expenses or a standard mileage rate. Generally, the more expensive your vehicle is to operate, the higher your deduction will be using the actual cost method.
For 2023, the rate for business use is 65.5 cents per mile. For instance, if you drove 1,000 miles annually for business purposes, your vehicle deduction would be $655 (1,000 x $0.655). You may come out ahead for more economical cars using the standard mileage deduction.
Check out Publication 463, Travel, Entertainment, Gift, and Car Expenses, for more information on vehicle deductions.
4. Contribute to a retirement account
If you haven’t opened a retirement account, such as an IRA, SEP-IRA, or solo 401(k), don’t miss the opportunity to cut taxes and start building wealth before year-end. The benefit depends on how much you contribute and your account type.
For 2023, the maximum IRA contribution is $6,500 or $7,500 if you’re over 50. If you contribute $6,500 to a traditional IRA by your tax filing deadline (mid-April or mid-October if you file an extension), you reduce your taxable income by that amount.
Self-employed retirement accounts, such as a SEP-IRA and solo 401(k), allow contributions of up to 25% of your net business earnings up to $66,000. That gives you a much larger potential tax deduction.
5. Max out a health savings account (HSA)
If you have a high deductible, HSA-qualified health plan purchased on your own or through your or a spouse’s employer, you can open an HSA. Like a traditional IRA, HSA contributions made by your tax filing deadline are deductible for the current year.
What’s terrific about an HSA is that your funds can be invested for tax-free growth. Plus, when you spend it on qualified healthcare costs, your withdrawals are entirely tax-free. That significantly cuts the long list of medical expenses you’ll find in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.
6. Buy business equipment
If you’ve been considering buying equipment for your business, such as a computer, machinery, or vehicle, consider doing it before the end of the year. In some cases, you may be able to deduct the entire cost this year instead of depreciating it over several years.
Review Publication 946, How to Depreciate Property, and consult with a certified tax accountant if you purchased business assets or are considering them.
7. Time your business income and expenses
Timing your income and expenses involves legitimately moving them from one year to another to pay the least in taxes. For instance, if you defer business income until January, you reduce earnings in the current year.
To reduce your taxable income, you might accelerate or prepay certain business expenses before the New Year–such as real estate continuing education, memberships, and auto insurance. If you mail payments or make credit card charges in the current year, you can deduct them.
A wise strategy for cutting taxes before the year-end is getting guidance from a certified tax professional. Their advice can pay off in the long run if it helps you get organized and reduce your taxable income for the year. It’s up to you (and your tax pro) to make smart moves now to avoid potential tax mistakes and save as much money as possible.
Laura Adams is the author and host of the Money Girl podcast.
This content should not be considered accounting or legal advice. You should consult your local tax or legal professional in your state for appropriate strategies.
This column does not necessarily reflect the opinion of RealTrends’ editorial department and its owners.
To contact the author of this story: Laura Adams at [email protected]
To contact the editor responsible for this story: Tracey Velt at [email protected]
It may seem like you’ll never have $1 million to invest, but if you invest consistently over decades, you might build up that much wealth more quickly than you’d think. And if you manage to get a windfall with that many zeros behind it, it’s best to figure out ahead of time how you’ll invest it to keep it growing.
So let’s say you find yourself with a $1 million windfall tomorrow. What will you do with it? Well, hopefully, you’d consult with a professional who can give you advice on the best way to allocate your funds. But once you’ve decided to do that, your best bet is to choose low-cost, high-reward investment options. And, of course, you’ll want to diversify your investment portfolio. So to do that, here are the best options you can invest in if you have a million dollars.
What To Do Before You Begin Investing $1 Million
Before you start investing, there are a few things that you should do.
Think About Your Investing Goals
Before you start investing, you need to know why you’re investing. Your goals will play a significant role in determining how you invest.
For example, if you’re young and investing for retirement age, you can afford to own volatile stocks. You’ll probably want to build a portfolio that’s heavy on stocks and light on less risky investments like bonds. This can give your portfolio the highest potential returns.
If you’re investing for a more short-term goal, you’ll likely want to build a more conservative portfolio so that you don’t lose your savings right before you need them.
Your goals can also determine the account you use to invest. If you’re saving for retirement, you’ll want to use a 401(k) or IRA. If you want to help a child pay for college, you might use a 529.
Related: The 10 Best Investment Strategies for Short-Term Savings Goals
Think About Your Investing Style
Are you the type of person who enjoys managing their money, or do you want to take a hands-off approach to investing?
If you’re an active investor, look for a brokerage that offers low or no commissions on trades and has tools you can use to research stocks and other securities.
If you’re looking for more passive, buy-and-hold investments, consider working with a company with low-cost mutual funds, such as index funds.
Related: The 5 Best S&P 500 Index Funds (and the Worst Ones)
Think About What’s Important to You
Some people want to put their money where their mouth is when it comes to investing. Before you start investing, you might want to consider ESG investing, which focuses on Environmental, Social, and Governance factors in companies.
For example, you might want to focus on investing in companies that work to benefit the environment or take steps to ensure they treat their workers fairly and pay them well.
ESG investing has grown popular in recent years, and some argue that it can improve performance compared to investing without focusing on these factors. However, ESG investing is often more difficult or expensive because you have to do the work to assess companies’ commitment to ESG concepts or pay a mutual fund manager to do that for you.
Related: The Pros and Cons of Socially Responsible Investing
How to Invest $1 Million: Overview
Type of Investment
Best For
Robo-Advisors
Lowest Fee Structure
Stocks and Mutual Funds
Autonomy
Real Estate
Physical Asset Value
Bonds
Proper Risk Balance
P2P Lending
Higher Risk / Return
1. Pay Off All High-Interest Debt
First, if you have any major debts, you’ll want to pay those off. There’s some debate about whether or not you should pay off your house, so put some thought into that one. But, at a minimum, you should knock out all high-interest debt. Most of the investments below will not come anywhere near beating the 20%+ interest you’re paying for credit cards and personal loans. So get rid of those first so you have a great financial base to launch your investments from.
2. Be Sure You Have a Fully-Funded Emergency Fund
Again, before we talk about investments, let’s be sure you’ve got your financial base in place. A fully-funded emergency fund of six months or more worth of expenses is your next step. For this, you’ll want to put the money somewhere liquid and insured, so look for an FDIC-insured savings account with a high yield.
One of the best options today comes from the CIT Bank Savings Connect Account. You’ll earn a cool 4.65% APY on your money which should keep you in line (or ahead) of inflation. The money is always liquid so if there’s an emergency, you’ll have full access to the account.
Also Read: Best Online Savings Accounts with High Interest
3. Max Out Your Retirement Savings
With a million dollars to invest, you can max out your retirement savings vehicles first, and using these tax-advantaged accounts should be your priority each year that you possibly can. If you already have money going into a company 401(k), consider a service that can analyze the fee structure of your account to make sure you’re maximizing your return.
And if you don’t already have an IRA, open one to use with some of the following investing options. Then max out those accounts before you direct money to your taxable accounts.
4. Use a Robo Advisor
Any time you’re looking to make a big investment, big fees will have an amplified effect. So you’ll want to look for the lowest-fee options with a good yield when you’re looking to invest this much money. One option for that is to invest with a robo advisor. Using algorithms instead of individuals, these services make historically solid investing decisions but cost far less than traditional investment advisors.
Wealthfront is one of the best robo advisors out there and they’ll give you $50 on the house for creating an account with a $500 deposit. Wealthfront has dozens of features that will allow you to set a personal risk tolerance and create a portfolio that suits you. After you’ve created your profile, it’s largely hands-off from there.
The advisory fee to use Wealthfront is 0.25%. So for example, if you invested $500,000 with them, you would pay an annual fee of $1,250. That may sound pretty steep, but if you’re generating returns of 7%+, it represents a very small fraction of what you’ll gain. In this example, a 7% return means your end of year balance after one year would be ~$533,750 after the fee was taken.
5. Invest $1 Million In Your Values
If you’re interested in using that million dollars to spread some good in the world, you can do that while earning money through a company like Stash. Investing in socially responsible companies is easier than ever now. You can invest in these types of stocks (or any other stock) with as little as $5 from the palm of your hand with Stash. It’s an app that simplifies and democratizes investing so everyone, from first-time investors to pros, can reach their financial goals regardless of income or experience level.
With detailed stock market data and educational materials, personalized portfolio tracking, easy-to-read reports, and personalized notifications on your personal moments of success, this app not only lets you invest without any brokerage fees but also equips you with the tools to make more informed decisions about when it’s time to sell up or down.
Read our Stash Review
6. Consider Adding Real Estate
Even with a million dollars to invest, you may not be able to buy a property outright in some areas of the country. And if you do own property on your own, you’re stuck with the headache of managing it. If you want to avoid that but still want to add real estate to your portfolio, Fundrise is a company that can get you invested.
Through crowdfunding, your investment is pooled with others to purchase property. There are different investment strategies and goals within every Fundrise account so you can play it safe, or take on more risk for a higher return. Fundrise even offers a self-directed IRA option so your contributions can reduce your annual tax burden.
If you’d rather not invest directly in a single property, CrowdStreet also offers real estate funds that let you diversify your investment. You can also sign up for the site’s advisory service, which lets you work with a professional to build a real estate portfolio that can help you achieve your investing goals.
In order to become a CrowdStreet investor, you will need to have an income that exceeds more than $200,000 annually and a total net worth of at least $1 million (not a problem if you’re reading this post). And unlike Fundrise, you won’t be able to invest in single family units. CrowdStreet is for retial and commercial real estate only.
7. P2P Lending for Higher Risk & Return
Another way to be choosy and to get a potentially hefty return on your investment is with a peer-to-peer lending platform. Prosper is great for lending your money to individuals who need to consolidate debt, fix up their homes, or need a cash infusion to start a business.
When you invest in this platforms, you can create a portfolio of loans that you partially help fund so that you can spread your risk across multiple loans quite easily. The historical returns are generally well above that of savings and CD’s but the more risk you take, the greater the chance that the customer you lend to could default, which will offer negative returns.
P2P lending was a very hot idea 15 years ago and has cooled considerably since. Still, when you choose a blended loan portfolio, the returns through Prosper can be quite generous. And perhaps the greatest upside to Prosper is that your investment helps others achieve their financial futures.
8. Consider Balancing with CDs and Securities
Of course, even millionaires have to worry about keeping a balanced portfolio and ensuring that not all of their capital is in riskier investments. That’s where options like CDs and securities come in. These have traditionally been a way to out-earn inflation, so you aren’t losing money with it sitting around.
But they’re also much safer than any other type of investment. So be sure you talk to your financial advisor about the best way to utilize tools like these to bring balance to your portfolio.
Creating a CD ladder is a great way to lock in guaranteed returns and diversify. Short-term CD interest rates are the highest they’ve been in decades and you can lock in a 4-month no penalty CD with Ponce Bank right now and earn 5.15% APY.
A no-penalty CD means you can withdraw the funds at anytime and even thought it’s a CD, there won’t be an interest penalty for early withdrawal. Your investment is always protected and always available.
How Did We Come Up With This List?
When creating a list of ways to invest $1 million responsibly, we looked for investment strategies available to most people that will help them build a diverse portfolio and earn solid returns. We also considered the cost of the investment strategy, as costs play a direct role in your returns. Every penny you pay in fees can have a compounding effect on your future returns.
We also tried to come up with a list of investment strategies that meet different risk tolerances and investing goals. People who are less risk-tolerant may not want to invest in real estate because real estate investing often involves high risk and leverage. Instead, they might want to focus on safer investments like mutual funds or even CDs.
When looking for financial help online, it’s hard to know whether you can trust the information you find. Anyone can publish on the internet, and they may have an ulterior motive.
Diversify Your Investments
One essential thing, no matter how you choose to invest, is to make sure you diversify your investment portfolio.
Diversifying your investments, in essence, means not putting all of your eggs in one basket. If you decide to invest in stocks, don’t put all your money into a single company. If you’re purchasing real estate, try to buy more than one property.
Think about what would happen if the company you invested in goes bankrupt or the property you buy burns down. You’d lose all of your money. If you diversify your portfolio, even the worst-case scenario for one of your investments wouldn’t completely doom your portfolio.
Mutual funds, real estate investment trusts (REITs) that own multiple properties, and robo advisors that build balanced portfolios are all great ways to easily diversify your investment portfolio.
Strongly Consider Working with a Professional
If you have $1 million to invest, you have to be incredibly smart about managing that money. As we’ve written before, $1 million isn’t as much as it used to be. In fact, the argument can be made that you need at least $2 million to retire. So this would only get you halfway home.
So, it’s important that you not only preserve the $1 million the best you can but also help it grow. Investing is one thing you have to do, but only if you are comfortable managing that large of a portfolio. If you’re not (and even if you are), I would STRONGLY consider looking at working with a professional.
I get that you’d want to manage $1 million on your own (heck, even getting to this point is an accomplishment), but don’t be silly and mismanage it.
Track Your Investments
As you begin pulling together your various investments, it’s important to figure out how you will keep track of them. Sure, you could pay someone to do it all for you. But that would just eat into your returns and your ability to grow your money. If you’d prefer to keep an eye on your investments yourself, check out services like Empower, which help you pull together all the various threads of your financial life, from your budget to your investments on different platforms.
Empower can help you track your investment performance, spot potential problems, and keep an eye on your overall portfolio balance. It can also run your day-to-day budget, so it’s a very flexible platform worth using once you’re ready to start keeping track of all this money.
The most important thing to remember is once you hit that million-dollar goal mark you’ve been saving for, the work isn’t over. You could easily lose it with celebratory spending. Have a plan in place for how you want to make this money work for you. With the right investment vehicle, you’ll be cruising down the road toward financial freedom.
Frequently Asked Questions (FAQ)
How much interest will I earn on $1 million?
To use a basic example, say you had an account with $1 million that paid 4% annually–in such a case, you’d earn $40,000 per year. What’s great about compounding interest, though, is by leaving your money in the account, interest would accumulate on the new balance. So after the second year, assuming no other changes, you’d have $41,600.
Can I retire with $1 million?
You can retire with $1 million dollars if you manage your withdrawals appropriately (it’s pretty tight, but do-able). The Rule of 4 says that you should withdraw no more than 4% of your total portfolio each year. Assuming you’re earning at least 4% in returns, you can effectively live off of interest earned without touching your principal balance. With a $1 million portfolio, this is $40,000 per year.
What’s the best way to invest $1 million short-term?
The best short-term investment for $1 million is a low-cost index fund that broadly diversifies your investments in stocks across a variety of industries. Alternatively, you can invest your $1 million in a robo advisor which will pick low-cost investments across different areas for you.
Read More: Best Investments for Passive Income
Bottom Line
As you can see, there are many ways you can invest $1 million. The first thing to recognize is that you’ve amassed this much money, which is more than many people can say for themselves. Next, though, you need to determine a strategy and focus on executing that strategy (and stick to the plan!), so you can make that $1 million last and grow even more.
Robo-advisors have barely been around for 10 years, but in the past couple of years several have been steadily expanding their investment menus, and even offering valuable add-on services. One of the leaders in this regard is Wealthfront. The robo-advisor has been growing its investment capability in every direction but is now even offering financial planning. The platform now bills itself as offering High-Interest Cash, Financial Planning & Robo-Investing for Millennials. If you’re looking for more than just investing, Wealthfront has it. And as has become their trademark, it’s all available at a low cost.
What is Wealthfront?
Based in Palo Alto, California, and founded in 2011, Wealthfront has about $25 billion in assets under management. It’s the second-largest independent robo-advisor, after Betterment. And while dozens of robo-advisors have arrived in recent years, Wealthfront stands out as one of the very best. There isn’t any one thing Wealthfront does especially well, but many. And they’re adding to their menu of services all the time.
Their primary business of course is automated online investing. You can open an account with as little as $500, and the platform will design a portfolio for you, then manage it continuously. Your money will be invested in a globally diversified portfolio of ETFs–just like most other robo-advisors. But Wealthfront takes it a step further, and also adds real estate and natural resources.
Like other robo-advisors, Wealthfront uses Modern Portfolio Theory (MPT) in the creation of portfolios. They first determine your investment goals, time horizon, and risk tolerance, then build a portfolio designed to work within those parameters. MPT emphasizes proper asset allocation to both maximize returns, and minimize losses.
But in a major departure from other robo-advisors, Wealthfront now offers the ability to customize your portfolio and get access to a variety of investment methodologies and portfolios, including Smart Beta, Risk Parity and Stock-Level Tax-Loss Harvesting. And more recently, they’ve also stepped into the financial planning arena. They now offer several financial planning packages, customized to very specific needs, including retirement planning and college planning.
If you haven’t checked out Wealthfront in the past year or so, you definitely need to give it a second look. This is a robo-advisor platform where things are happening–fast!
How Wealthfront Works
When you sign up with Wealthfront, they first have you complete a questionnaire. Your answers will determine your investment goals, time horizon, and risk tolerance. A portfolio invested in multiple asset classes will be constructed, with an exchange-traded fund (ETF) representing each.
The advantage of ETFs is that they are low-cost, and enable the platform to expose your portfolio to literally hundreds of different companies in each asset class. With your portfolio invested in multiple asset classes, it will literally contain the stocks and bonds of thousands of companies and institutions, both here in the U.S. and abroad.
Wealthfront offers tax-loss harvesting on all portfolio levels. But they’ve also added portfolio options for larger investors, that include stocks as well as ETFs. The inclusion of stocks gives Wealthfront the ability to be more precise and aggressive with tax-loss harvesting.
Each portfolio also comes with periodic rebalancing, to maintain target asset allocations, as well as automatic dividend reinvestment. As is typical with robo-advisors, all you need to do is fund your account–Wealthfront handles 100% of the investment management for you.
More recently, Wealthfront has also added external account support. The platform can now incorporate investment accounts that are not directly managed by the robo-advisor. This will provide a high-altitude view of your entire financial situation, helping you explore what’s possible and providing guidance to optimize your finances.
And much like many large investment brokers, Wealthfront now offers a portfolio line of credit. It’s available only to investors with $25,000 or more in a taxable account, but if you qualify you can borrow money against your investment account and set your own repayment terms in the process
Wealthfront Features and Benefits
Minimum initial investment: $500
Account types offered: Individual and joint taxable accounts; traditional, Roth, rollover and SEP IRAs; trusts and 529 college accounts
Account access: Available in web and mobile apps. Compatible with Android devices (5.0 and up), and available for download at Google Play. Also compatible with iOS (11.0 and later) devices at The App Store. Compatible with iPhone, iPad and iPod touch devices.
Account custodian: Account funds are held in a brokerage account in your name through Wealthfront Brokerage Corporation, which has partnered with RBC Correspondent Services for clearing functions, such as trade settlement. IRA accounts are held with Forge Trust.
Customer service: Available by phone and email, Monday through Friday, from 7:00 AM to 5:00 PM, Pacific time.
Wealthfront security: Your funds invested with Wealthfront are covered by SIPC, which insures your account against broker failure for up to $500,000 in cash and securities, including up to $250,000 in cash.
Wealthfront uses third-party providers to maintain secure, read-only links to your account. The providers specialize in tracking financial data, as well as employ robust, bank-grade security, and in general, they follow data protection best practices. In addition, Wealthfront does not store your account password.
Wealthfront Investment Methodology
For regular investment accounts, Wealthfront constructs portfolios from a combination of 10 different specific asset classes. This includes four stock funds, four bond funds, a real estate fund, and a natural resources fund.
Each portfolio will contain various allocations of each asset class, based on your investor profile as determined by your answers to the questionnaire. The one exception is municipal bonds. That allocation will appear only in taxable accounts. IRAs don’t include them since the accounts are already tax-sheltered.
Notice in the table below that most asset classes have two ETFs listed. This is part of Wealthfront’s tax-loss harvesting strategy. In each case, the two ETFs are very similar. To facilitate tax-loss harvesting, one fund position will be sold, then the second will be purchased at least 30 days later, to restore the asset class. (We’ll cover tax-loss harvesting in a bit more detail a little further down.)
The ETFs used for each asset class are as follows, as of December 29, 2018:
Specific Asset ClassGeneral Asset ClassPrimary ETFSecondary ETF
US Stocks
Stocks
Vanguard CRSP US Total Market Index (VTI)
Schwab DJ Broad US Market (SCHB)
Foreign Stocks
Stocks
Vanguard FTSE Developed All Cap ex-US Index (VEA)
Schwab FTSE Dev ex-US (SCHF)
Emerging Markets
Stocks
Vanguard FTSE Emerging Markets All Cap China A Inclusion Index (VWO)
iShares MSCI EM (IEMG)
Real Estate
Real Estate
Vanguard MSCI US REIT (VNQ)
Schwab DJ REIT (SCHH)
Natural Resources
Natural Resources
State Street S&P Energy Select Sector Index (XLE)
Vanguard MSCI Energy (VDE)
US Government Bonds
Bonds
Vanguard Barclays Aggregate Bonds (BND)
Vanguard Barclays 5-10 Gov/Credit (BIV)
TIPS
Bonds
Schwab Barclays Capital US TIPS (SCHP)
Vanguard Barclays Capital US TIPS 0-5 Years (VTIP)
Municipal Bonds (taxable accounts only)
Bonds
Vanguard S&P National Municipal (VTEB)
State Street Barclays Capital Municipal (TFI)
Dividend Stocks
Bonds
Vanguard Dividend Achievers Select (VIG)
Schwab Dow Jones US Dividend 100 (SCHD)
Wealthfront’s historical returns are as follows (through 1/31/2019). But keep in mind these numbers are general. Since the portfolios designed for each investor are unique, your returns will vary.
Specialized Wealthfront Portfolios
As mentioned in the introduction, Wealthfront has rolled out several different investment options, in addition to its regular robo-advisor portfolios. Each represents a specific, and generally more specialized investment strategy, and is typically available to those with larger investment accounts.
Smart Beta: You’ll need at least $500,000 to be eligible for this portfolio. Smart beta departs from traditional index-based investing, which relies on market capitalization. For example, since Apple is one of the most highly capitalized S&P 500 stocks, it has a disproportionate weight in strict S&P 500 index funds. In a smart beta portfolio, the position in Apple will be reduced based on other factors.
In general, under smart beta, the weighing of stocks in the fund uses a variety of factors that are less dependent on market capitalization. There’s some evidence this investment methodology produces higher returns. This portfolio is available at no additional fee.
Wealthfront Risk Parity Fund: This is actually a mutual fund–the first offered by Wealthfront. It involves the use of leverage with some positions within the portfolio. It attempts to achieve higher long-term returns by equalizing the risk contributions of each asset class. It’s based on the Bridgewater Hedge Fund, and requires a minimum of $100,000, with an additional annual fee of 0.25% (0.50% total). This is the only Wealthfront portfolio that charges a fee over and above the regular advisory fee.
Socially responsible investing (SRI): Wealthfront just recently began to offer a specific SRI portfolio option. Once you sign up, you’ll be able to customize your portfolio and add socially responsible ETFs.
Sector-specific ETFs: If you want to invest in a particular portion of the market, such as technology or healthcare, Wealthfront gives you the option to build a portfolio that focuses on certain industries to portions of the stock market.
Customized Wealthfront Portfolios:
Wealthfront also lets investors build their own portfolios, which is somewhat uncommon among robo-advisors.
Most robo-advisors will build your portfolio automatically based on your risk tolerance and goals. If you like that service, Wealthfront can do it. However, more hands-on investors are free to make tweaks to the automatically designed portfolio by adding or removing ETFs.
You can also build a portfolio entirely from scratch if you’d rather. You can choose which ETFs to invest in and how much you want to invest in them. You can then let Wealthfront handle things like rebalancing and tax-loss harvesting while maintaining the portfolio you desire.
Wealthfront Tax-loss Harvesting
If there’s one investment category where Wealthfront stands above other robo-advisors, it’s tax-loss harvesting. Not only do they offer it on all regular taxable accounts (but not IRAs, since they’re already tax-sheltered), but they also offer specialized portfolios that take it to an even higher degree.
Wealthfront starts with a tax location strategy. That involves holding interest and dividend-earning asset classes in IRA accounts, where the predictable returns will be sheltered from income tax. Capital appreciation assets, like stocks, are held in taxable accounts, where they can get the benefit of lower long-term capital gains tax rates.
But for larger portfolios, Wealthfront offers Stock-level Tax-Loss Harvesting. Three specialized portfolios are available, using a mix of both ETFs and individual stocks. The purpose of the stocks is to provide more specific tax-loss harvesting opportunities. For example, it may be more advantageous to sell a handful of stocks to generate tax losses, than to close out an entire ETF.
Given that Wealthfront puts such heavy emphasis on tax-loss harvesting, it’s not surprising they’ve published one of the most respected white papers on the subject on the internet. If you want to know more about this topic, it’s well worth a read. The paper concludes that tax-loss harvesting can significantly increase the return on investment of a typical portfolio.
US Direct Indexing
US Direct Indexing is an enhanced level of tax-loss harvesting that Wealthfront offers to people with account balances exceeding $100,000.
Instead of building a portfolio of ETFs, Wealthfront will use your money to directly purchase shares in 100, 500, or 1,000 US companies. By buying shares in so many companies, Wealthfront can emulate an index fund in your portfolio while owning individual shares in the businesses.
Owning individual shares in hundreds of companies makes tax-loss harvesting easier as it lets Wealthfront’s algorithm trade based on movements in individual stocks rather than in funds. This can increase the number of tax losses that Wealthfront harvests each year, reducing your income tax bill.
Other Wealthfront Features
Wealthfront Cash Account
Wealthfront offers acash account where you can safely and securely store your money for anything–emergencies, a down payment for a home, or to later invest. By working with what they call Program Banks, Wealthfront has quadrupled the normal FDIC insurance on this account, so you’re protected for up to $5 million.
There’s also no market risk since it’s not an investment account and the money isn’t being invested anywhere. You can make as many transfers in and out of the account as you’d like, and it only takes $1 to start.
So what’s the catch?
There really isn’t one. Wealthfront will skim a little off the top to make some money before giving you an industry-leading 4.30% APY, but other than that, you’re just giving them more financial data. Since we’re doing this all the time with technology anyway, it shouldn’t make that big of a difference.
I see no downside, especially if you’re already a client of Wealthfront.
They’re really making a play to be your all-in-one financial services provider, too.
A new feature, just launched, is the ability to use your cash account as a checking account. This includes the ability to access your paycheck up to two days early when you set up a direct deposit. Additionally, you can invest in the market within minutes using your Wealthfront Cash account. Put the two together and you give yourself the ability to invest more than 100 days more in the market. The account also allows you to auto-pay bills and use apps like Venmo and PayPal to send money to friends or family. Account-holders also get a debit card to make purchases and get cash from ATMs. And you can use the account to organize your cash into savings buckets – like an emergency fund, down payment on a house, or other large purchase – and use Wealthfront’s Self-Driving Money offering to automate your savings into those buckets.
If you have cash that’s getting rusty in a traditional bank account and you want to earn more, the Wealthfront Cash Accountis a great place to keep it.
Read more about the cash account in our Wealthfront Cash Account full review.
Wealthfront Portfolio Line of Credit
This feature is available if you have at least $25,000 in your Wealthfront account. It allows you to borrow up to 30% of your account value, and currently charges interest rates between 3.15% and 4.40% APR depending on account size. You can make repayments on your own timetable, since you’re essentially borrowing from yourself. And since the credit line is secured by your account, you don’t need to credit qualify to access it.
Wealthfront Free Financial Planning
This is Wealthfront’s entry into financial planning. But like everything else with Wealthfront, this is an automated service. There are no in-person meetings or phone calls with a certified financial planner. Instead, technology is used to help you explore your financial goals, and to provide guidance to help you reach them. And since the service is technology-based, there is no fee for using it.
The service can be used to help you plan for homeownership, college, early retirement, or even to help you plan to take some time off to travel, like an entire year!
Simply choose your financial objective, enter your financial information, and Wealthfront will direct you on how to plan and prepare.
Self-Driving Money
One of the biggest and largely unrecognized obstacles for most investors is something known as cash drag. That’s when you have too much of your portfolio sitting in cash, which may earn interest, but it doesn’t provide the investment returns you can get in a diversified investment portfolio.
Wealthfront has addressed the cash drag dilemma with their newly released Self-Driving Money features. It’s a free service offered by the robo-advisor that essentially automates your savings strategy. It does this by automatically moving excess cash to help meet your goals, including into investment accounts where it will earn higher returns. And in the process, it eliminates the need to make manual cash transfers, and the judgment needed to decide exactly when to make that happen.
Our vision of Self-Driving Money is going to be a complete game-changer for people’s finances, said Chris Hutchins, Head of Financial Automation at Wealthfront. We want to completely remove the burden of managing your money so you can focus on your career, your family or whatever is most important to you.
You can take advantage of Self-Driving Money from the Wealthfront Cash Account. You’ll set a maximum balance for the connected account, which should be an amount that’s more than you expect to spend or withdraw on a monthly basis.
How It Works
When Wealthfront determines you’re over your maximum balance by at least $100 it will schedule an automatic transfer of the excess cash based on your goals. For example, you can tell Wealthfront you want to save $10,000 in an emergency fund, then max out your Roth IRA, then put the rest toward saving for a down payment on a house. Once you set the strategy, Wealthfront will automate the rest.
And before it happens, you’ll receive an email alert, then always have 24 hours to cancel the transfer if you need to cover unexpected expenses. You’ll also be able to turn on and off your Self-Driving Money plan at any time.
It’s usually possible to set up automated transfers from external accounts into most investment accounts. But what sets Wealthfront apart is the fact that it will make those transfers automatically. They will make sure you always have enough cash to pay your bills, then automatically transfer any excess into your savings buckets or investment accounts to improve the return on your money.
The strategy is designed to optimize your money across spending, savings, and investments, and to make it all flow with no effort on your part. You can simply have your paycheck direct deposited into your external checking account or Wealthfront Cash Account, cover your expected monthly spending, then have excess funds automatically transferred into the Wealthfront account of your choice.
By delivering on its Self-Driving Money vision, Wealthfront is taking the robo-advisor concept to a whole new level. Not only do you not need to concern yourself with managing your investments, but now even funding those investments will happen automatically. The result will be near complete freedom from the financial stresses that plague so many individuals.
Wealthfront Fees
Wealthfront has a single fee structure of just 0.25% per year for their advisory fee. That means you can have a $100,000 portfolio managed for just $250, or only a little bit more than $20 per month.
The one exception is the Wealthfront Risk Parity Fund, which has a total fee of 0.50% per year.
How to Sign Up with Wealthfront
To open an account with Wealthfront, you’ll need to be at least 18 years old, and a U.S. citizen.
You’ll need to provide the following information:
Your name
Address
Email address
Social Security number
Date of birth
Citizenship/residency status
Employment status
As is the case with all investment accounts, you’ll also be required to supply documentation verifying your identity. This is usually accomplished by supplying a driver’s license or other state-issued identification.
As mentioned earlier, you complete a questionnaire that will be used to determine your investment goals, time horizon, and risk tolerance. Your portfolio will be based on your answers to that questionnaire, and will be presented to you upon completion of the questionnaire.
For funding, you can use ACH transfers from a linked bank account. You will also have the option to schedule recurring deposits, on a weekly, biweekly, or monthly basis. The platform can even enable you to set up dollar-cost averaging deposits.
If you already have a brokerage account with another company, Wealthfront makes it easy to transfer your funds to your new account. If you’re invested in ETFs that Wealthfront supports, Wealthfront will assist with an in-kind transfer.
That means that you won’t have to sell your shares before transferring funds, which lets you avoid capital gains taxes that would be triggered by a sale.
Wealthfront Alternatives
Wealthfront’s closest competitor, and the robo-advisor that offers the most comparable services, is Betterment. They also have an annual advisory fee of 0.25%, but require no minimum initial investment. That could make it the perfect robo-advisor for someone with no money, who plans to fund their account with monthly deposits. Read the full Betterment review here.
Related: Wealthfront vs. Betterment
Another alternative is M1. Also a robo-advisor, M1 enables you to invest your money in what they call “pies”. These are miniature investment portfolios comprised of both stocks and ETFs. You can invest in existing pies, or create and populate pies of your own design. Once you invest in one or more pies, the platform will automatically manage it going forward. What’s more, M1 is free to use. Read more about M1 here.
Related: Wealthfront vs. Vanguard
Read More: The Best Robo Advisors – Find out which one matches your investment needs.
Wealthfront Pros and Cons
Investment options: Wealthfront offers more investment options than just about any other robo-advisor, particularly for investors with at least $100,000.
Reasonably priced: The annual fee of 0.25% is extremely reasonable, especially when you consider the degree of sophistication offered by Wealthfront’s investment methodology.
Tax-loss harvesting: This is available on all accounts, and Wealthfront is probably better at this investment strategy than any other robo-advisor.
Portfolio credit line: Gives you the ability to borrow against your portfolio with ease, and represents a form of margin investing.
Financial planning feature: The financial planning service is free to use and is available to all investors.
Limited access for smaller investors: Some of the more advanced investment portfolios and services are available only to investors with $100,000 or more to invest.
$500 minimum initial investment: It’s a minor issue, though some competitors require no funds to open an account.
FAQs
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Should You Sign Up for Wealthfront?
In a word, absolutely! Wealthfront is one of the very top robo-advisors, and you can’t go wrong with this one. Not only do they offer far more services than most other robo-advisors, but they also allow you to grow along the way. For example, as your account increases in value, you can take advantage of more sophisticated investment strategies, including advanced tax-loss harvesting.
That Wealthfront offers its portfolio line of credit and free financial planning services only makes the platform a bit more attractive, But the real benefit is the actual investment service. Wealthfront’s investment service comes extremely close to that of traditional human investment advisors, but at only a fraction of the annual cost.
Even outside the congested sprawl that is New York City, moving anywhere in New York State has benefits. The state is busy, beautiful and full of potential.
Whether you’re set on big city living or want to take advantage of the fall foliage and outdoor space upstate, if you want to call New York home, you’re going to need to take a close look at your budget. Calculating your cost of living, based on New York State prices, is a great way to start. Consider costs in these essential areas to see if this northeastern state is right for you.
New York Housing prices
It’s no secret that New York, overall, is an expensive place to live. Especially in and around The Big Apple, housing prices can skyrocket to the point that you’re cramming five people into a one-bedroom apartment.
That said, there’s always a deal to find, even if it means living a little further out than you’d anticipated. Here’s the cost of living in New York for housing in major cities.
Albany
As the state capital, Albany sits upstate along the Hudson River with a thriving urban center. It’s known for its diverse culture, great architecture and a lot of college students. Housing prices here are on the rise at 6.2 percent above the national average.
Rent prices are increasing only slightly year-over-year, keeping things pretty affordable. A one-bedroom apartment averages out to $1,267 per month, up 3 percent over last year. A two-bedroom apartment averages out to $1,465 per month, up 9 percent over last year.
Housing prices are also increasing at about the same rate, up 4.4 percent over last year. The median home price in Albany is currently $235,000.
Brooklyn
The largest New York City borough when it comes to population, Brooklyn is well-known for its people. The diverse crowd comes from all over the world, many to orchestrate a start-up or pursue an opportunity at one that’s taken off. A trendy place, that’s easy to navigate, Brooklyn is an attractive home for a lot of people, which is most likely why its housing prices are 196.7 percent above the national average.
Although rent prices are coming down in Brooklyn, when compared to last year, they’re still on the higher end. A one-bedroom apartment, down 25 percent, still has an average monthly rent of $2,600. Two-bedroom apartment prices have dropped by 53 percent, but are still $2,650 per month, on average.
Home prices are on the rise and pricy. The median home price in Brooklyn is $1.02 million, up 3 percent over last year.
Buffalo
The only city on the list coming in under the national average for housing, Buffalo is 6.8 percent below. The second-largest city in the state, situated right on Lake Erie, is what you think when. you think upstate.
Rents in Buffalo offer a mixed picture. One-bedroom apartments are up 5 percent, and two-bedroom apartments are down by 12 percent. This may make renting more affordable than buying since home prices are on the rise.
An average one-bed rents for $1,327 per month, a two-bed is at an average of $1,446 per month, but median home sales in Buffalo sit at $216,00, which is an 8 percent increase over last year.
Manhattan
As the literal center of everything, it’s no surprise housing prices in Manhattan are 382.7 percent above the national average (wow!). This is the most densely populated of the five boroughs, home to the Empire State Building, Times Square and Broadway. It’s also a major commercial, financial and cultural center. You get it all.
Average apartment rent aligns with this heightened housing cost. At $4,517 per month, finding an affordable place could be a challenge.
Home prices aren’t much better. The median home price in Manhattan, which stayed the same as last year, is currently $1.2 million.
Queens
Situated on Long Island, Queens is home to the U.S. Open tennis tournament, as well as great museums, restaurants and attractions. It’s also considered one of the safest New York City boroughs to live in and a great place for families. These attractive qualities have definitely boosted housing prices, which are 109.1 percent higher than the national average.
Apartment rent isn’t very cheap either, although prices are rising slowly. The average one-bedroom rent is $1,900, up 6 percent over last year, and two-bedrooms have an average monthly cost of $2,300, up 15 percent.
House prices are up 2.3 percent from last year. The median home price in Queens is pretty high though at $706,000.
Food prices
Another cost of living in New York is food. Averaging in all of New York State, food prices aren’t that expensive. The average New Yorker only spends between $233 and $267 per month on groceries, which isn’t that much. Of course, it depends a lot on where you live, whether you fit into what’s ‘average.’
Buffalo is 4.6 percent below the national average
Albany is 12.9 percent above the national average
Queens is 25.7 percent above the national average
Brooklyn is 29.2 percent above the national average
Manhattan is 44.4 percent above the national average
It’s no surprise that food prices are higher the closer in you get to New York City. You can see these differences much better when looking at the cost of individual items. For example, eggs in Manhattan are 38 percent more than eggs in Buffalo. Bananas in Brooklyn are 18 percent more than bananas in Albany.
This same price difference is apparent when on a date for two. A three-course meal in Brooklyn for you and a special someone is $90, but that same meal only costs you $73 in Buffalo. That’s a 19 percent difference just to live in the city.
Utility prices
Throughout New York State, utility prices hover pretty close to the average across the country. Two cities even tie, with utility prices slightly below average.
Albany and Buffalo tie at 4.6 percent below the national average
Manhattan is 3.3 percent above the national average
Queens is 4.4 percent above the national average
Brooklyn is 6.6 percent above the national average
Even with reasonable utility prices, monthly energy bills are high, on average, in every city on the list. They’re all above $150, with some even close to $200. It makes sense, though, when you think about how much electricity it takes to power this state, most of it concentrated in those neon signs in Times Square (they’re bright).
However, even with this energy consumption, the state’s Clean Energy Standard mandates New York provide 100 percent carbon-free electricity from all sources by 2040. They’re moving in the right direction for this cost of living in New York.
Transportation prices
Public transportation is big throughout New York, which is good because driving in some areas is downright intimidating. This includes city driving, as well as navigating all that winter snow. With a combination of buses, trains and your own car, here’s how the cities stack up when it comes to transportation prices as a cost of living in New York.
Buffalo is 0.6 percent below the national average
Albany is 0.8 percent above the national average
Queens is 9.2 percent above the national average
Brooklyn is 14.9 percent above the national average
Manhattan is 17.6 percent above the national average
Depending on where in New York you live, a car may really not be necessary. Public transportation in certain spots is amazing, and all five boroughs have impressive walk and bike scores. Manhattan, for example, has a walk score of 97 and a bike score of 87. You can definitely get around there without a vehicle.
NYC MTA
The New York City MTA extends its reach to all five boroughs, including Manhattan, Brooklyn and Queens. With subway, bus and rail lines, you can really get just about anywhere you need with the MTA.
Fares vary based on what line you’re riding and whether it’s an express. Most subway routes and local busses cost $2.75 per way. The express bus is $6.75.
The best way to use the MTA hassle-free is with a MetroCard. The cards themselves cost $1 plus the fee for the type of card you want. You also get unlimited swipes within a certain amount of time. For example, a 30-day unlimited MetroCard costs $127, but you get unlimited subway swipes for those 30 days.
CDTA in Albany
The Capital District Transportation Authority offers bus routes throughout Albany, but also services other cities within the Capital Region of the state. In Albany alone, there are 40 different routes.
The base fare for a ride on the CDTA is $1.50. For the most cost-effective ride, residents use a Navigator card which lets you add pay-as-you-go funds or buy a discounted monthly pass.
NFTA Metro in Buffalo
A combination bus and rail system, the NFTA actually covers both the Erie and Niagara Counties of New York. Within the heart of Buffalo, the rail system gets you where you need to go.
A standard fare is $2 for all NFTA Metro services. Monthly passes are also available for $75. There’s also a mobile app you can use to buy Metro funds to board both buses and the rail system.
Healthcare prices
Overall, the cost of living in New York for healthcare prices are pretty reasonable, with no city that much higher than the national average.
Buffalo is 8.2 percent below the national average
Brooklyn is 4.2 percent above the national average
Queens is 4.9 percent above the national average
Manhattan is 7.9 percent above the national average
Albany is 11.3 percent above the national average
Interestingly enough, the highest overall city, when it comes to healthcare prices, has the least expensive average doctor visit. Albany costs $99 on average to see the doc, while the most expensive visit will be in Queens at $132.86.
Goods and services prices
Overall, most of the things you have in your budget that aren’t completely necessary, but you really like having, cost more in New York, on average, than around the country.
Buffalo is 8.3 percent below the national average
Albany is 13.9 percent above the national average
Queens is 20.2 percent above the national average
Brooklyn is 23.8 percent above the national average
Manhattan is 33.1 percent above the national average
The sticker shock of childcare
One other item in the goods and services category that can really shift your monthly budget is childcare. Maybe you don’t need to pay for this now, but it’s a pricy item in New York, so it’s good to know.
A full-day, private preschool costs $2,043 per month in Brooklyn. Prices in other boroughs exceed $1,100 per month, as well. It’s not until you get further away, to Buffalo, that this cost dips below the $1,000 market. Preschool in Buffalo only averages out to $935.42.
Taxes in New York
Sales tax in New York can get high fast. The state has a sales tax of only 4 percent, but local areas can then add up to 4.875 to that total. That means the most you could possibly pay in sales tax is 8.88 percent. At this level, for every $1,000 you spend shopping, you’re automatically forking over $88.80 straight in taxes. That’s a high markup.
Of course, the areas within New York City max out their sales tax. Manhattan, Brooklyn and Queens all have an 8.88 percent sales tax rate. Buffalo is barely less at 8.75, and Albany is only slightly lower right at an even 8 percent.
Altogether, it’s expensive to shop (and live) in New York (but you knew that already).
How much do I need to earn to live in New York?
Living in New York comes with a hefty price tag, so it’s very important you calculate your cost of living properly in order to ensure your budget can handle it. The best way to do this is with our rent calculator, but there are a few basic numbers you can crunch, as well.
One of them is calculating how much you’d need to make annually to afford the average New York rent, which is $2,355 per month. To do this, you need to put 30 percent of your annual salary to rent. So, at this average price, you’d need to make $94,200 a year.
This is possible, but not always probable being that the average annual income in New York is only $88,030. This number comes close, but a few places may still be out of reach unless you bring in a roommate to supplement costs. That’s a game-changer for the budget.
Living in New York
The most amazing thing about New York is the assortment of lifestyles you can lead. You can take urban living to the extreme throughout New York City, or slow things down upstate. Sometimes, your budget will drive where you end up, and sometimes, you’ll cram yourself into a tiny apartment with roommates just to live in the middle of the action. Either way, New York has so much to offer and is a great place to take up residence.
Related articles:
The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of June 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.
One of the safest states in the U.S., Utah has a lot going for it. The weather gives you solid seasons, with warm summers and cold (ski-friendly) winters. Outdoor activities abound beyond the mountains, with plenty of rivers and lakes to explore. Low unemployment rates and a growing stake in the tech industry provide ample opportunities. There’s also a large population of young professionals seeking Utah out as their new home, so the community is energetic, educated and ready to go.
The list can go on, but already with so many traits recommending Utah, we bet we’ve piqued your interest. But, don’t pack your bags yet. Before you can call Utah home, you’ve got to make sure you can afford to live here. By looking at some key cost of living components, in a few central Utah cities, we can help you with figure out if your budget matches up.
Utah housing prices
Most Utah cities recommend themselves as some of the best places to live in the state. There’s not much that isn’t interesting and scenic. However, everything appealing about Utah has a price tag, and most cities have costs that exceed the national average. Thankfully, when it comes to the cost of living in Utah for housing, you’ll never go too far over, but on the whole, expect to have to pay to call this state home.
Cedar City
Combining a small-town feel with an urban setting, Cedar City changes things up with as many ranches and farms as there are college residences. It’s a great combination of the best parts of Utah and at an affordable price. Housing prices in Cedar City are 7.3 percent below the national average.
The average rent for a two-bedroom is affordable, at $775 per month, and home prices are even going down. The median home price in Cedar City is $322,00, down by 6.7 percent over last year.
Ogden
Known for its professional opportunities, Ogden is the place to go if you’re looking for a government job. The professional stability combined with the city’s proximity to ski resorts means it’s all about working hard and playing hard. This explains why housing prices in Ogden are 6 percent above the national average.
Rents in Ogden are rising pretty significantly year-over-year, keeping prices up. The average one-bedroom apartment saw a 26 percent increase over last year and is currently $1,305 a month. Two-bedroom apartments are rising at a slower rate, up only 14 percent over last year. The current average rent per month is $1,499.
Home prices are also rising, up 17.1 percent over last year. The median home price in Ogden is $410,000.
Provo
One of many college towns in Utah, Provo is home to Brigham Young University. Run by the Church of Jesus Christ of Latter-Day Saints, both the student population and many of the city’s residents are members of the church. Provo has a heavy focus on family life and is full of many young people and new families.
This popular city has housing prices that average 15.8 percent above the national average. The average rent for a two-bedroom is $1,495, and home prices are up 17.6 percent. The median home price in Provo is $450,000.
Salt Lake City
Perhaps the best-known city in Utah, Salt Lake City has it all. It’s the perfect package of a place to live, with a strong city center, plenty of jobs, fun things to do and the great outdoors to enjoy. You’ll never be without something to do or see here, whether you’re going to a free summer concert, cheering on the Utah Jazz at a basketball game or simply exploring the city. For all its popularity, Salt Lake City housing prices aren’t too high, but they do hit above the national average by 26.3 percent.
Steady growth in the rental market has led to some pretty high prices in Salt Lake City. A one-bedroom apartment has an average monthly rent of $1,513, up 20 percent over last year. A two-bedroom will set you back an average of $1,831 per month, which is 16 percent higher than last year.
Home prices are rising even faster, up 36.2 percent over last year. The median home price in Salt Lake City is $613,000.
Utah food prices
Another cost of living in Utah is food. Utah residents spend an average of between $200 and $233 per month on groceries. Judging by the local favorite foods, a large portion of this could be on fresh produce. Yes, the state is famous for fry sauce and pastrami burgers, but it’s also well-known for honey, tomatoes, raspberries, corn and Green River melons. Yum.
Compared to the national average, most Utah cities hit very slightly above average.
Ogden is 4.4 percent below the national average
Provo is 0.1 percent above the national average
Cedar City is 0.9 percent above the national average
Salt Lake City is 6.3 percent above the national average
This could impact your overall grocery bill, but might not make everything you buy more expensive in one city over another. Lettuce, for example, costs 20 cents more in Cedar Lake than Salt Lake City. Peaches are 20 cents more in Ogden, the only city with food prices below the national average than in Cedar City.
Where food pricing gets predictable is when you look at the average cost for a romantic dinner for two. A three-course meal, for two, costs $72.50 in Salt Lake City, but only costs $35 in Ogden. That means you’re paying 52 percent more to eat the same meal in Salt Lake City.
Utah utility prices
Across the state of Utah, you’ll be happy to hear, utility prices are all below the national average. That’s good news for the cost of living in Utah.
Provo is 10.9 percent below the national average
Ogden is 7.5 percent below the national average
Salt Lake City is 7 percent below the national average
Cedar City is 2.7 percent below the national average
This means energy bills typically range between $140 and $165 per month, coming from both electricity and alternate energy sources.
Utah transportation prices
Although utility prices are on the lower side when compared to the national average, transportation prices in Utah do the exact opposite. They’re all slightly above.
Cedar City is 1.4 percent above the national average
Provo is 3.3 percent above the national average
Ogden is 4.5 percent above the national average
Salt Lake City is 5.9 percent above the national average
Even though Salt Lake City tops the list in cost, it also gets the highest scores when it comes to walkability (67) and bike friendliness (73).
Although it’s easy to get around Salt Lake, and Provo is often considered somewhat walkable itself, living in Utah most likely means you’ll need to either own a car or rely on public transportation (or both.)
The Utah Transit Authority
Stretching well beyond a single city, this network of vehicles really goes the distance. Yes, there are solid transportation networks throughout Utah that cover smaller areas, but the UTA takes the cake. It encompasses Salt Lake City, Ogden and Provo through its commuter rail service.
In Ogden, specifically, UTA buses cover the downtown area, Weber State University and routes to major employment centers. There’s also a ski bus that gets you to Snowbasin and Powder Mountain.
In Salt Lake City, a bevy of buses come regularly, with special routes during rush hour. There are also buses heading up to Snowbird Alta and Solitude Brighton for skiing.
Fares vary based on transportation type. For the local bus or streetcar, a one-way fare is $2.50, and a monthly pass is $85. If you want a premium pass, to have access to all types of transportation UTA offers, except the PC-SLC Connect, you can get a monthly pass for $170.
Utah healthcare prices
Shifting gears to look at healthcare, a tricky area for anyone’s cost of living total, all of our Utah cities fall below the national average.
Cedar City is 10.5 percent below the national average
Ogden is 9.9 percent below the national average
Provo is 8.5 percent below the national average
Salt Lake City is 5.7 percent below the national average
Healthcare costs include doctor’s visits, medications, getting your eyes checked and those two annual visits to the dentist each year. Individual prices won’t always align with how overall rank, though. The least expensive city, on average, for a doctor’s visit isn’t Cedar City, but Provo, the only city with a doctor’s visit bill under $100.
Utah goods and services prices
Goods and services are a wide category when it comes to the cost of living in Utah total. All the extras, that maybe don’t feel so extra, fit here. These are things you want but don’t necessarily need, and in Utah, they’re all slightly above what you pay on average.
Cedar City is 2.8 percent above the national average
Ogden is 4.8 percent above the national average
Salt Lake City is 6 percent above the national average
Provo is 9.9 percent above the national average
To better understand how these averages impact specific goods and services you might partake in, this chart breaks things down.
Provo may have the highest combined prices, but that isn’t the case for every individual service. A vet visit, for example, will be more in Salt Lake City on average, and a movie ticket is more in Cedar City.
Another key service in this category, with a high price tag, is childcare. Even if you don’t need to use this service now, prices can vary greatly, making it something you might want to think about. For a full-day, private preschool, you’ll pay $362.50 in Cedar City, but $783.33 in Salt Lake City. That’s a 54 percent difference that could easily stretch your budget.
Taxes in Utah
When it comes to taxes, Utah residents pay both individual income tax and sales tax. The income tax rate is 4.85 percent, and the state sales tax rate is 4.85 percent. Localities can then add up to 3.35 percent more onto the sales tax, which means the most you’d pay in any Utah city is 8.2 percent. That means for every $1,000 you spend shopping, $82 goes right to taxes.
None of the cities on our list max out the sales tax.
Cedar City has a 6.2 percent sales tax rate
Provo has a 7.25 percent sales tax rate
Ogden has a 7.25 percent sales tax rate
Salt Lake City has a 7.75 percent sales tax rate
At 7.75 percent, when you shop in Salt Lake City and spend $1,000, $77.50 is what you’ll pay solely in taxes.
How much do I need to earn to live in Utah?
To effectively calculate how much you need to earn to afford the cost of living in Utah, and if it will work with your ideal budget, plug in specific numbers to our rent calculator.
For some quick estimating, you can look at how much you need to earn to afford the average rent in the state. Rent should only take 30 percent of your annual income. So, with the average rent in Utah at $1,571, you’d need to make $62,840 per year.
This is highly likely to work out since the average salary in Utah is much higher, at $89,300. That means you’ll not only be fine looking at average-priced places to live but have wiggle room to get something with more amenities (or square footage).
Living in Utah
Utah is growing in population, so there are a lot of people out there, like you, who’re discovering this beautiful place full of activity and opportunity. To really get the ball rolling on deciding if Utah fits your budget, it’s best to look at the cost of living across the state.
Could you afford to live, eat and play in any specific city? If the numbers align, it might be time to start packing those boxes and preparing for a new adventure.
Related articles:
The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of June 2022.
Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.
Let’s say that you find yourself with some tax debt this year. It’s less than ideal—if you’re scrambling to pay off your tax debt, it might have a huge impact on your financials. But does tax debt affect your credit score? And does an IRS collection go on your credit report?
The IRS doesn’t report directly to the credit bureaus. And a tax lien won’t show up on your credit report either. But that doesn’t mean taxes won’t impact your credit score. Read on to find out more about how federal taxes and credit can be related.
Does IRS Collection Go on Your Credit Report?
The IRS doesn’t report information about the taxes you owe, when or how you pay them or whether you’re in collections to the credit bureaus. In fact, the Taxpayer Bill of Rights includes a right to privacy and confidentiality. That means that in many situations, your tax information is not public knowledge.
What does this mean?
Your payments on a tax bill, whether on time or otherwise, generally don’t impact your credit positively or negatively.
If you’re late paying your taxes, the IRS won’t report that information to the credit bureaus.
The IRS itself typically won’t report your debt to the credit bureaus at all.
Does IRS Debt Ever Show up on Your Credit Report?
Prior to April 2018, federal tax debt could show up on your credit report via another path. If the IRS files a tax lien against you for taxes owed, the information becomes public record. That’s true of most liens.
Credit reports used to include information about liens. In April 2018, the credit reporting agencies modified policies on how certain public records, including liens, were dealt with. That included removing all tax liens from credit reports.
What does this mean?
Tax liens won’t show up on your credit report, so tax information probably won’t ever show up.
This is due to a policy change from the credit bureaus, though, and that can always be reversed if things change.
Tax liens are still public records, so creditors or others can find out about them if they look.
How Do Taxes Affect Your Credit Score?
Just because taxes don’t appear on your credit report doesn’t mean they won’t have an impact on your credit score. If you’re behind on taxes or dealing with paying off a large tax bill, that could have an impact on your overall finances. In turn, that could negatively impact your credit score. Here are a few ways this can happen:
You Prioritize Tax Debt Over Other Debt
In the worst-case scenario, you might make payments on tax debt instead of payments owed on a mortgage, car loan or other debt. If you do this for several months, you could risk serious issues like foreclosures or repossessions. Even if you only do it for a month or two, you can end up with late payments reported on your credit report. All those things are bad for your score.
In less severe cases, you might be able to make tax payments while also making timely payments on your other debts. But perhaps you’re not paying down balances on those debts quickly because you’re prioritizing your tax debt. That can lead to a higher credit utilization ratio for longer, which can impact your credit score.
You Use Revolving Credit to Pay Taxes
If you aren’t starting with a large balance on your credit card accounts, you might think about using them to pay down your tax bill. That’s one way to remove the stress of a potential tax lien. For many people, the interest expense of paying off some credit card debt is preferable to facing consequences from the IRS.
But this option does impact your credit score. If you max out or drive up your credit card balances to pay off tax debt, you increase your credit utilization ratio. Credit utilization is about 30% responsible for your credit score, so that can make for a big impact!
You Take Out a Loan to Pay Taxes
Instead of revolving credit, you might use an installment loan to pay off some tax debt. Whether you’re taking out an unsecured personal loan or a home equity loan, this new debt will have at least some impact on your credit. First, there’s the hard inquiry that may be required to evaluate you for the loan. Hard inquiries can negatively impact your credit score a bit.
Then there’s the fact that you have a new account on your credit score. That can also cause a temporary drop in your score if it changes the overall age of your credit.
It’s Important to Deal With Taxes Promptly
Tax debt doesn’t magically go away, and the impact to your life and finances can get bigger the longer you ignore the issue. If you owe taxes, make a plan to pay them as soon as you can.
Does filing taxes late affect your credit score? Not directly, but it can lead to all the issues discussed above. If you know you’ll owe taxes, don’t avoid filing because you can’t pay. Interest on tax debt is often less than the fines for not filing your return on time. You can also reach out to the IRS to set up installment plans or other payment arrangements on large tax bills.
It’s also a good idea to be familiar with how your other debts might impact your taxes. For example, if a creditor forgives your debt and sends you a 1099C cancellation of debt, you may need to pay taxes on that amount.
Learning how to do your taxes yourself and getting a head start on the process every year can be a good idea to get ahead of tax debt. When in doubt, consider consulting a tax or financial professional to help you come up with the right plan for you.
Not sure what your credit score is to begin with? Sign up for ExtraCredit® and get the full story about your credit with information from all three major bureaus and 28 of your FICO® scores.