The U.S. Department of Housing and Urban Development (HUD) on Monday announced that it would be bringing its Innovative Housing Showcase back to the National Mall in Washington, D.C., this June. The event is designed to highlights housing solutions and “advancements in housing design, technology and sustainability.”
Taking place on June 7-9, the event is open to the public and will offer an opportunity “to raise awareness of innovative and affordable housing designs and technologies that have the potential to increase housing supply, lower the cost of construction, increase energy efficiency and resilience, and reduce housing expenses for owners and renters,” HUD explained in a news release.
Coming on the heels of a new commitment to housing solutions as outlined by President Joe Biden during his State of the Union address earlier this month, the event is designed to highlight a wider effort by housing professionals and stakeholders to impact housing access, availability and sustainability. The event will also feature interactive exhibits, including full-sized prototype homes and other technology demonstrations.
HUD expects as many as 4,000 people, “including policymakers, housing industry representatives, media, and the public,” to attend the event across all three days.
“The Innovative Housing Showcase is a testament to our nation’s unwavering commitment to moving the housing sector forward,” HUD Secretary Marcia Fudge said in a statement. “The future of housing is innovative. The Showcase provides a unique opportunity to explore technologies that can make housing more affordable and more resilient, while bringing industry leaders and the public together on creative solutions to the challenges facing our communities.”
Technological advancement is key to improving housing across the country, which is why it’s important to highlight advancements in a public setting, according to Solomon Greene, principal deputy assistant secretary for policy development and research (PD&R) at HUD.
“HUD and its Office of [PD&R] have supported innovation in housing and building technologies since the beginning, and these investments have contributed to changes in building codes, improvements in industry practice, and most importantly, lower housing costs for American families,” Greene said. “The Showcase continues that tradition, featuring the latest technologies and designs that can help meet the nation’s growing housing affordability and climate resilience needs.”
HUD recently posted a notice in the Federal Register to solicit exhibitors for the event, with final applications due March 29. Exhibitors and other programming details are expected in May.
Looking for the best business ideas for teens? Whether you’re a teenager trying to find ways to make extra money or if you’re a parent trying to help your child start a business to learn about money, there are many positives of starting your own business young. Whether it’s in the summer, after school, or…
Looking for the best business ideas for teens?
Whether you’re a teenager trying to find ways to make extra money or if you’re a parent trying to help your child start a business to learn about money, there are many positives of starting your own business young.
Whether it’s in the summer, after school, or on weekends, having a small business can be a fun and educational thing to start.
I did many different things as a teen to make extra money, and they all taught me so much. There are many different ways for teens to make money, as you will learn below.
Best Business Ideas for Teens
There are many business ideas for teens listed below. If you want to skip the list, here are some ways for teens to make money that you may want to start learning more about first:
Below are the best small business ideas for teenagers to start.
Recommended reading:
1. Babysitting
Babysitting is an obvious job for teenagers, and it can be a great way to make money. I was a babysitter when I was a teenager and regularly earned over $1,000 a month by babysitting (mainly in the summer).
Starting a babysitting business is a smart choice for teens as it’s simple to start with very few costs. Your main investment is the time and effort you spend taking care of children.
To get started, you’ll need to let people know you’re available. Reach out to your parents’ friends, neighbors, or family members. After a while, word of mouth can help you find more jobs.
Safety is really important too, of course. So, you will most likely want to get certified in first aid or CPR. This not only makes you more trustworthy but also helps you handle emergencies.
2. Car washing services
Starting a car washing business can be a great business for a teen entrepreneur.
To start, you just need basic supplies: a bucket, a soft sponge, window cleaner, and cloths for drying and polishing.
With a straightforward service like car washing, you can operate right in your driveway or travel to clients’ homes for convenience.
3. Start a blog
Starting a blog is a great way for you to share your thoughts and ideas while potentially earning money. Your blog can cover any topic you’re passionate about, whether it’s fashion, sports, technology, or your daily experiences.
While I was around 21 years old when I started my blog, I know a few people who started theirs as teenagers.
A blog can be a great business idea to start when you’re young, as you can decide how to build your blog, how you earn an income, and the schedule you put toward it.
You can easily learn how to start a blog with my free How To Create a Blog Course.
Here’s a quick outline of what you will learn:
Day 1: Why you should start a blog today
Day 2: What topic to blog about
Day 3: Tutorial on how to start a blog on WordPress
Day 4: How to make money with your blog
Day 5: How to make passive income on your blog
Day 6: How to get pageviews to your blog
Day 7: Tips to see success with your blog
Out of all of these business ideas for teens, blogging is by far my favorite. It does take more time to start making money, but it’s very flexible and fits with any kind of schedule.
4. Tutoring and teaching
If you’re a teen who’s really good at a certain subject, tutoring could be a great way to start a rewarding business. You can use your knowledge to help others do well in areas you’re good at.
Your friends or younger students might find it helpful to have one-on-one sessions where you explain difficult topics in simple ways.
Subjects you may be able to tutor in include:
Math
Science
Foreign languages
English
Many tutors are teenagers, so this may be a great fit for you!
5. Photography
If you love capturing moments through a lens, starting a photography business could be a perfect fit for you.
Starting a business as a photographer can kick off with a relatively low investment. Initially, you might need to spend between $500 to $2,000 on equipment like a good camera, lenses, and editing software. But, if you already have a camera, then that is the bulk of the cost.
You can take pictures at events like birthdays or graduations, capture stunning portraits, or create art through landscape and wildlife photography.
6. Home care services in your neighborhood
When you start a home care services business, you’re stepping into a role that helps busy homeowners manage their households.
This can include a range of services that assist with the upkeep of a home, such as:
Housecleaning – You can offer to dust, vacuum, and clean the different areas of a home. People always appreciate coming back to a sparkling clean space.
Laundry – Washing, drying, and folding clothes are tasks that many would gladly outsource to you. Organizing wardrobes or ironing clothes can be added services.
Plant care – Have a green thumb? Offer to water plants, prune leaves, and take care of any garden needs.
Raking leaves – Raking leaves is a good business idea for teens, especially during the fall. Trees drop their leaves and many homeowners need help gathering and disposing of them.
Errand runner – As an errand runner, you’ll help people in your community with tasks they might not have time for, like grocery shopping, picking up prescriptions, or mailing packages.
When I was a teen, I had a friend who was a personal assistant for someone in her neighborhood. She would pick up their dry cleaning, take care of their plants, walk their dogs, and more.
7. Pet care (pet sitting and dog walking)
If you’re a teen who loves animals, starting a pet care business can be a great way to earn some extra cash. Pet sitting and dog walking services are in high demand and can be both fun and rewarding.
To start, you can join a dog walking app-based service. Rover is a user-friendly option that connects you with pet owners. You can create a profile, set your own prices, and specify the types of services you feel comfortable providing, such as dog walking or pet sitting.
You can typically earn between $15 and $30 for each hour spent with a pet, considering you might need to commute to the pet’s location.
8. Graphic design
If you’re interested in art and technology, you can start a graphic design business.
Graphic design is about creating visual content for companies and individuals. You’ll use software to make logos, social media graphics, posters, and much more.
As a teen graphic designer, your income will vary. Typically, you can make anywhere from $5 to $100 per project when starting. As your skills grow, so can your rates. The market for design work is expanding, making room for you to succeed.
9. Music and art lessons
Can you play piano, guitar, or violin? Or maybe you’re skilled in drawing or painting?
If you’re a teen with a talent for music or art, teaching art or music lessons can be a great business idea. Whether you play an instrument or paint like a pro, other kids and parents might pay for your expertise.
10. Sell handmade goods and crafts
If you like being creative and making things with your hands, selling arts and crafts can be a great business idea for teens.
Here are some crafts that teens can create and sell for extra money:
Jewelry – You can make necklaces and bracelets.
Homemade candles – Candles are simple to make and can be sold to people who like to add a cozy feel to their homes.
Paintings – If you like to paint or draw, you can create artwork to sell.
Slime – Slime is really popular and fun to play with. Teens can make and sell their own slime in different colors and maybe even add things like glitter to make it unique.
Soap – Homemade soap is always nice to have, and people love to buy it.
Stickers – Everyone loves stickers and this can be a fun way to make extra money on Etsy or in person.
You may be able to sell your homemade items at local craft fairs or online on Etsy.
Recommended reading: 16 Best Things To Sell On Etsy To Make Money
11. Providing technical support
If you’re good with technology, starting a technical support service can be a choice to look into. Lots of people have trouble with technology and need help. As a teen, you can meet this demand by selling your tech-savvy skills and knowledge.
Services you can sell include:
Software installation and updates
Virus and malware removal
Hardware troubleshooting
Help with using different programs and apps
You can market your business by telling your friends, family, and neighbors about your services, and even by creating flyers to distribute and post on local community boards and at local businesses.
12. Start a YouTube channel
Making a YouTube channel is a way for you to share what you love, your talents, and your ideas with the world. It can also become a fun way to earn some money.
Most people know about YouTube, and almost everyone has seen at least one video on the platform. According to YouTube, there are over 2 billion people who watch at least one video on YouTube every month.
Many people have goals of starting a YouTube channel and making money, but not many people ever actually start.
You can learn more at How I Grew From 0 Subscribers To Over $100,000 On YouTube In Less Than One Year.
13. Design and sell print-on-demand products
Starting a print-on-demand business lets you be creative and make money. You can make products that are inexpensive to create, such as posters or custom-designed mugs.
To begin, design things that show your interests or what customers like. After that, use a service like Printful to put these designs on different products. The company takes care of everything else, from printing to shipping.
14. Lawn care business
Starting a lawn mowing business is a great way for teens to make money and is one of the popular small business ideas for teens. It’s easy to get started, and you can make cash during spring and summer (or even year-round depending on where you live, like Florida, Texas, Arizona, and California).
All you need is a lawn mower, some fuel, and basic gardening tools.
You can talk to neighbors, family, and friends to find new lawn mowing jobs.
I know many families with teenagers who mow lawns to make money. Some even turn it into a full-time business as they grow up.
15. House sitting
For teenagers, starting a house sitting business is a smart way to make money. You’re responsible for looking after someone’s home while they’re away, which is a big job.
Trust is important due to this, and homeowners must feel sure that their property and pets are safe in your care.
When I was a teen, I had a friend who was a regular house sitter for several people. She would water their plants, walk their dogs, and stay overnight in their homes to make sure everything was fine with the house.
16. Sell printables on Etsy
If you want to earn money from home and be your own boss with low startup costs, creating printables could be a great option for you.
A printable is a digital product that can be downloaded and printed at home. You create them once and then sell them on a platform like Etsy for people to purchase. You don’t have to physically print anything; you’re just selling the digital download.
Printables include things like grocery shopping checklists, weekly meal plans that people can put on their fridges, gift tags, and quotes to be framed. These are digital products that users can download and print for their use.
Making money at home as a teenager through creating printables is great because you create one digital file download for each product, and then you can sell them an unlimited number of times.
I recommend reading about this further at How I Make Money Selling Printables On Etsy.
Important note: To sell on Etsy, you need to be at least 18 years old. If you’re between 13 and 17, you can still sell on Etsy with the proper permission and under the direct supervision of your parent or legal guardian. The Etsy account should be registered using the parent or legal guardian’s information.
17. Social media influencer
If you enjoy being in front of the camera and are good at connecting with people, you could possibly make money as a social media influencer.
This can include platforms such as TikTok, Instagram, and more.
Now, this is not a guaranteed way to make extra money as a teen, as not everyone makes it. But, you won’t know unless you give it a try.
It’s all about your image and your message (and some luck too, of course). Ask yourself, what are you passionate about? Fashion? Gaming? Fitness?
You’ll want to keep your posts consistent (for many platforms, this will include posting at least once a day) and your voice authentic. This is how you’ll attract followers who can’t wait to see what you post next.
You’ll also want to interact with your audience. Reply to comments, ask questions, and listen to what they want. An engaged audience is a loyal one, and brands notice this. The more you connect, the more your followers trust you.
As your following grows, companies might pay you to talk about their products. That’s because they see value in your ability to reach and engage with a dedicated audience.
You can learn more at How I Make Money On TikTok – How I Grew To 350,000 Followers and Made $60,000 In 6 Weeks.
18. Videography
If you love making videos, starting a videography business could be a perfect idea for you. As a young entrepreneur, you can begin this business idea with just a smartphone or a basic camera.
You can start this small business idea by practicing filming different events like school activities or community gatherings. This will help you to create a portfolio that highlights your unique style and skills.
19. Streaming
If you like playing video games and have a fun personality, you may be able to make money streaming. With platforms like Twitch, you can create a channel where you showcase your gaming skills or entertain an audience with your commentary.
Once you gather a following, you can monetize your channel through subscriptions, ads, sponsorships, and donations. Selling branded merchandise is another way to earn money.
Recommended reading: How Much Do Twitch Streamers Make?
20. Baking
If you love making treats that leave your friends and family asking for more, starting a baking business could be your path to success.
You could bake things like cookies, cakes, bread, and more.
Before selling, make sure you understand the legal requirements, such as if you need a permit or license.
21. Proofreader
A proofreader is someone who reads through written stuff like articles, books, or ads to find and fix any mistakes. Your job is to make sure everything’s correct before people see it.
If you love reading and often spot mistakes in written content, you might want to explore becoming a proofreader.
Freelance proofreading is a flexible and detail-oriented job that only requires a laptop or tablet, an internet connection, grammar skills, and a good eye for finding mistakes.
If you want to find online proofreading jobs, I recommend watching this free 76-minute workshop all about how to get started proofreading.
Recommended reading: 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year).
22. Buy and sell flipper
Reselling items online on platforms like Craigslist, eBay, or Facebook Marketplace can be a great way to run your own business and make extra money.
Plus, it’s something that anyone can start because many of us own things that we could probably sell.
And, there are always things you can buy for a low price and potentially resell for a profit. You might even find free items that people are throwing away and sell those too.
There is a helpful free webinar that I recommend – Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business In As Little As 14 Days.
23. Answer online surveys
Okay, so this isn’t a business, but it is a way to make money online.
Taking surveys won’t make you rich, but it can help you earn a bit of extra money during your spare minutes throughout the day.
Companies pay you to take surveys because they want to know what people think about their product and their company. They want real opinions from real people.
Here are some of the survey companies that are open to teenagers (along with their minimum age requirements):
American Consumer Opinion – Age minimum – 14 years old
Survey Junkie – Age minimum – 12 years old
Branded Surveys – Age minimum – 16 years old
Swagbucks – Age minimum – 13 years old
InboxDollars – Age minimum – 12 years old
User Interviews – Age minimum – 16 years old
Things To Think About as a Teen Entrepreneur
As a teen wanting to start a business, it’s important to think about things like balancing schoolwork, managing finances, and making sure that you are staying safe.
Balancing school and business
Your school schedule is a priority, and finding a balance between it and your new business venture is important, so it’s important to plan out your week.
I recommend creating a visual where you can see your school time, study hours, and time for your business.
Example of a weekly schedule:
Day
School Hours
Study Time
Business Hours
Free Time
Monday
8 a.m. – 3 p.m.
4 – 6 p.m.
7 – 9 p.m.
Remaining
Tuesday
8 a.m. – 3 p.m.
4 – 6 p.m.
7 – 9 p.m.
Remaining
…
…
…
…
…
Sunday
None
Optional
Flexible
Flexible
Financial planning
It’s important to understand the basics of financial planning when it comes to your business so that you can make sure you are making money and not wasting money.
So, I recommend listing the resources and materials you’ll need along with their costs. This also includes keeping track of all your expenses and income using a spreadsheet or even just writing your expenses down.
Working safely
You should always be safe, and make sure not to fall for any scams or fall into business with someone that you do not want to. Keep parents up-to-date on what is going on in your business and make sure to meet strangers in public/safe places.
Frequently Asked Questions
Below are answers to common questions about starting a business as a teen.
What are some easy-to-start business ideas for high school students?
If you’re in high school and want to start a business, you can sell services like lawn care, dog walking, or car washing. These types of businesses require minimal money from you to get started and can be managed around your school schedule.
What are the business ideas for teens online?
For online business ideas for teens, there are many things you could do such as selling printables, starting a blog, online tutoring, selling handmade crafts on Etsy, and more.
What are the top business ideas for young adults?
The top business ideas for young adults include babysitting, car washing, lawn mowing, online tutoring, and starting a YouTube channel.
What types of businesses are suitable for 13 to 17-year-olds?
Teens between 13 and 17 can look into babysitting, pet sitting, tutoring, or crafting and selling homemade goods.
Business Ideas for Teens – Summary
I hope you enjoyed this article on the best business ideas for teens.
Starting a business when you’re a teenager can be fun and help you make some extra money. This can help you to save money for college, buy things that you want, hang out with your friends, buy clothing, and more.
Plus, it’s a chance to learn important skills and a good work ethic.
You can do different things to earn cash, like doing chores at home or trying out creative online projects. If you enjoy outdoor work, you can wash cars or take care of lawns. If you’re into technology, you might want to start a blog or a YouTube channel.
There are lots of options depending on what you like and what you’re good at!
What other business ideas for teens would you add to this list?
What can employers do to make sure their financial benefits attract and serve a truly diverse workforce?
It’s a question that has become increasingly relevant since the Covid-19 pandemic shed a harsh light on the pervasive economic inequalities embedded in society and the workplace. While there have been gains in the average wealth of all demographic groups since 2019, the racial wealth gap remains stubbornly wide.
According to Federal Reserve data from the second quarter of 2023, Black families had about $986,000 less wealth, on average, compared with white families, while Hispanic families had about $992,000 less wealth, on average, than white families. Put more starkly: Black and Hispanic families had 24 cents for every $1 of white family wealth.
Even when they attend and graduate from college, minorities still face an uphill financial climb. According to the Education Data Initiative, Black college graduates owe an average of $25,000 more in student loan debt than white college graduates. Four years after graduation, black students owe an average of 188% more than white students borrowed.
And while women have increased their presence in higher-paying jobs traditionally dominated by men, the gender pay gap hasn’t gone away: On average, women are paid 83.7 percent as much as men, which amounts to a difference of $10,000 per year. The gaps are even larger for many women of color, according to the U.S. Department of Labor.
Given these realities, it’s important that diversity, equity, and inclusion (DE&I) programs and financial wellness initiatives are effectively combined to help address the problems of economic inequality throughout every segment of your workforce.
By helping underrepresented employees turn wages into long-term wealth, companies can play a pivotal role in driving financial success that impacts future generations and results in systemic change.
Where Do Financial Wellness and Diversity, Equity, and Inclusion Intersect?
These days, many employers of all sizes have a DE&I strategy or program in place to increase inclusion and remove bias and discrimination in the workplace. Financial wellness benefits are also growing in popularity as a way to attract, retain, and add value to employees.
While companies may actively promote both financial wellness and DE&I, they often overlook the potential synergy between the two. Understanding how these two human resource pillars work together can help amplify the relevance, effectiveness, and success of both programs throughout your workforce.
Traditionally, financial well-being programs have focused on long-term savings and investing for retirement. But it’s becoming increasingly apparent that this approach doesn’t meet all the needs of an increasingly diverse workforce.
Depending on the individual, financial success can come in many forms, not just having enough for retirement. Success might also include paying off debt, saving for emergencies, or buying a first home. Understanding your workforce and its diverse needs — as well as understanding the importance of a broad-based definition of financial well-being — helps put you at the nexus of your DE&I and financial wellness goals.
Recommended: How to Support Your Low-Wage Workforce
Can Financial Well-Being Initiatives Enhance Diversity, Equity, and Inclusion in Your Workforce?
The answer is an overwhelming yes — as long as your financial well-being programs are designed to be customizable for employees on different financial footings with a range of financial goals and stresses. Here are some steps you can take to integrate your financial well-being and DE&I programs.
Ensure Fair Pay for All Employees
This may seem like a basic concept, but it still needs plenty of attention. Doing everything you can to close the race and gender pay gaps in your organization shows your commitment to both DE&I and financial well-being — and to making them work together.
Recommended: How Employers Can Help Close the Racial Wealth Gap
Embrace Flexible Financial Contribution Programs
Personalized, relevant financial benefits can help you meet your employees where they are in terms of financial challenges and goals. When you offer a range of financial well-being benefits, you give employees the power to choose the financial programs that can help them the most.
The pandemic highlighted for many people the need for short-term, goal-oriented savings as well as long-term investing. Programs that can resonate strongly with today’s diverse workforce and its many needs include: emergency savings accounts; student loan repayment programs, including 401(k) matches for employees paying off student loans; budget counseling, and debt management tools. Established college tuition reimbursement and retirement savings programs are also vital parts of a holistic financial wellness program.
Recommended: How Does an HR Team Implement a Student Loan Matching or Direct Repayment Benefit?
Get Creative
Don’t be afraid to think out of the box when it comes to expanding financial well-being programs so that you can include all employees. Many employers are reimagining traditional approaches to leaves and paid time off — for example, allowing employees to transfer unused PTO balances into accounts like emergency savings or 529 tuition savings plans.
Creativity is also important when it comes to education efforts. Simply offering new programs is not enough. Education efforts should be accessible, interactive, and customized so that each employee can find the information they need and act on it.
SoFi at Work has noticed that some employers are adopting a “learning journey” approach that allows workers to choose their own paths depending on where they are on their journey towards their individual financial goals and aspirations.
Recommended: Are Your Benefits Helping Women — Especially Moms — Achieve Financial Wellness?
Choose Credible Partners for a Sustainable Program
To provide this extra support and guidance across a broad spectrum of financial needs, you’ll need to choose credible partners that can provide expertise, platforms, and cost-effective services in specific areas. Good partners can help you launch personalized and sustainable programs that are accessible in the short-term, but also build the foundation for your department’s long-term goals.
The Takeaway
Employers can play a key role in ensuring that all employees have the same opportunities for financial success and control of their own financial futures. Democratizing financial well-being can not only create a more diverse and inclusive workplace, but ultimately a more equitable future for all of us.
SoFi at Work can help. We provide the benefits platforms and education resources that can enhance financial wellness throughout your workforce.
Photo credit: iStock/pixdeluxe
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Credit cards are handy financial tools, thanks to the credit card issuers who offer, provide, and manage them. A credit card issuer is a type of financial institution that supplies credit cards to consumers.
Read on to learn more about how these businesses operate.
What Is a Credit Card Issuer?
Credit card issuers are financial institutions responsible for making credit cards, managing the application and approval process for credit cards, and keeping credit card accounts running smoothly. If you needed to check your credit card balance, pay your bill, or request a replacement credit card, you’d turn to your credit card issuer.
Recommended: Guide to Credit Card Purchase Protection
How Credit Card Issuers Work
The financial institutions that offer credit cards can be lending institutions, banks, credit unions, or fintech companies. The cardholder borrows money from the credit card issuer each time they make a purchase, and when they pay their credit card bill, they’re paying the credit card issuer back for some or all of the credit they have used. This makes credit card issuers integral to what a credit card is.
A credit card issuer is the one to determine an applicant’s credit card interest rate and limit, the type of cardholder benefits offered, and the fee structure for the credit card. Generally, credit card issuers aren’t the ones to process merchant transactions, but they do decide whether to approve or decline a charge.
When questions about their credit card arise, account holders can call the number on the back of their credit card to connect with their credit card issuer’s customer support line.
Why Are Credit Card Issuers Important?
Understanding why credit card issuers are so important can help consumers to better manage their relationship with their credit card issuer and choose the right credit card for their needs once they’re old enough to get a credit card.
The issuer is responsible for determining a credit card’s terms and features. All credit card issuers have different policies, customer support approaches, and types of rewards offerings. Before choosing a credit card, it’s helpful to carefully research not just how a credit card works but how the credit card issuer runs its operations, in terms of fees and rates you will be subject to.
Recommended: How Do Credit Cards Work?
Common Credit Card Issuer Fees
What the fees look like for a specific credit card will vary by credit card issuer, but the following credit card issuer fees are fairly common to come across.
Annual Fees
An annual fee is a charge that’s paid once a year for having the credit card. These fees can often range from $95 to $500 or more per year. Not all cards charge this fee, but those that do tend to come with more valuable perks and rewards.
Before signing up for a credit card with an annual fee, it’s important to crunch the numbers to see if the rewards that come with using the credit card (like cash back or travel points) will outweigh the cost of the fee. Even if you get a good APR for a credit card, a high annual fee could make the offer less sweet.
Late Payment Fees
Late payment fees apply when someone is past due on paying their bill. Usually, these fees go up each time a payment is missed. The late fee won’t ever cost more than the minimum payment due on the payment the cardholder missed, but these fees can still add up. The current average fee is $32, but it may soon be lowered to $8, pending legislation.
Balance Transfer Fees
When someone transfers their credit card balance from one card to another (usually to a balance transfer card with a lower interest rate), they can potentially owe a balance transfer fee. This fee can be either a percentage of the transferred amount or a fixed fee.
While consolidating debt through a balance transfer can make it easier to pay off credit card debt, make sure to take into consideration any fees involved.
Foreign Transaction Fees
Making purchases when traveling abroad can lead to paying a foreign transaction fee, which is usually around 1% to 3% of the purchase.
However, there are plenty of credit cards — especially travel rewards credit cards — that don’t charge foreign transaction fees. If someone travels internationally often, they could save a lot by choosing a credit card with no foreign transaction fees, which is worth considering when applying for a credit card.
Credit Card Issuer vs Credit Card Payment Networks
It’s easy to confuse credit card issuers and credit card payment networks. While a credit card issuer creates and manages credit cards, a credit card payment network is the one that processes transactions between credit card companies and merchants.
Here are the key differences between credit card issuers and credit card payment networks:
Credit Card Issuer
Credit Card Payment Network
• Creates and manages credit cards
• Accepts or declines credit card applicants
• Determines fees, credit card APR, credit limits, and rewards
• Approves and declines credit card transactions
• Processes transactions between credit card companies and merchants
• Creates the digital infrastructure that facilitates credit card transactions
• Charges an interchange fee
• Determines which credit cards can be used with which merchants
Differences Between Credit Card Issuers and Co-branded Partners
A co-branded partner is a merchant that works with a credit card issuer to create a co-branded credit card with their name on it. This is a common arrangement with store, airline, and hotel credit cards.
Here’s a breakdown of how credit card issuers and co-branded partners differ:
Credit Card Issuer
Co-Branded Partner
• Responsible for creating and managing credit cards
• Decides whether to accept or decline credit card applicants
• Determines card specifics, like fees, interest rates, and rewards
• Approves and declines credit card transactions
• Works with a a credit card issuer to create a co-branded card
• Uses co-branded card created by issuer to increase sales and attract new customers
• Can use co-branded card to deliver value to loyal customers
Finding the Credit Card Issuer Number
If someone looks closely at their credit card, they’ll be able to learn a lot about their credit card issuer, including what their credit card issuer number is and how to contact their issuer.
Credit Card Issuer Phone Number
It’s always possible to learn how to contact a credit card issuer by going to their website, but cardholders also can find their card issuer’s phone number on the back of their credit card or on their monthly statements.
Credit Card Issuer Identification Number
To find a credit card issuer number, all a cardholder has to do is look at the string of numbers on a credit card. The first six to eight digits on the card represent the Bank Identification Number (BIN), or the Issuer Identification Number (IIN). This number is what identifies the credit card issuer. The following digits on the card are what identify the cardholder.
Examples of Some Major Credit Card Issuers
There are many different credit card issuers, but these are some of the biggest ones in the U.S.:
• American Express
• Bank of America
• Capital One
• Chase
• Citi
• Discover
• U.S. Bank
• Wells Fargo
The Takeaway
When you’re choosing a credit card, looking at the credit card issuer matters. This is the financial institution that creates and manages credit cards, determines a card’s fees, interest rate, and rewards offerings, and also approves (or denies) credit card applicants. Knowing that you have a well regarded issuer with fair policies is an important step in securing a credit card that suits your needs.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
How do I know my credit card issuer?
If someone is unsure of who their credit card issuer is, they can look at the credit card number on their card. The first six to eight digits on a credit card — called either the Bank Identification Number (BIN) or the Issuer Identification Number (IIN) — identify the card issuer.
What is the difference between a credit card issuer and a credit card network?
Credit card networks, unlike credit card issuers, are the party that processes the credit card transaction directly with merchants. Credit card networks have digital infrastructure that allow them to facilitate transactions between merchants and card issuers in exchange for an interchange fee.
What do credit card issuers do?
Credit card issuers create, distribute, and manage credit cards. They decide what the interest rates and fees of a credit card are, who is approved for one and how much they can spend, and how the card’s rewards structure works.
Photo credit: iStock/Luke Chan
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
When it comes to their kids, many of your employees may be willing to put their retirement on the line.
As HR pros focus on workforce planning, understanding the burden that college costs impose on most employees is a key component for successful financial wellness programs.
Paying for college is a daunting challenge, and even financially savvy parents can become overwhelmed and confused by the college financing process. That’s where employer-sponsored education efforts can help. Employers who understand the following common college financing traps can better plan programs to alleviate the stress of paying for college and improve financial wellness overall.
Trap One: Prioritizing Their Children’s Education Over Their Own Retirement
By now, it’s become a financial wellness mantra: Parents should prioritize their retirement savings before saving for or paying for a child’s college education. After all, the thinking goes, students can borrow for education costs, but parents can’t borrow money to pay for retirement. And if parents don’t properly prepare for retirement, their children may end up supporting them in their later years, jeopardizing their future finances.
But with ever-rising tuition costs and the increasing burden of student debt, it may be harder for your employees to follow that tried-and-true advice. The cost of college has more than doubled over the past four decades — and student loan borrowing has risen along with it. Americans collectively owe more than 1.7 trillion in student loan debt, according to the Federal Reserve .
Trying to ease the burden on their children, your employees may be raiding their future. Among people aged 25 to 80 who are saving for both retirement and future college expenses, 58% say they are delaying retirement, and 41% say they have withdrawn money from their own retirement funds to pay for a child’s (or other relative’s) tuition, according to a July 2023 survey by the Society of Actuaries .
When an employee delays retirement to catch up on missed retirement savings or pay off education loans, it can be costly to an organization. What’s more, if paying for college forces an employee to work longer than they want to, the result may be a less productive, less engaged worker.
Recommended: SoFi Survey: The Future of Financial Well-Being at Work
Trap Two: Mismanaging PLUS loans
Parent Loans for Undergraduate Students (PLUS loans) are underwritten by the federal government and allow families to borrow without the same credit checks and other limits imposed on other types of lending. Because these loans are in a parent’s name, your employees may naturally gravitate to them as a way to help their children avoid debt.
But there are drawbacks. Unlike federal student loans, there are no limits on the amount parents can borrow as long as it doesn’t exceed education costs. To qualify for a PLUS loan, parents need only pass a check for an “adverse event” such as a recent bankruptcy filing or foreclosure. There is no consideration of the borrower’s ability to repay the loan. Given the often astronomical costs of attending a four-year college, your employees may quickly find they have taken on more debt than they can comfortably handle.
In addition, PLUS loan interest rates, set by the government each year, are usually significantly higher than student-held federal loans (8.05% for 2023-2024 versus 5.50%) and sometimes higher than some private college loans.
If parents default or consolidate their PLUS loans, or if they receive a forbearance or a deferment, the interest that continues to accrue is capitalized. That means that principal and payments can become even more unaffordable for employees. In addition, if the loans go into default, the government can garnish wages, Social Security checks, and tax refunds.
Recommended: Preparing for College Resource Guide for Parents
Trap Three: Avoiding College Financing at All Costs
Another common mistake lurks on the opposite side of the spectrum. In an effort to avoid college debt of any kind, parents who have some, but not enough, college savings may decide to forego saving for retirement, dip into retirement savings, or use home equity to pay tuition bills as they come.
Withdrawing 401(k) savings can result in significant penalties, taxes, and, importantly, lost principal and earnings. Cash-out home refinancing can lead to higher and perhaps unaffordable mortgage payments. Even putting retirement savings on hold when the year’s tuition is due can translate into large gaps in savings goals, depending on the number and ages of children attending college.
These are all understandable mistakes. As we saw above, an overreliance on debt to pay college bills can seriously jeopardize financial well-being. But so, too, can dismissing the strategic use of financial aid and loans to finance college costs.
For instance, your employees may neglect filling out the Free Application for Federal Student Aid (FAFSA), figuring that they earn too much to qualify for federal financial aid. According to Sallie Mae’s How America Pays for College 2023 report, 71% of families filed the FAFSA for the 2022-2023 academic year, down from 86% in 2016-2017.
These parents may not realize that without the FAFSA, the student will not be awarded federal subsidized and unsubsidized loans, which can be attractive for their low rates and, in the case of subsidized loan, help from the government in paying interest.
More importantly, many schools require students to submit a FAFSA to be eligible for merit-based scholarships and grants, even though these funds are awarded according to the student’s academic record and other achievements, not financial need. Merit-based aid does not have to be repaid and is usually awarded to undergraduates for the full four years.
While too much debt is never smart, a prudent and affordable mix of well-structured student debt can help parents avoid sacrificing retirement savings, home equity, and other long-term savings to pay for college now.
Employer-sponsored college financing education and one-on-one college counseling can help ensure parents understand the complexities of financial aid and student borrowing so they can balance long-term and current financial needs and goals.
The Takeaway
Employers who help parents avoid these common college financing traps may help alleviate what is fast becoming one of the largest sources of financial stress in your workforce.
SoFi at Work can help with student loan repayment platforms, extensive education efforts, plus a lending suite of student, graduate student, MBA, and parent loans. For organizations that are looking to help their employees get ahead on their education financing goals, SoFi at Work also offers a 529 College Savings Program, which can be integrated into any payroll system.
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The Federal Reserve’s recent data says the average credit card interest rate is 21.47%, which is a high number by most standards. If you never carry a balance or take out cash advances, it may not be a big deal for you, but if you do, it’s worth paying attention to the average credit interest rate. Doing so could help you anticipate and potentially budget for increased interest payments.
Here, you’ll learn more about credit card interest rates and how they can impact your financial life.
What Is the Average Credit Card Interest Rate?
The average interest rate for credit cards is 21.47%, as mentioned above, as of the start of 2024. Rates have been steadily increasing in recent years — in November 2021, the average rate for credit cards was 14.51%, and back in November 2017, for example, it was 13.16%.
Keep in mind, however, that the interest rate for your credit card could be higher or lower than this average depending on factors such as your credit profile, given how credit cards work. So what’s a good annual percentage rate (APR) for you may be different from what a good APR for a credit card is for someone else, as you’ll learn in more detail below.
Interest Rates by Credit Quality Types
Credit card interest rates, or the APR on a credit card, tend to vary depending on an applicant’s credit score. The average interest rate for credit cards tends to increase for those who have lower credit scores, according to the CFPB’s most recent Consumer Credit Card Market Report.
The report measures what’s called an effective interest rate — meaning, the total interest charged to a cardholder at the end of the billing cycle.
Credit Quality
Effective Interest Rate
Deep subprime (a score of 579 or lower)
23%
Subprime (a score of 580-619)
22%
Near prime (a score of 620-659)
20%
Prime (a score of 660-719)
18%
Prime plus (a score of 720-799)
15%
Super prime (800-850)
9%
What this table shows is that the lower your credit score, the more you will be paying in interest on balances you have on your credit cards (meaning, any amount that remains after you make your credit card minimum payment).
Keep in mind that these rates don’t include any fees that may also apply, such as those for balance transfers or late payments, which can further increase the cost of borrowing.
Recommended: Revolving Credit vs. Line of Credit, Explained
Interest Rates by Credit Card Types
Interest rates may vary depending on the type of credit card you carry. In general, platinum or premium credits have a higher APR — cards with higher interest rates tend to come with better features and benefits.
Type
APR Range
No annual fee credit card
20.64% – 27.65%
Cash back credit card
21.06% – 27.78%
Rewards credit card
20.91% – 28.15%
Prime Rate Trend
The prime rate is the interest rate that financial institutions use to set rates for various types of loans, such as credit cards. Most consumer products use the prime rate to determine whether to raise, decrease, or maintain the current interest rate. That’s why for credit cards, you’ll see the rates are variable, meaning they can change depending on the prime rate.
As of March 6, 2024, the prime rate is 8.50%. On March 17, 2022, the prime rate was 3.50%. This can be considered an example of how variable this rate can be.
Delinquency Rate Trend
Credit card delinquency rates apply to accounts that have outstanding payments or are at least 90 days late in making payments. These rates have fluctuated based on various economic conditions. In many cases, rates are higher in times of financial duress, such as during the financial crisis in 2009, when it was at 6.61%.
As economic conditions rebound or the economy builds itself up, delinquency rates tend to go down, as consumers can afford to make on-time payments. According to the Federal Reserve, the delinquency rate for the fourth quarter in 2023 was 3.20%, up from 2.34% a year earlier and 1.63% for the same time period in 2021. This may be due to the pandemic, when consumers were more wary of discretionary spending or from negotiating payment plans with creditors.
Credit Card Debt Trend
Credit card debt has risen from its previous levels of $926 billion in 2019 and $825 billion at the end of 2020. It has climbed to $1.129 trillion for the fourth quarter of 2023, a new high.
This shows an ongoing surge in credit card debt, and these statistics can make individual cardholders think twice about their own balance and how to lower it.
Recommended: How Does Credit Card Debt Forgiveness Work?
Types of Credit Card Interest Rates
Credit cards have more than one type of interest rate. The credit card interest rate that applies may differ depending on how you use your card.
Purchase APR
The purchase APR is the interest rate that’s applied to balances from purchases made anywhere that accepts credit card payments. For instance, if you purchase a pair of sneakers using your credit card, you’ll be charged the purchase APR if you carry a balance after the statement due date.
Balance Transfer APR
A balance transfer APR is the interest rate you’ll be charged if you move a balance from one credit card to another. Many issuers offer a low introductory balance transfer APR for a predetermined amount of time.
Penalty APR
A penalty APR can kick in if you’re late on your credit card payment. This rate is usually higher than the purchase APR and can be applied toward future purchases as long as your account remains delinquent. This is why it’s always critical to make your credit card payment, even if you’re in the midst of requesting a credit card chargeback, for instance.
Cash Advance APR
A cash advance has its own separate APR that gets triggered when you use your card at an ATM or bank to withdraw cash, or if you use a convenience check from the issuer. The APR tends to be higher than the purchase APR.
Introductory APR
An introductory APR is an APR that’s lower than the purchase APR and that applies for a set amount of time. Introductory APRs may apply to purchases, balance transfers, or both.
For instance, you may get a 0% introductory APR for purchases you make for the first 18 months of account opening. After that, your APR will revert to the standard APR. (Note that the end of the introductory APR is completely unrelated to your credit card expiration date.)
Factors That Affect Interest Rate
When you apply for a credit card, you may notice that your interest rate is different from what was advertised by the issuer. That’s because there are several factors that affect your interest rate, which can make it higher or lower than the average credit card interest rate.
Credit Score
Your credit score determines how risky of a borrower you are, so your interest rate could reflect your creditworthiness. Lenders tend to charge higher interest rates for those who have lower scores. Your credit score can also influence whether your credit limit is above or below the average credit card limit.
Credit Card Type
The type of credit card may affect how much you could pay in interest. Different types of credit cards include:
• Travel rewards credit cards
• Student credit cards
• Cash-back rewards credit cards
• Balance transfer cards
Most likely, the more features you get, the higher the interest rate could be. Student credit cards may have lower interest rates, but that may not always be the case. That’s why it’s best to check the APR range of credit cards you’re interested in before submitting an application.
The Takeaway
The current average credit card interest rate is 21.47%, according to data from the Federal Reserve. However, your rate could be higher or lower than the average APR for credit cards based on factors such as your creditworthiness and the type of card you’re applying for. Your best bet is to pay off your entire balance each month on your credit card so you don’t have to worry about how high the interest rate for a credit card may be. That way, you can focus on features you’re interested in.
With whichever credit card you may choose, it’s important to understand its features and rates and use it responsibly.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
What is the average credit card interest rate?
The average interest rate for credit cards is 21.47%, according to the latest data from the Federal Reserve for the fourth quarter of 2023.
How do you get a low credit card interest rate?
You may be able to get a low credit card interest rate by building your credit score, as this will encourage lenders to view you as less risky. Otherwise, you can also aim to get a credit card with a low introductory rate, though these offers are generally reserved for those with good credit. Even if the APR is temporary, it could be beneficial depending on your financial goals.
What is a bad APR rate?
A bad APR is generally one that is well above the average credit card interest rate. However, what’s a good or bad APR for you will depend on your credit score as well as what type of card you’re applying for.
Photo credit: iStock/MicroStockHub
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
No matter what age you are, it’s never too soon to start thinking about — and actively saving for — your retirement. With reports coming out regularly about the severe retirement savings gap in the U.S., it seems as though the majority of Americans are vastly underprepared for this life event.
If your employer offers a 401(k) at your place of work, this is a great way to get started (or continue) saving for your golden years. Before you jump in, find out exactly what a 401(k) is and how it can help you prepare for retirement. If you already contribute to a 401(k) plan, make sure you know what to expect when it comes time to retire.
How does a 401(k) work?
A 401(k) plan helps you save while investing your contributions in various mutual funds. Employers offer this type of retirement plan, so you can’t sign up for one unless you go through your place of work.
As an incentive to save, you receive a tax break. Depending on the type of 401(k) you choose (or your company offers), you either receive that tax break when you make the contribution or when it comes time to withdrawal.
Employer 401(k) Matching
Many employers offer a match to any contribution you make. This usually happens in one of two ways: they’ll either match dollar for dollar up to a certain limit or up to a percentage of your salary.
The most common type of 401(k), the traditional 401(k), allows you to make any contribution tax-deductible each year. So if you contribute $6,000 a year, you get to knock that off your taxable income amount. If you’re on the edge of a tax bracket and make a sizeable 401(k) contribution, you might even be able to jump down into a different bracket with a lower tax rate.
401(k) Tax Rules
While your investments continue to grow each year, they remain temporarily protected from taxation. Unlike other types of investments, you don’t pay any annual tax on your 401(k) earnings until you start to make withdrawals. At that point, you’ll be subject to regular income tax when you take out money each month.
As you continue to make 401(k) contributions throughout your year, you can adjust your investments to become increasingly less volatile. The idea is that as you get closer to retirement age, you have less risk to ensure a solid nest egg when you need it.
The Benefits of a 401(k)
A 401(k) is a retirement savings plan sponsored by an employer. It allows employees to save and invest a portion of their paycheck before taxes are taken out. Contributions to a 401(k) are made with pretax dollars, which can lower your taxable income in the current year and potentially result in a lower tax bill.
Some other benefits of a 401(k) include:
Employer matching contributions: Many employers will match a portion of their employees’ 401(k) contributions, effectively giving you free money to save for retirement.
Tax-deferred growth: Any investment earnings on your 401(k) account grow tax-free until you withdraw the money in retirement.
Potential for tax credits: Depending on your income and participation in a 401(k) or other qualified retirement plan, you may be eligible for certain tax credits that can help reduce your tax liability.
Retirement income: A 401(k) can provide a source of income in retirement, which can help you maintain your standard of living when you are no longer working.
Convenience: Many 401(k) plans offer a range of investment options, and the contributions are automatically deducted from your paycheck, making it easy to save for the future.
The money you withdraw from a 401(k) in retirement is subject to income tax, and 401(k) plans have contribution limits. However, overall, a 401(k) can be a valuable tool for saving for the future and reducing your tax liability.
401(k) Contribution Limits
There are limits to your 401(k):
While it’s a great financial tool, you can only contribute up to $22,500 each year, amounting to $1,875 per month if you divide it out monthly. If you’re over the age of 50, you’re allowed to contribute up to $30,000 a year ($2,500 per month). These contribution limits are in place so that you can only benefit from so much tax savings each year.
Required Minimum Distributions
Another rule associated with a 401(k) is that you must start taking “required minimum distributions” at some point. That means once you hit a certain age, you must begin withdrawing funds from your 401(k) account — and paying taxes on them.
Currently, the requirement is that you start taking distributions the year after you turn 70 ½. Then you have to take out distributions by December 31 of each following year. Your minimum required amount is determined by the IRS based on your life expectancy. There’s nothing quite like a government tax agency predicting your lifespan, is there?
Still, this information helps you determine what kind of tax burden you can expect when you’ve finally retired. While your income may be lower, your deductions might be as well. After all, you probably don’t have kids left at home to claim as a deduction. And if you’ve paid off your mortgage, you won’t have that interest to deduct either.
It’s great not to have those expenses, but it can be helpful to talk to a tax professional to get a better idea of your taxes, especially in that first year of retirement or required minimum distributions. The more prepared you are, the more financial flexibility you can have!
401(K) Plan Types
There are two main types of 401(k) plans: traditional 401(k)s and Roth 401(k)s.
A traditional 401(k) allows you to contribute pretax dollars to your account. Your contributions and any investment earnings in the account are tax-deferred. This means you won’t have to pay taxes on them until you withdraw the money in retirement. When you withdraw the money in retirement, it is taxed as ordinary income.
A Roth 401(k) is similar to a traditional 401(k), but contributions are made with after-tax dollars. This means you won’t get an immediate tax break on your contributions, but qualified withdrawals from the account in retirement are tax-free.
Some 401(k) plans may offer both traditional and Roth options, allowing you the flexibility to choose the type of plan that best meets your needs.
There are also types of 401(k) plans that are designed for specific types of employers, such as safe harbor 401(k)s and SIMPLE 401(k)s. These plans may have different contribution limits and rules for employer matching contributions. So, it’s important to understand the details of the plan you are enrolled in.
What’s the difference between a traditional 401(k) and a Roth 401(k)?
While a traditional 401(k) offers upfront tax savings in return for taxes paid later during retirement, a Roth 401(k) flips the situation around. Instead, your contributions are made with your taxable income. In return, you don’t have to pay any taxes when you start withdrawing from your account during retirement.
While you miss out on tax savings upfront, you’re only paying on the original contribution amount. If you had to pay taxes when you withdraw, you’re also paying taxes on everything you’ve earned, which is hopefully a lot more money than you started with.
Roth 401(k) Requirements
There are requirements to qualify for the Roth 401(k) benefits:
First, your account must be open for at least five years. You also have to wait until you’re at least 59 ½ before you can start taking distributions, unless you’ve had a disability.
A Roth IRA is particularly useful if you’ve accumulated a lot in retirement savings and other investments. While many people have less income when they retire, that’s not always the case. You may have a comprehensive portfolio of investments, in which case you could be better served by not paying taxes on at least part of your withdrawals.
If you’re nearing retirement and expect to drop in your tax bracket soon, there may be no sense in using a Roth 401(k) now. A Roth 401(k) can be a great choice if you have a lower income now because you’re earlier in your career or have tons of tax deductions because of kids and a mortgage.
Like all retirement plans, there are better products for different points in your life. By constantly reassessing how you contribute to your retirement savings, you can maximize your tax benefits now and in the future.
See also: IRA vs. 401(k): Where Should You Invest Your Money?
Employer Contribution Match
An employer contribution match is a feature of some 401(k) plans in which the employer agrees to contribute a certain amount of money to an employee’s 401(k) account based on employee contributions.
For example, an employer might offer a 50% employer match on the first 6% of an employee’s salary that the employee contributes to their 401(k) account. In this case, if the employee contributes 6% of their salary to their 401(k), the employer would contribute an additional 3% (50% of the employee’s contribution).
Employer contributions are a way for employers to encourage their employees to save for retirement and to provide an additional source of retirement income for their employees. Employers may also use contribution matching as a way to attract and retain top talent.
Employer contribution matches may have certain rules and requirements, such as vesting periods, that determine when an employee becomes fully entitled to employer contributions. Make sure you understand the details of any employer contribution match offered by your employer to make the most of this benefit.
What happens if you leave your job?
Don’t worry. You don’t lose your 401(k) savings if you leave your current employer. You typically have a few different options available to you. First, you can leave it in the company plan if they allow it. You won’t be able to continue making contributions or any changes to your allocations. But you can access it when you’re ready to retire.
401(k) Rollover
Or you can do a rollover:
A rollover allows you to switch the funds to another retirement plan without paying any tax penalties. You can either do an IRA rollover or use a plan from your new employer. You do need to make sure your new employer’s plan allows for rollovers.
Then you can continue your contributions as normal, following the rules of the new account, whatever it may be. An IRA is always a viable option because you’re in control of how you invest. And while the annual contribution limit is $6,500 (or $7,500 if you’re 50 or older), it doesn’t count when you’re rolling over funds.
Your final option for handling your 401(k) when you leave your job is to cash it out. If you do this, you’ll be subject to all the relevant penalties. These include a 10% early withdrawal penalty and income taxes for both federal and state. The exception to the early withdrawal penalty is if you are at least 55 years old when you leave your employer.
How much should you contribute to your 401(k)?
How much you decide to contribute to your 401(k) should depend on numerous factors. At the very least, you should contribute the maximum amount allowed to receive a matching contribution from your employer. That essentially equals free money, which you should never pass up.
Next, think about your financial picture as a whole. What kind of debt do you have? If you have any high-interest credit card or loan balances, you may want to focus your efforts on paying those down before contributing more to your retirement plan. Lower interest debts, like a fixed student loan, may not be as pressing to repay.
Furthermore, consider these recommended saving strategies:
Emergency Fund
You’ll probably want a three to six-month emergency fund in case you lose your job or get a sudden illness or injury. Having a large chunk of money stashed away in an easy-to-access savings account can provide you with financial security here and now.
Roth IRA
Once you’ve got your overall savings plan in order, it’s time to start figuring out where else to invest for retirement. Before you max out your traditional 401(k), think about picking up a Roth IRA. This helps you diversify your retirement plans for tax purposes.
Like a Roth 401(k), a Roth IRA lets you pay taxes on your contributions now, so you don’t have to pay anything when you make withdrawals during retirement. It can certainly help you spread out your tax burdens over the course of your life.
Still have money left over to invest?
If you do, revisit your 401(k). Remember, you can contribute up to $22,500 so you can certainly divert more of your income towards that maximum.
How else should you prepare for retirement?
Preparing for retirement takes a constant reassessment of your current needs versus your future goals. As easy as it is to say, “You need to contribute this-many-thousands of dollars a year to survive retirement,” the reality is that it’s much harder to actually do that.
But saving for retirement is still a challenge worth conquering. Even if you’re in your 40s and haven’t started saving a dime, you can start today. Once you’ve got your current savings fund in place that you can use for emergencies, implement some of these easy tips to get ready for retirement.
For now, worry less about picking the perfect type of account and focus on the habit of retirement saving.
Here are some ideas to get you started:
How to Save Extra Money:
Downsize your living expenses, one step at a time.
Place your tax refund into a retirement account.
Stream television instead of paying for cable.
Cut back on eating out.
Stay healthy to reduce future healthcare costs.
Pay down high interest debt like credit cards.
Sell your stuff and put the money towards retirement.
How to Strategically Manage Your Retirement Accounts:
Create a retirement savings goal as a percentage of your income.
Pay yourself first by setting up auto direct deposit to your retirement account on payday.
Take advantage of higher IRA contribution limits when you’re 50+.
Audit your accounts every year.
Consolidate multiple accounts (like IRAs) to reduce fees.
Put your end-of-year bonus into a retirement account.
Bottom Line
Investing in your retirement is really investing in yourself. Taking advantage of your employer’s 401(k) is an important part of the equation. In addition to making regular contributions, be sure to explore all of your options for financing your retirement. A healthy portfolio mix isn’t difficult to develop, and there are plenty of resources available to help you get started.
Amidst a backdrop of inflation, rising borrowing costs, and growing debt levels, employee financial wellness has been on the decline in recent years. According to PwC’s 2023 Employee Financial Wellness Survey, a full 60% of full-time employees are stressed about their finances. Indeed, employees are even more concerned about their finances today than during the height of the pandemic.
Given that money worries can take a toll on employee health and well-being, as well as productivity at work, it makes sense that a growing number of employers are enhancing support for financial wellness. Bank of America’s 2023 Workplace Benefits Report found that 97% of employers now feel responsible for employee financial wellness (up from 95% in 2021, and from 41% in 2013).
Regardless of how well-compensated your staff may be, this type of resource can help workers feel more financially confident and prepared for the future. Here’s a look at 10 reasons why adding this benefit is so important.
1. Decreases Distractions and Increases Productivity
According to PwC’s Survey (which included 3,638 full-time employed adults across a variety of industries), financially stressed employees tend to be more distracted and less engaged while at work. The study found that financial stress and money worries had a negative impact on the respondents’ sleep, mental health, self-esteem, physical health, and personal relationships. Nearly one-third of employees surveyed admitted that financial insecurity has negatively impacted their productivity at work.
When employees are able to easily get answers to their financial questions and access on-site support when dealing with money problems, there’s a good chance they’ll be less stressed about their finances and more able to focus on their jobs. That’s a win for both employees and employers.
2. Improves Employee Physical Health
Financial stressors have been found to correlate directly with not only mental health challenges but also with poor physical well-being. As the American Psychological Association points out in their Stress in America 2023 report, stress and anxiety put the body on high alert and ongoing stress can accumulate, causing inflammation, wearing on the immune system, and increasing the risk of a number of different ailments, including digestive issues, heart disease, weight gain, and stroke.
Providing your employees with the support they need now can go a long way toward staving off physical health challenges down the line.
3. Builds Loyalty
By offering financial wellness programs, employers demonstrate a commitment to their employees’ well-being, which can help foster employee loyalty and increase retention rates.
The PwC study found that just 54% of financially stressed employees felt there was a promising future for them at their employer, and they were twice as likely to be looking for a new job than employees who were less stressed about their personal finances. What’s more, 73% of financially stressed employees said they would be attracted to another employer that cares more about their financial well-being compared to just 54% of non-financially stressed employees.
Recommended: 3 Ways to Support Your Employees During Times of Uncertainty
4. Can Help Reduce the Burden of Student Debt
Employees struggling to pay down student debt often have difficulty contributing to 401(k) plans and achieving other financial goals, such as buying a house or car. By offering student loan repayment benefits and education, employers can reduce this burden and help employees plan for the future.
The good news is that these programs recently became more affordable. Under the Coronavirus Aid, Relief and Economic Security (CARES) Act, employers can now provide $5,250 tax-exempt annually for an employee’s student loan repayment through 2025. That means employees won’t pay income tax on contributions made by their employers toward educational assistance programs, yet the employer also gets a payroll tax exclusion on these funds.
A growing number of employers are offering some form of loan repayment support. In 2021, only 17% of companies offered any of these benefits. In October 2023, 34% of employers offered student loan benefits.
Recommended: How Student Loan Benefits Can Help Retain Employees
5. Employees Want It
According to the PwC study, the vast majority of employees want help with their finances. Not only that, the stigma around getting help with finances appears to be lifting. In 2023, employees overall were less likely to be embarrassed to ask for guidance or advice about their finances than they’ve been in the past: Just 33% said they find it embarrassing, compared to 42% in PwC’s 2019 survey.
In Bank of America’s Workplace Benefits Report (which surveyed more than 1,300 employees and nearly 800 employers), 76% of employees said they felt that employers are responsible for their financial wellness.
6. Can Help Parents Save for Future College Expenses
In a June 2023 survey of 1,000 parents of teenagers by Discover Student Loans, 70% of subjects said they were worried about financing their kids’ college expenses. In addition, 68% of parents were concerned about the amount of debt their kids will be saddled with even after the parents offer up their own financial assistance.
Providing employees with much-needed information about 529 college savings plans and giving them a convenient way to contribute directly from their pay, can go a long way in helping to relieve the stress associated with one of their top financial concerns.
While in the past, the options for using unspent 529 funds were limited (and often meant facing tax and penalty consequences), the SECURE 2.0 Act allows savers to roll unused 529 funds — to a lifetime limit of $35,000 — into the beneficiary’s Roth IRA, without incurring the usual 10% penalty for nonqualified withdrawals or generating any taxable income. The new rule went into effect January 1, 2024 and might come as a relief to any employees who worry about having excess funds stuck in a 529 should their child end up not needing the money.
Recommended: The Importance of Offering 529 Plan Contributions in an Employee Benefits Package
7. Helps to Clarify Confusing Financial Topics
Many young professionals want to buy their first home, but they don’t know how to save for a down payment or secure a mortgage. New to the workforce, they also struggle to understand financial topics they weren’t taught in school, such as income tax deductions (especially as they get married and have children), the necessity of life insurance, and wealth management and investing.
At the same time, older employees might feel overwhelmed by the financial options available to them. With educational resources and access to experts through a financial wellness program, employees can find the information they need from vetted and trusted sources. In PwC’s survey, 68% of employees said they use their employer’s financial wellness services such as coaching, workshops or online tools.
8. Protects Employees
Sometimes healthcare benefits just aren’t enough. In the event of a health emergency, employees need to be prepared for insurance deductibles and other unexpected costs. Solid financial preparations can prevent them from dipping into savings or making hardship withdrawals from 401(k) plans. Those withdrawals can not only damage their prospects for long-term financial stability, but also create administrative headaches for HR.
Providing an automated emergency savings program is fast becoming a way for employers to help provide a foundation for financial well-being for workers. These plans allow employees to make paycheck contributions to a dedicated account (possibly with a company match), and can help make your workforce more financially resilient in the face of life’s “What Ifs.”
Recommended: How Much Should Your Employees Have in Emergency Savings?
9. Enhances Your Organization’s DEI Efforts
These days, many employers of all sizes have a diversity, equity and inclusion (DEI) strategy or program in place to increase inclusion in the workplace. Offering financial wellness benefits to employees is yet another way to foster a more equitable company culture.
The reason is that financial wellness benefits can help level the playing field by helping to empower minorities and underrepresented groups, who may have more financial stress and encounter more barriers to economic opportunities. Giving all employee populations access to programs that can help them buy their first homes, pay down student debt, save for emergencies, and invest for the future allows them to build wealth for generations to come.
Recommended: How to Support Your Low-Wage Workforce
10. Helps Employees Plan for Retirement
Employer-sponsored retirement plans can help to ease the financial stress that stems from retirement planning. In addition to offering a retirement plan, you might also provide education programs on planning for retirement, understanding different types of accounts available, and best places to get started based on age and goals.
In addition, you might consider instituting a 401(k) match for their student loan payments. Thanks to a provision in Secure Act 2.0 (that went into effect at the start of 2024), companies can match employees’ qualified student loan payments with contributions to their retirement accounts, including 401(k)s, 403(b)s, SIMPLE IRAs, and government 457(b) plans. With this benefit, employees won’t need to make the decision regarding whether to contribute to their 401(k)s or make student loan payments.
Recommended: How Does an HR Team Implement a Student Loan Matching or Direct Repayment Benefit?
The Takeaway
Financial stress is a major concern for today’s employees, and something a growing number of workers want their employers to help with. Providing support for financial wellness can help boost employee engagement and retention, stave off mental and physical health concerns, help your company recruit top talent, and even lead to a more inclusive and equitable workplace.
SoFi at Work can help. We provide the benefit platforms and education resources that can enhance financial wellness throughout your workforce.
Photo credit: iStock/Inside Creative House
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Paying bills is one of those forever things in life. But between the sheer number of bills for the month—rent or mortgage payment, car payment, utilities, credit cards—and the different ways to pay them, it can be tough to keep track of it all.
Making timely payments, though, is essential. Paying bills on time can mean avoiding late fees, higher interest rates, and dings to your credit score. In fact, your payment history—or how often you pay your bills on time—makes up the biggest portion of your credit score.
Fortunately, learning how to pay bills on time is often just a matter of getting organized and setting up a bill payment schedule. Try these tips and tricks to make missing bill due dates a thing of the past.
Take stock of all your monthly bills
First things first: You need to make a list of your bills for the month. Comb through your credit card and bank statements, and even your credit reports, to find typical payment amounts for your rent, utilities, loans, and credit cards. And don’t forget to look for more irregularly scheduled bills, like car insurance or subscription renewals.
Next, record the bills on a spreadsheet, in a budgeting app, or using any “method that will keep you organized and help you pay your bills on time,” says Dan Herron, a CFP® and certified public accountant. Be sure to include payments that are automatically paid out of your checking account or billed to your credit card. For each bill, write down:
Even if you’re a budgeting whiz, there may come a day when you can’t afford to pay all of your bills on time. That’s why you should also organize monthly bills by payment priority.
Using the above list, sort your bills into two groups: higher and lower priority. High-priority bills are for basic needs like shelter, transportation to work, and health insurance, or those that generally must be paid in full. Lower-priority bills are those that are important but offer some flexibility—for example, the ability to make a minimum payment (as is the case for a credit card) or to extend your payment due date.
Now you have a categorization system to help you make smart decisions about how to pay bills during times when you’re short on money.
Optimize your payment schedules
Once you have a monthly bills checklist, you can create a bill payment schedule that turns a slew of payment due dates and methods into a more streamlined system for how to pay bills. Here’s how to create one.
Group bills by due date
Many bills are due around the same time. Go through your monthly bills checklist and group them based on due date similarity.
Change your bill due dates
Some creditors allow you to change your regular bill due date. If you have many bills due at the beginning of the month, you may want to move some to the end of the month for better cash flow (for example, instead of paying a bill on Oct. 1, see if you can move it up to Sept. 30.) Update your bill payment schedule if you make any changes.
Add due dates to a calendar
Once you have your bills organized by due date, add them to a digital calendar and set payment reminders for a week before each bill is due, Herron says.
How to organize your bills
Staying organized is the best way to pay bills each month. What works best for you won’t be exactly the same as for someone else, but there are guidelines for how to pay bills most efficiently.
Create a bill ‘drop zone’
Rather than tossing your paper bills onto an already teetering pile of mail, keep unpaid bills in a dedicated file folder or basket. For electronic bills, create a digital folder for unpaid bills in your email, on your desktop, or in a cloud storage system. Once you’ve paid a bill, move it from the unpaid folder into a paid folder for that month or year, Herron says.
Automate as much as possible
The bill pay feature in your Discover® Cashback Debit account can make paying bills a snap. While automating all your bills comes with the risk of overdrawing your checking account—be sure you have overdraft protection or a connected savings account, Herron says.
Checking with cash back and no monthly fees
Discover Bank, Member FDIC
Decide when to pay your bills
Figure out how to pay bills that won’t be automatically paid from your checking account. Will you pay them when they come due or on a specific day or two each month? For example, if you have a bunch of bills due on the 15th of the month, you might decide to pay them all on the 8th of the month.
Take advantage of tech
Good news: You don’t have to rely solely on your memory or your organizational skills to pay your bills on time. Lean on technology for help.
Sign up for reminders from your bank and creditors when your bills are due. You can also receive notices of when payments or checks have cleared and when your checking account balance has dipped below a certain amount.
Also, consider using online bill pay through a checking account, which is one of the best ways to pay bills each month. In addition to automatic payments, this service offers features you can’t get from many other payment methods, such as paying multiple bills from one place and scheduling your bills to be paid in advance.
Have savings ready in case of an emergency
Having savings can help you ride out an emergency—say, a medical issue or a surprise car repair—without skipping a bill payment or taking on debt. Many financial experts recommend having enough money stored up to cover three to six months’ worth of expenses in case of a financial emergency. (Read our guide on adjusting your budget in case of a layoff.)
You can build your savings with sporadic deposits over time, but it’s also a good idea to include saving a regular amount as an “expense” in your budget. And if you have money left over after paying your bills, consider setting aside an additional portion in a separate savings account. “If the account is a high-yield savings account, you can earn some interest while you’re at it,” Herron says.
Ask for help when you need it
If you’re worried you won’t be able to cover all your bills—or you’ve already fallen behind—you have options! While it’s best to contact your creditors before you miss a payment, don’t be afraid to reach out at any point. Many creditors—such as credit card companies, medical providers, and banks—have options to help make paying your bills more manageable. For example, they might put you on a payment plan, adjust your payment due dates, or waive late fees.
Depending on your income level, there are also government programs targeted at helping people pay their utility bills.
Reevaluate and readjust
Managing and paying your bills is not a one-and-done situation. Be sure to keep your monthly bills checklist and bill payment schedule updated throughout the year.
Herron recommends reviewing your credit card and checking account statements weekly to “check your spending and see if there are any bills that you don’t recognize or that have gone up in price.” Not only can this help you stay on budget, but it’s also a good opportunity to cancel any subscriptions you no longer want. If you’re struggling to pay your bills, look for areas where you can reduce your expenses or find a better deal and then take action, like shopping around for cheaper internet service.
You’re in control
Paying bills may never be your favorite thing to do, but creating a system for how to pay bills on time can make you feel much more prepared and secure when the first of the month (or the 15th or the 30th) rolls around.
Automation is one easy step to help ensure your bills get paid on time each month, and a Discover Cashback Debit account makes bill paying simple and straightforward. Plus, it earns 1% cash back on up to $3,000 in debit card purchases each month.1 That’s a win-win for anyone looking to stay current on their bills and make a little extra cash while they do it.
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1ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay® Cash), online sports betting and internet gambling transactions, and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal®, who also provide P2P payments) may not be eligible for cash back rewards. Apple Pay is a trademark of Apple Inc. Venmo and PayPal are registered trademarks of PayPal, Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.
David Peskin, formerly from Senior Lending Network and Reverse Mortgage Funding (RMF), has purchased an ownership stake in top 10 reverse mortgage lender HighTechLending (HTL) and will lead the company’s new pursuits alongside co-owner and COO Erika Macias.
Peskin spoke to RMD about the move. He shed light on why now was the right time to move into an ownership role at the lender, what he hopes to accomplish and the place the reverse mortgage product will continue to play in the company’s pursuits.
The move to HighTech
In early 2023, Peskin and Eric Ellsworth joined HighTechLending initially as president and EVP of reverse sales, respectively. Their arrival came around the same time as the sudden and unexpected death of Don Currie, the company’s founder and longtime president. Currie had sought to bring both men in and work alongside them, Peskin explained.
“The idea was to work alongside Don and Erika,” Peskin told RMD in an interview. “Don was planning on retiring, and the initial arrangement for me was to buy some of his shares, and then the remaining shares over time. It was very unexpected and sad when Don passed. Don was a great guy whom I had done business with for 10 years and had come to know and trust. Unfortunately when Don passed, it created, I would say, a level of uncertainty in our future with HighTech given that he left all of his shares to his estate which had control over HighTech.”
This put any long-term decisions on hold until Peskin and the company could determine a way forward, but the arrival of 2024 saw the formation of a deal that would effectively continue the original plan, Peskin said.
“The good news is that we finally signed a definitive agreement in January of this year to buy 100% of the estate’s shares,” Peskin said. “And now, we’re simply waiting for regulatory approval. Hopefully, we’ll have that in the next 60 to 90 days.”
Macias remains a shareholder and the COO of the company, and Peskin looks forward to continuing work alongside her.
“She is still an equity owner and she’ll continue to do what she’s been doing,” he said. “She’s been an outstanding partner, we got very lucky to end up in the same place together. We’re very excited to work with her. She’s just been incredible.”
Looking to the future
The closure of RMF was a major shock to the reverse mortgage industry, and when asked about his thoughts on the situation as he takes a leading role at another company he said he is primarily focused on the future.
“I ran the origination side of the business, and was heavily focused on growing our origination platform,” he said. “We had a great team there, and did a great job building an outstanding origination platform. I know people loved working for us, so we’ll build the same culture.”
But Peskin also has a passion for the reverse mortgage market that brought him back into the fold, he explained.
“I’m a big believer in this market, and a bigger believer in solving seniors’ cash flow problems,” he explained. “Because of that, I’m focused on the future, and setting out what I intended to do even before RMF: giving people as many options as possible so they can access their home equity for a safe and secure retirement.”
The question of forward integration
A core takeaway for him is that his previous company was exclusively focused on one product, while HighTech has more product offerings available for its professionals to use.
“One reason I’m excited to purchase HTL is that [at RMF] we only offered reverse mortgages,” he said. “HTL offers a whole suite of products. We think that if you want to properly provide the older homeowners an opportunity to access the equity in the home, you’ve got to offer more than one product. It can’t just be reverse mortgages, it has to be a suite of an overall solution to the customer [that allows them] to let them pick what the best product is for them. And that’s a very big difference.”
A rise in forward mortgage companies are interested in entering the reverse mortgage space.
“Over time, people can learn both products, especially with the use of technology,” he explained. “But I don’t see how you can do [either] without having proper internal support. That’s why it’s so important to have a great support team that knows the diversity of products.”
Older people have a well-documented preference to remain in their homes, but the sentiment around tapping home equity remains low, he recognized.
“I know there are studies saying people don’t want to access the equity in their home, but at the end of the day for a lot of older homeowners, if they want to remain in their home they’re going to have to access their equity. But a reverse mortgage may not be the right product for them.”
Communicating to the industry
Peskin doesn’t expect to make any major changes to HighTech once the deal to buy Currie’s shares is finalized, outside of bringing more people into the fold, he said. He wants the industry to know that the company will be looking to go where older clients feel they need to, which includes a broader product mix than strictly reverse mortgages.
“You’ve got to look at it realistically,” he said. “You need to ask, ‘what do these customers need based on their current situation?’ And if I’ve got products to serve them today, or five-to-ten years from now, then I can build a business around that. I don’t think you can just look at today, you’ve got to look at how to help our loan officers be successful in growing their business.”
The only way to do that, he said, is with products that can meet the needs of both clients while emphasizing the strengths of employees.
“Loan officers need a good diversification of products, and the ability to offer those products,” he said.