With a full-suite of banking services online and an easy-to-use interface and mobile app, BBVA is best for those who want to handle all their banking needs online.
1Y CD Rate
J.D. Power Rating
2.8 / 5.0
SimpleScore BBVA 2.8
Savings APY 2
1Y CD APY 2
Customer Satisfaction 2
Mobile App 3
Product Variety 5
BBVA bank, formerly BBVA Compass bank, was founded in 1964 and is based in Alabama. BBVA has quite a few branches spread across seven states — Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas — although around half of those locations are in Texas. BBVA is a full-service bank and has been around a long time, but it also has a strong online banking presence. Unlike many other banks that we would consider “online banks,” BBVA offers a full suite of services, from checking and savings to money market accounts, investing, CDs and even home and auto loans.
In this article
Min Savings Deposit
Max Savings APY
J.D. Power Survey Score
Full-service banking with many options
What we like about it
BBV bank has been around for quite a while and has a sizable presence in the states where it has branches. Unlike many other banks that offer accounts online, this one offers a full suite of banking services, meaning you can do all of your banking in one place. The website and app are where this bank shines. With an easy-to-use interface that also offers a lot of functionality, it’s easy to manage accounts, even if you don’t live near any branches. Their mobile app offers a wide range of features too, along with great digital security options.
Things to consider
Because BBVA is a more traditional, full-service bank, their interest rates are lower than most online bank offerings, and they do have some fees that are higher than other banks. For example, overdraft fees are $38 each and you can incur up to six per day. That means even simple mistakes can add up quickly. The rates on BBVA’s CDs and savings APY rates are also low, and there are options with higher rates and lower fees available elsewhere.
BBVA checking accounts
BBVA bank offers the Free Checking account, which doesn’t have monthly Service Charge. This account includes free ATM withdrawals at not only BBVA ATMs, but the network of Allpoint ATMs as well, which means you have 44,000 options around the US. Fees for overseas withdrawals are small and reasonable. The bank also offers the Premium Checking account, which earns interest on your money. Like the other accounts, there is only a $35 minimum balance to open it, but if your balance is below $5,000 you’ll pay a hefty $26 monthly maintenance fee. If you’re going to keep that high of a balance, you may want to look at their money market account instead. We have more information on BBVA’s money market accounts below.
BBVA savings accounts
There are a few different types of savings accounts offered by BBVA. The first is the BBVA Build My Savings Account. You can earn a match bonus depending on the term you choose, your opening account balance and how much you add to the account regularly, up to $25 per term.
The BBVA Online Savings Account account also has a minimum opening balance of $25 and the same interest rate, but it does not have the same match options as the Build My Savings Option. It does offer easy access to your funds and a link to your checking account for overdraft protection, and there is no Service Charge for the account. The BBVA Savings Account offers similar benefits to the BBVA Online Savings Account and the same minimum opening balance, but there is a $15 quarterly Service Charge that can be waived if you meet certain criteria.
BBVA money market accounts
The BBVA Money Market account earns better interest than the Premium Checking account, but the APY varies by region. It can be set up as overdraft protection for your checking account, and you can access your money anytime you need it with ATM access or online and mobile banking. You’ll only need a minimum of $25 to open the account, and while there are higher-interest MMAs to be found elsewhere, most require a much more substantial minimum balance.
BBVA CDs require a minimum of $500 to open — certainly not the highest minimum around. Rates vary depending solely on term. These are certainly not the most spectacular rates out there if that’s what you’re looking for, but there are no maintenance fees associated with these accounts.
BBVA IRA accounts
As a full-service institution, BBVA offers SEP, ROTH and traditional IRAs with a variety of ways to invest, including mutual funds and ETFs. There are a wide variety of portfolios and funds to choose from based on your needs, how soon you want to retire and how risk-averse you may be. They also offer other ways to invest that can help you build your retirement income, including annuities and lifetime-income options.
BBVA credit cards
There are four credit card options with BBVA bank. All offer varying levels of rewards and interest rates that depend on your credit-worthiness and the type of perks you would like to earn.
The BBVA Rewards Card offers unlimited 1.5% rewards on all purchases and the ability to earn an additional unlimited 0.5% reward bonus with $1,000 in monthly direct deposits to a BBVA deposit account, among other perks like 0% balance transfer options.
The BBVA ClearPoints Credit Card is a rewards card that lets you choose how you earn up to 2x & 3x points in categories you select each quarter. It has no annual fee and offers a 0% introductory APR for 13 months on purchases, among other perks.
The Select Credit Card allows you to choose how you earn 3x the points in categories you select, and it offers access to Visa Signature travel and entertainment benefits, a 24/7 complimentary concierge, and no foreign transaction fees. The downside is the $125 annual fee, which BBVA waives for the first year.
The exception to this is the Optimizer Credit Card, a secured credit card that’s collateralized by a savings account. This card is designed for those who can’t qualify for a traditional credit card and will help rebuild their credit. It has a high interest rate, but the credit limit can be increased at any time with a matching deposit in the savings account.
Regardless of your credit history and your desire for rewards, BBVA probably has a credit card that will work for you.
There are two investing options with BBVA. The first is self-directed investing, which is just what is sounds like. You control and direct your investments, and you can put your money in mutual funds, ETFs and other options. You can even establish a margin account through the bank.
If you want more options and someone to manage your investing for you, BBVA offers full-service investment accounts as well. This means your money is managed by a professional. BBVA also offers 529 plans and options that help you save to pay for your child’s college managed under this plan.
Compare top bank accounts
Too long, didn’t read?
Are you looking for a full-service bank online that offers plenty of options? If the answer is yes, then BBVA may be the right place for you. Many fees can be avoided though they are steeper than many other banks, and the interest rates are respectable but not the highest around.
If you’re looking for the highest rates and lowest fees, or have very simple banking and financial services needs, BBVA may not be the best place for you. If you shop around, you will find higher interest rates, lower fees and simpler options from other online banks. From full-service investing to traditional banking and lending products, BBVA’s strength lies in its options. If you’re shopping around for a bank, they’re certainly worth a second look.
Investing is an important part of saving for the future, but many people are wary of putting their money into the stock market. Stocks can be volatile, with prices that change every day. If you can’t handle the volatility and risk of stocks or want to diversify your portfolio into a less risky investment, bonds are a good way to do so.
As with many types of investments, you can invest in bonds through a mutual fund, which gives you easy diversification and professional portfolio management — for a fee.
Are bond mutual funds a good addition to your portfolio? Here are the basics of these investment vehicles.
What Is a Bond?
A bond is a type of debt security. When organizations such as national and local governments, government agencies, or companies want to borrow money, one of the ways they can get the loan they need is by issuing a bond.
Investors purchase bonds from the organizations issuing them. Typically, bonds come with an interest rate and a maturity. For example, a company might sell bonds with an interest rate of 5% and a maturity of 20 years.
The investor would pay the company $1,000 for a $1,000 bond. Each year, that investor receives an interest payment of $50 (5% of $1,000). After 20 years, the investor receives a final interest payment plus the $1,000 they paid to buy the bond.
What Is a Mutual Fund?
A mutual fund is a way for investors to invest in a diverse portfolio while only having to purchase a single security.
Mutual funds pool money from many investors and use that money to buy bonds, stocks, and other securities. Each investor in the fund effectively owns a portion of the fund’s portfolio, so an investor can buy shares in one mutual fund to get exposure to hundreds of stocks or bonds.
This makes it easy for investors to diversify their portfolios.
Mutual fund managers make sure the fund’s portfolio follows their stated strategy and work towards the fund’s stated goal. Mutual funds charge a fee, called an expense ratio, for their services, which is important for investors to keep in mind when comparing funds.
Pro tip: Most mutual funds can be purchased through the individual fund family or through an online broker like Robinhood or Public.
Types of Bond Mutual Funds
There are many types of bond mutual funds that people can invest in.
Government bond funds invest most of their money into bonds issued by different governments. Most American government bond funds invest primarily in bonds issued by the U.S. Treasury.
U.S. government debt is seen as some of the safest debt available. There is very little chance that the United States will default on its payments. That security can be appealing for investors, but also translates to lower interest rates than other bonds.
Corporate bond funds invest most of their assets into bonds issued by companies.
Just like individuals, businesses receive credit ratings that affect how much interest they have to pay to lenders — in this case, investors looking to buy their bonds. Most corporate bond funds buy “investment-grade” bonds, which include the highest-rated bonds from the most creditworthy companies.
The lower a bond’s credit rating, the higher the interest rate it will pay. However, lower credit ratings also translate to a higher risk of default, so corporate bond funds will hold a mixture of bonds from a variety of companies to help diversify their risks.
Municipal bonds are bonds issued by state and local governments, as well as government agencies.
Like businesses, different municipalities can have different credit ratings, which impacts the interest they must pay to sell their bonds. Municipal bond funds own a mixture of different bonds to help reduce the risk of any one issuer defaulting on its payments.
One unique perk of municipal bonds is that some or all of the interest that investors earn can be tax-free. The tax treatment of the returns depends on the precise holdings of the fund and where the investor lives.
Some mutual fund companies design special municipal bond funds for different states, giving investors from those states an option that provides completely tax-free yields.
The tax advantages municipal bond funds offer can make their effective yields higher than other bond funds that don’t offer tax-free yields. For example, someone in the 24% tax bracket would need to earn just under 4% on a taxable bond fund to get the equivalent return of a tax-free municipal bond fund offering 3%.
High-yield bond funds invest in bonds that offer higher interest rates than other bonds, like municipal bonds and government bonds.
Typically, this means buying bonds from issuers with lower credit ratings than investment-grade bonds. These bonds are sometimes called junk bonds. Their name comes from the fact that they are significantly riskier than other types of bonds, so there’s a higher chance that the issuer defaults and stops making interest payments.
Bond mutual funds diversify by buying bonds from hundreds of different issuers, which can help reduce this risk, but there’s still a good chance that some of the bonds in the fund’s portfolio will go into default, which can drag down the fund’s performance.
Foreign governments and companies need to borrow money just like American companies and governments. There’s nothing stopping Americans from investing in foreign bonds, so there are some mutual funds that focus on buying international bonds.
Each country and company has a credit rating that impacts the interest rate it has to pay. Many stable governments are seen as highly safe, much like the United States, but smaller or less economically developed nations sometimes have lower credit ratings, leading them to pay higher interest rates.
Another factor to keep in mind with international bonds is the currency they’re denominated in.
With American bonds, you buy the bond in dollars and get interest payments in dollars. If you buy a British bond, you might have to convert your dollars to pounds to buy the bond and receive your interest payments in pounds. This adds some currency risk to the equation, which can make investing in international bond funds more complex.
Some bond mutual funds don’t specialize in any single type of bond. Instead, they hold a variety of bonds, foreign and domestic, government and corporate. This lets the fund managers focus on buying high-quality bonds with solid yields instead of restricting themselves to a specific class of bonds.
Why Invest in Bond Mutual Funds?
There are a few reasons for investors to consider investing in bond mutual funds.
Reduce Portfolio Risk and Volatility
One advantage of investing in bonds is that they tend to be much less risky and volatile than stocks.
Investing in stocks or mutual funds that hold stocks is an effective way to grow your investment portfolio. The S&P 500, for example, has averaged returns of almost 10% per year over the past century. However, in some years, the index has moved almost 40% upward or downward.
Over the long term, it’s easier to handle the volatility of stocks, but some people don’t have long-term investing goals. For example, people in retirement are more concerned with producing income and maintaining their spending power.
Putting some of your portfolio into bonds can reduce the impact of volatile stocks on your portfolio. This can be good for more risk-averse investors or those who have shorter time horizons for their investments.
There are some mutual funds, called target-date mutual funds, that hold a mix of stocks and bonds and increase their bond holdings over time, reducing risk as the target date nears.
Bonds make regular interest payments to their holders and the majority of bond funds use some of the money they receive to make payments to their investors. This makes bond mutual funds popular among investors who want to make their investment portfolio a source of passive income.
You can look at different bond mutual funds and their annual yields to get an idea of how much income they’ll provide each year. For example, if a mutual fund offers a yield of 2.5%, investors can expect to receive $250 each year for every $10,000 they invest in the fund.
Pro tip: Have you considered hiring a financial advisor but don’t want to pay the high fees? Enter Vanguard Personal Advisor Services. When you sign up you’ll work closely with an advisor to create a custom investment plan that can help you meet your financial goals. Read our Vanguard Personal Advisor Services review.
Risks of Bond Funds
Before investing in bonds or bond mutual funds, you should consider the risks of investing in bonds.
Interest Rate Risk
One of the primary risks of fixed-income investing — whether you’re investing in bonds or bond funds — is interest rate risk.
Investors can buy and sell most bonds on the open market in addition to buying newly issued bonds directly from the issuing company or government. The market value of a bond will change with market interest rates.
In general, if market rates rise, the value of existing bonds falls. Conversely, if market rates fall, the value of existing bonds rises.
To understand why this happens, consider this example. Say you purchased a BBB-rated corporate bond with an interest rate of 2% for $1,000. Since you bought the bond, market rates have increased, so now BBB-rated companies now have to pay 3% to convince investors to buy their bonds.
If someone can buy a new $1,000 bond paying 3% interest, why would they pay you the same amount for your $1,000 bond paying 2% interest? If you want to sell your bond, you’ll have to sell it at a discount because investors can get a better deal on newly issued bonds.
Of course, the opposite is true if interest rates fall. In the above example, if market rates fell to 1%, you could command a premium for your bond paying 2% because investors can’t find new bonds of the same quality that pay that much anymore.
Interest rate risk applies to bond funds just as it applies to individual bonds. As rates rise, the share price of the fund tends to fall and vice versa.
Generally, the longer the bond’s maturity, the greater the effect a change in market interest rates will have on the bond’s value. Short-term bonds have much less interest rate risk than long-term bonds. Bond funds usually list the average time to maturity of bonds in their portfolio, which can help you assess a fund’s interest rate risk.
Bonds are debt securities, meaning they’re reliant on the bond issuer being able to pay its debts.
Just like people, companies and governments can go bankrupt or default on their loan payments. If this happens, the people who own those bonds won’t get the money they lent back.
Bond mutual funds hold thousands of bonds, but if one of the issuers defaults, some of the fund’s bonds become worthless, reducing the value of the investors’ shares in the fund.
Bonds issued by organizations with higher credit ratings are generally less risky than those with poor credit ratings. For example, most people would consider U.S. government bonds to have a very low credit risk. A junk bond fund would have much more credit risk.
Foreign Exchange Risk
If you’re buying shares in a bond fund that invests in foreign bonds, you should consider foreign exchange risk.
Currencies constantly fluctuate in value. Over the past five years, $1 could buy anywhere between 0.80 and 0.96 euros.
To maximize returns, investors want to buy foreign bonds when the dollar is strong and receive interest payments and return of principal when the dollar is weak.
However, it’s incredibly hard to predict how currencies’ values will change over time, so investors in foreign bonds should consider how changing currency values will affect their returns.
Some bond funds use different strategies to hedge against this risk, using tools like currency futures or buying dollar-denominated bonds from foreign entities.
Mutual funds charge fees, which they commonly express as an expense ratio.
A fund’s expense ratio is the percentage of your invested assets that you pay each year. For example, someone who invests $10,000 in a mutual fund with a 1% expense ratio will pay $100 in fees each year.
Expense ratio fees are included when calculating the fund’s share price each day, so you don’t have to worry about having cash on hand to pay the fee. The fees are taken directly out of the fund’s share price, almost imperceptibly. Still, it’s important to understand the impact fees have on your overall returns.
If you invest $10,000 in a fund that produces an annual return of 5% and has a 0.25% expense ratio, after 20 years you’ll have $25,297.68. If that same fund had an expense ratio of 0.50%, you’d finish the 20 years with $24,117.14 instead.
In this example, a difference of 0.25% in fees would cost you more than $1,000.
If you find two bond funds with similar holdings and strategies, the one with the lower fees tends to be the better choice.
Bond mutual funds are a popular way for investors to get exposure to bonds in their portfolios. Just as there are many different types of stocks, there are many types of bonds, each with advantages and disadvantages.
If you don’t want to pick and choose bonds to invest in, bond funds offer instant diversification and professional management. If you want an even more hands-off investing experience, working with a financial advisor or robo-advisor that handles your entire portfolio may be worth considering.
Buying a fixer-upper is sometimes romanticized by pop culture. While it’s fun to dream, the reality of home renovation is that it can be laborious and draining, especially if the home needs serious help.
Repair work requires energy and resources, and it can be difficult to secure a loan to cover both the value of the home and the cost of repairs—especially if the home is currently uninhabitable. Most lenders won’t take that sort of chance.
But if you have your heart set on buying a fixer upper, an FHA 203(k) loan can help.
The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), insures loans for the purchase and substantial rehab of homes. It is also possible to take out an FHA 203(k) loan for home repairs only, though it might not be your best option if that’s all you need.
If you have the vision to revive a dreary house, here’s info about FHA 203(k) loans and other home improvement loan options.
What Is an FHA 203(k) home loan?
Section 203(k) insurance lets buyers finance both the purchase of a house and its rehabilitation costs through a single long-term, fixed- or adjustable-rate loan.
Before the availability of FHA 203(k) loans, borrowers often had to secure multiple loans to obtain a mortgage and a home improvement loan.
The loans are provided through HUD-approved mortgage lenders and insured by the FHA. The government is interested in rejuvenating neighborhoods and expanding homeownership opportunities.
Because the loans are backed by the federal government, you may be able to secure one even if you don’t have stellar credit. Rates are generally competitive but may not be the best, because a home with major flaws is a risk to the lender.
The FHA 203(k) process also requires more coordination, paperwork, and work on behalf of the lender, which can drive the interest rate up slightly. Lenders also may charge a supplemental origination fee, fees to cover review of the rehabilitation plan, and a higher appraisal fee.
The loan will require an upfront mortgage insurance payment of 1.75% of the total loan amount (it can be wrapped into the financing) and then a monthly mortgage insurance premium.
Applications must be submitted through an approved lender .
What Can FHA 203(k) Loans Be Used For?
Purchase and Repairs
Other than the cost of acquiring a property, rehabilitation may range from minor repairs (though exceeding $5,000 worth) to virtual reconstruction.
If a home needs a new bathroom or new siding, for example, the loan will include the projected cost of those renovations in addition to the value of the existing home. An FHA 203(k) loan, however, will not cover “luxury” upgrades like a pool, tennis court, or gazebo (so close!).
If you’re buying a condo, 203(k) loans are generally only issued for interior improvements. However, you can use a 203(k) loan to convert a property into a two- to four-unit dwelling.
Your loan amount is determined by project estimates done by the lender or the FHA. The loan process is paperwork-heavy. Working with contractors who are familiar with the way the program works and will not underbid will be important.
Contractors will also need to be efficient: The work must begin within 30 days of closing and be finished within six months.
If the home is indeed unlivable, the 203(k) loan can include a provision to provide you with up to six months of temporary housing costs or existing mortgage payments.
Who Is Eligible for an FHA 203(k) Loan?
Individuals and nonprofit organizations can use an FHA 203(k) loan, but investors cannot.
Most of the eligibility guidelines for regular FHA loans apply to 203(k) loans. They include a minimum credit score of 580 and at least a 3.5% down payment.
Applicants with a score as low as 500 will typically need to put 10% down.
Your debt-to-income ratio typically can’t exceed 43%. And you must be able to qualify for the costs of the renovations and the purchase price.
Again, to apply for any FHA loan, you have to use an approved lender. (It’s a good idea to get multiple quotes.)
Home Improvement Loan Options
The FHA 203(k) provides the most comprehensive solution for buyers who need a loan for both a home and substantial repairs. However, if you need a loan only for home improvements, there are other options to consider.
Depending on the improvements you have planned, your timeline, and your personal financial situation, one of the following could be a better fit.
Other Government-Backed Loans
In addition to the standard FHA 203(k) program, there is a limited FHA 203(k) loan of up to $35,000. Homebuyers and homeowners can use the funding to repair or upgrade a home.
Then there are FHA Title 1 loans for improvements that “substantially protect or improve the basic livability or utility of the property.” The fixed-rate loans may be used in tandem with a 203(k) rehabilitation mortgage.
The owner of a single-family home can apply to borrow up to $25,000 with a secured Title 1 loan.
With Fannie Mae’s HomeStyle® Renovation Mortgage, homebuyers and homeowners can combine their home purchase or refinance with renovation funding in a single mortgage. There’s also a Freddie Mac renovation mortgage, but standard credit score guidelines apply.
If you have an existing mortgage and equity in the home, and want to take out a loan for home improvements, a cash-out refinance from a private lender may be worth looking into.
You usually must have at least 20% equity in your home to be eligible, meaning a maximum 80% loan-to-value (LTV) ratio of the home’s current value. (To calculate LTV, divide your mortgage balance by the home’s appraised value. Let’s say your mortgage balance is $225,000 and the home’s appraised value is $350,000. Your LTV is 64%, which indicates 36% equity in the home.)
A cash-out refi could also be an opportunity to improve your mortgage interest rate and change the length of the loan.
For green improvements to your home, such as solar panels or an energy-efficient heating system, you might be eligible for a PACE loan .
The nonprofit organization PACENation promotes property-assessed clean energy (or PACE) financing for homeowners and commercial property owners, to be repaid over a period of up to 30 years.
Home Improvement Loan
A home improvement loan is an unsecured personal loan—meaning the house isn’t used as collateral to secure the loan. Approval is based on personal financial factors that will vary from lender to lender.
Lenders offer a wide range of loan sizes, so you can invest in minor updates to major renovations.
Home Equity Line of Credit
If you need a loan only for repairs but don’t have great credit, a HELOC may provide a lower rate. Be aware that if you can’t make payments on the borrowed funding, which is secured by your home, the lender can seize your home.
If you have your eye on a fixer-upper that you just know can be polished into a jewel, an FHA 203(k) loan could be the ticket, but options may make more sense to other homebuyers and homeowners.
SoFi offers cash-out refinancing, turning your home equity into renovation money.
Or maybe a home improvement loan of $5,000 to $100,000 seems like a better way to turn your home into a haven.
Check your rate today.
SoFi Loan Products SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal. SoFi Home Loans Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information. Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners. External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement. 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.
(Reposting 5/5/21 since an email went out today with details on this offer.)
The Bank of America Premium Rewards card has added a bonus category through December 31, 2021, (showing on the regular landing page):
Earn 2x points on grocery store purchases through December 31, 2021 (instead of the regular 1.5x).
This works for both new cardholders and existing cardholders, as readers have verified in the comments.
Nice little bonus, especially for relationship customers who earn a 75% bonus which makes it a total 3.5% at grocery stores. There are still other cards that earn more than that at the grocery, but some might appreciate 3.5% uncapped return.
Starting a business is an opportunity to be your own boss, make money and grow your skill set.
There are also the not-so-great, somewhat messy and complicated parts about operating a business. If you start off solo or small, you’ll be tackling a lot of tasks yourself.
But don’t worry. In this article, we’re going to address something relatively simple in the business world: the best business checking accounts.
We’ll go into why you need one, what you should look for and several of the best ones available, both in-person and online-only.
Wait, Do I Really Need a Business Checking Account?
The purpose of a business checking account is to keep your business finances separate from your personal finances.
Technically, you might not need one depending on the legal structure of your business.
For example, if you’re a freelance writer who established a sole proprietorship and is starting slowly, you could use your personal checking account to get off the ground. But you’ll want to be extremely organized about keeping track of your business money for tax time. (Nothing will damper your momentum like getting audited.)
The type of business you’re running makes a difference here. If it’s transaction-heavy — or a particular legal structure, like a limited liability company — you might need a business checking account, full stop.
But if you’re starting any kind of business, it’s probably in your best interest to open one.
Business checking accounts make it easier to track profits, expenses and deductions, and help establish your operation if you file for business credit cards or loans down the line.
What You Need to Open a Business Checking Account
To open an account, you’ll typically need the following:
Social security number (SSN) or employee identification number (EIN)
Valid driver’s license or state ID
An initial deposit
How easy it is to open a business checking account will depend on your business. If you’re a sole proprietor, the process might feel similar to opening a personal checking account. If you have a different legal business structure, you’ll likely have to provide additional documentation (like your articles of incorporation). Requirements will vary from bank to bank.
What You Should Look for in a Business Checking Account
Before you peruse accounts, get a handle on your business needs and wants. For instance, do you make a lot of transactions? Do you want a business credit card ASAP? Do you prefer a big bank where you can pop into a different branch every half mile?
There are other considerations. Do you want your bank, credit union or financial institution to…
Offer free bank statements?
Have an app?
Offer free online banking and/or bill pay?
Have in-person locations?
Offer comprehensive customer service, i.e., allow you to talk to someone online and on the phone 24/7?
Have integration with tools, like invoicing software?
Offer multiple products, such as business credit cards, small-business loans, etc.?
There are lots of banks for small businesses to choose from, but you want one that will give you the most options. And ideally, save you some money and headaches in the process.
To choose the best business checking accounts, we focused on accounts that:
Require a low minimum initial deposit ($1,000 or less — most require only $25).
Offer a certain number of transactions for free.
Either have no monthly service fee or make it easy to have the fee waived.
We also focused on checking accounts for small and medium businesses. If you’re looking for accounts to manage a higher volume, many of the traditional institutions on our list have them, too.
Check out our current list of bank promotions for a chance to gain a monetary bonus when signing up for a new business checking account.
The 5 Best Business Checking Accounts for May 2021
We chose five institutions and a couple of different checking account options for each where available.
1. Chase: Best for 24/7 Customer Service and Overall Accessibility
Chase is a well-known brand with many physical branches and flexible options for business owners. It’s a good choice if you want to be able to find a chain easily and talk to someone in person. Chase also offers 24/7 support, so you can call and email them anytime of day. From personal experience, if you send them a secured online message, they typically follow up within 24 hours. To learn more, read our Chase Bank review.
Number of branches: Approximately 4,700
Number of ATMs: 16,000
Here’s the lowdown on Chase Business Complete Banking and Chase Performance Business Checking.
Chase Business Complete Banking
Chase Business Complete Banking (for small businesses) at a glance:
Sign-up bonus: $300 for new customers who meet certain criteria
Minimum initial deposit: $25
Monthly service fee: $15; waived if you maintain a minimum daily balance of $2,000 or link a qualifying Chase account
Cash deposits per month: Up to $5,000 without an additional fee
Free transactions per month: 100
Access to Chase online and mobile banking
Get same-day deposits on card payments at no additional cost
Chase Performance Business Checking
Chase Performance Business Checking (for medium-sized businesses) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $25
Monthly service fee: $30; waived if you maintain a minimum daily balance of $35,000 or more in qualifying accounts
Cash deposits per month: Up to $20,000 without an additional fee
Free transactions per month: 250
No charge for all incoming wires and two outgoing domestic wires per statement cycle
Interest-bearing option availableChase has business saving account, lending and credit card options, too. Chase offers several small-business credit cards, all with new card member bonuses, which include $750 cash back to 100,000 bonus points depending on the card.
2. Wells Fargo: Best for Small Business Owners Just Getting Started
Wells Fargo is another strong choice for your business checking account needs. It has many branch locations and you can call them 24/7. Its website is also easy to navigate and lets you find answers to your questions without clicking on a ton of links. Check out our Wells Fargo Bank review for more information.
Number of branches: Approximately 7,200
Number of ATMs: Over 13,000
Wells Fargo Initiate Business Checking
Initiate Business Checking (for new and small businesses) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $25
Monthly service fee: $10; waived by having a minimum daily balance of $500
Cash deposits per month: Up to $5,000 for free
Free transactions per month: 100
Customized business debit card
24/7 fraud monitoring
If you’re just getting started with your small business and don’t expect to scale right away, Initiate Business Checking is a solid, affordable account to open.
Wells Fargo Navigate Business Checking
Navigate Business Checking (for small- to medium-sized businesses) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $25
Monthly service fee: $25; waived by having a minimum daily balance of $10,000 or an average combined business deposit balance of $15,000
Cash deposits per month: Up to $20,000 for free
Free transactions per month: 250
Customized business debit card
24/7 fraud monitoring
Wells Fargo also offers small-business lending and credit card options.
3. U.S. Bank: Best for Simple, Fee-Free Banking
While primarily located in the Midwest, this chain has lots of locations across the country. That’s great news if you’re a small-business owner looking for a simple checking account.
U.S. Bank has no monthly service fees for its Silver account, so no worries about meeting certain criteria to have the fee waived. You can also go to its website and take a short quiz to determine which account would work best for your needs.
Number of branches: 3,106
Number of ATMs: 4,842
U.S. Bank offers Silver, Gold, Platinum and Premium business checking accounts, and we’re going to outline the first two.
U.S. Bank Silver Business Checking
Silver Business Checking (best for newer or smaller businesses) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $100
Monthly service fee: $0
Cash deposits per month: 25 for free
Free transactions per month: 120 per statement cycle; 50 cents per excess transaction
U.S. Bank will charge you $5 for paper statements, so stick with online ones to save money and the planet.
Online and mobile banking
Discount on first check order
Small Business Visa credit card
Card payment processing
U.S. Bank Gold Business Checking
Gold Business Checking (for businesses with moderate transaction levels) at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $100
Monthly service fee: $20; waived by satisfying one of several criteria listed on its website
Cash deposits per month: 100 for free
Free transactions per month: 300 per statement cycle; 45 cents per excess transaction
Online and mobile banking
Remote check deposits
Discount on first check order
Small Business Visa credit card
Card payment processing
Silver and Gold are good options for small businesses looking for free business checking accounts (as long as you stay within the limits). And in general, Chase, Wells Fargo and U.S. Bank are all good options for an LLC.
4. BlueVine: Best for Fee-Free, Online-Only Banking
Want to open an account on your phone and manage it entirely online? Welcome to 2021… and to BlueVine.
BlueVine boasts no hidden fees and unlimited transactions. Members can pay vendors, schedule one-time and recurring payments, and earn an impressive 1.0% on their checking account balance up to $100,000. Deposits are FDIC-insured (up to $250,000) through The Bancorp Bank.
Number of branches: 0
Number of ATMs: Users can withdraw cash fee-free at over 38,000 MoneyPass® locations in the U.S.
BlueVine at a glance:
Sign-up bonus: None specified
Minimum initial deposit: $0
Monthly service fee: $0
Cash deposits per month: Unlimited. You can deposit cash at close to 100,000 retail locations through a partnership with Green Dot. A $4.95 fee, per deposit, applies.
Free transactions per month: Unlimited
A BlueVine Business Debit Mastercard®
Access to a business line of credit
Two free checkbooks
Phone and email customer support
5. Axos Bank: Best for Business Interest Checking
Axos Bank is another online-only bank. In addition to business checking accounts that earn interest, customers can take advantage of surcharge-free ATMs across the U.S.
Number of branches: 0
Number of ATMs: You can use any ATM in the U.S. and you’ll be reimbursed for the fees
Axos Bank offers Basic Business Checking, Business Interest Checking and Analyzed Business Checking. We’re going to look at the first two.
Axos Basic Business Checking
Basic Business Checking at a glance:
Sign-up bonus: $!00 if you incorporated after June 1, 2020
Minimum initial deposit: $1,000
Monthly service fee: $0
Cash deposits per month: Up to 60 items with remote deposit
Free transactions per month: 200; afterward, 30 cents each
Pay bills with no charge through the app
First set of 50 checks is free
Compatible with QuickBooks
Axos Business Interest Checking
Business Interest Checking at a glance:
Sign-up bonus: $100 if you incorporated after June 1, 2020
Minimum initial deposit: $100
Monthly service fee: $10; waived if there’s an average daily balance of $5,000
Cash deposits per month: Up to 60 with remote deposit
Free transactions per month: 50; afterward, 50 cents each
Earn up to 0.81% APY
First set of 50 checks for free
Axos Bank also offers saving accounts and Business CDs, but no credit cards.
Regional Business Checking Account Options
Here’s a glance at three smaller, regional options for business checking accounts. If your area isn’t listed, you can research credit unions and banks near you.
America First Credit Union
This institution has branches in Nevada and Utah. America First offers four types of business checking accounts: Basic, Premier, High-Yield and Non-Profit.
The Basic Business Checking offers 250 free monthly transactions, free online bill pay, access to money market savings, lines of credit and Business Visa credit card.
This bank has branches in Tennessee, Florida, North Carolina, South Carolina, Virginia and Texas. First Horizon offers BizEssentials Checking (Value, Basic, Standard and Interest) and Business Interest Checking Account, which combines the benefits of a checking and interest-earning savings account.
The Business Interest Checking Account has no minimum balance requirements, plus you’ll earn interest on your balance and have access to a Visa Business debit card.
SunTrust, Now Truist
This bank has branches in Alabama, Arkansas, Washington, D.C., Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. SunTrust offers three types of business checking accounts: Simple Business Checking, SunTrust Primary Business Checking and SunTrust Business Advantage Plus Checking.
SunTrust Primary Business Checking has a $15 monthly fee that’s waived in the first two statement cycles and after that when you have a $1,000 minimum daily balance. Each month, you’ll get 150 free transactions and $5,000 cash processing.
What’s the Right Business Checking Account for You?
The best business checking account for you will depend on your business and needs. Whether you’re just starting out or looking to level up, there are plenty of options out there, online and off. Start your search now, so your future self — and CPA, come tax time — will thank you later.
Contributor Kathleen Garvin (@itskgarvin) is a personal finance writer based in St. Petersburg, Florida, and former editor and marketer at The Penny Hoarder. She owns a content-writing business and her work has appeared in U.S. News, Clark.com and Well Kept Wallet.
Buying a new car? Planning to get a car loan for it? Then keep the following tips in mind to get a good interest rate – and avoid the crucial mistakes that cost you even more money over the long run.
Tip #1: Don’t Get Financing at the Dealership
The vast majority of car buyers get their car loans at the same dealership where they buy the car. Their reasoning: It’s convenient, and/or the dealers give great interest rates. Do you have the same sentiment?
Here’s the problem: As attractive as the dealer’s advertised interest rates are, they’re likely reserved only for buyers with excellent credit scores. What’s more, there’s a pretty good chance you can find an even better deal elsewhere, such as with community banks and credit unions.
Our advice: Do your homework, and get your loan lined up and ready before you visit the dealer. If the dealer offers you an even better deal, you can still have the loan canceled.
Tip #2: Check Your Credit Score
Do you know your credit score? If not – and if you let the dealer come up with your car loan for you – you’re in BIG trouble! The dealer might convince you that your credit rating is worse than it actually is, and jack up your interest rates accordingly.
Get your credit score by requesting your credit ratings from TransUnion, Equifax, and Experian. You can also check your credit score by applying for preapproved car financing. Car loans from banks and credit unions can give you a pretty good idea of the vehicles and interest rate your credit score qualifies you for.
Click here to learn how you can improve your credit score.
Tip #3: Watch Out For Scams.
Another risk you run when you let your dealer set up your financing for you is getting scammed. A common scam is carried out when, a few days after you sign the dotted line and bring your new car home, the dealer calls you and tells you the car loan “didn’t work out,” and that you’ll need to re-negotiate a new loan with a higher interest rate – or give the car back, losing your deposit in the process.
Protect yourself by getting your car loan elsewhere, or by not buying the car until you’re 100% sure the dealer’s financing is finalized.
Tip #4: Don’t Focus on the Monthly Fee
Lastly, one of the biggest mistakes car buyers make is going for the loan with the lowest monthly fees. Low monthly fees normally mean higher interest rates and longer payment periods. If you’re not careful, you might end up paying over twice the car’s value throughout the life of the loan.
Remember that there are at least two things that go into the monthly fee: The price of the car and the car loan’s premium. (If you’re trading in your old car, that’s an additional factor.) A single monthly fee won’t tell you how much of each is going into it – and there’s no way of knowing whether you’re paying too much for your loan or getting too little from your trade-in.
So if the car salesman asks you how much you can afford to pay each month – you don’t need to answer. Don’t get trapped! Focus instead on the total amount you’ll be paying for the car loan over its lifetime. It’s the best way to save money and get a decent car at the same time.
Advertiser Disclosure: This post includes references to offers from our partners. We receive compensation when you click on links to those products. However, the opinions expressed here are ours alone and at no time has the editorial content been provided, reviewed, or approved by any issuer.
Apple Card immodestly claims to “completely [rethink] everything about the credit card.” Is it correct? Maybe.
Backed by the Mastercard network, Apple Card certainly has a host of innovative features that old-fashioned credit cards don’t, such as daily cash-back and numberless physical cards. And it’s a harbinger of the cashless, contactless payments landscape to come. No serious observer can dispute that Apple Card is ahead of its time.
But any product that’s truly ahead of its time must also be competitive in the present. And beyond its novel features, Apple Card works pretty much like any other credit card. Indeed, in spite – or perhaps because – of its novel additions, it lacks some consumer-friendly features common to other popular cash-back cards and general-purpose rewards cards.
Here’s a closer look at what sets Apple Card apart, and how it stacks up against other credit cards.
Things to Keep in Mind About Apple Card
Before we dive into Apple Card’s details, two points bear mentioning.
First, though cardholders who don’t pay their statement balances in full each month are subject to interest charges that vary with their creditworthiness and prevailing benchmark rates, Apple Card charges none of the fees typically levied by credit card companies: no annual fee, no late fee, and no over-limit fee.
Second, Apple Card is designed to work with Apple Pay, which runs on Apple (Mac) hardware only. If you’re one of the many millions of iPhone users in the United States, this card is for you. If you’re an Android loyalist, you’re out of luck.
Here’s a closer look at Apple Card’s most notable features.
Earning Cash Back
Apple Card has a three-tiered cash-back program:
3% Cash Back. All purchases from Apple earn unlimited 3% cash back. These include, but are not limited to, purchases from Apple.com, physical Apple Stores, the iTunes Store, the App Store, and in-app purchases. Certain non-Apple purchases made using Apple Pay earn 3% cash-back rewards as well.
2% Cash Back. All other purchases made using Apple Pay (including through your Apple phone or Apple Watch) earn unlimited 2% cash back. Hundreds of major retailer chains and brands, encompassing more than 2 million individual merchant locations online and off, accept Apple Pay. These include but aren’t limited to Walgreens, Nike, Uber Eats, Duane Reade, Amazon, and thousands of gas stations. If you’re not familiar with how Apple Pay works, see its site for details.
1% Cash Back. Purchases made with merchants – online, offline, and in-app – that don’t accept Apple Pay earn an unlimited 1% cash back.
Redeeming Cash Back
Cash back earned through Apple Card purchases accrues daily. Each day a purchase posts to your account, you’ll receive the requisite cash back on your Apple Pay Cash card in the Apple Wallet app.
From there, you can use it to pay for purchases within or without the Apple ecosystem or to make payments on your Apple Card balance.
If you don’t have an Apple Pay Cash card and aren’t interested in getting one, you must accept cash back earned to your Apple Card via statement credits, which may not be much of a sacrifice.
Apple Pay Integration
Apple Card is essentially an offshoot of Apple Wallet. It’s designed for use in conjunction with Apple Pay – or, more specifically, as the user’s default Apple Pay payment method. Apple clearly expects most Apple Card transactions to be contactless, executed through a Web portal or with the tap of an iPhone.
Beyond Apple Card’s novelty as the first truly “contactless first” credit card, users benefit from Apple Pay’s stringent security features. These include:
Unique Device Number. Your Apple Card is issued with a unique number that’s stored in your iPhone’s Secure Element, the secure microchip that hosts the phone’s most sensitive functions.
Two-Factor Purchasing. Every purchase requires your unique device number, plus a unique one-time code generated on the spot.
Purchase Authorization Via Face ID or Touch ID. This renders stolen phones all but useless for making purchases.
Apple Card also takes data security seriously. Apple and Goldman Sachs, the card’s issuer, vow never to share customer data with third parties. Only Goldman Sachs has access to users’ transaction histories and personal information.
Physical Credit Card
Apple Card isn’t 100% virtual. The physical Apple Card is a titanium card that looks and feels just like any other premium credit card, except that it’s much sleeker. The card face is a minimalist triumph, with no cardholder name, card number, or CVV and virtually no marks to mar its metallic hue.
Apple and Goldman Sachs tout the security benefits of Apple Card’s featurelessness. Without any information to identify the card, it’s useless in the wrong hands.
Real-Time Fraud Protection
Apple Card’s real-time fraud protection feature notifies you every time your card is used to make a purchase. If something doesn’t seem right about a transaction, or you know for a fact that you didn’t make it, you can immediately initiate the dispute process by tapping the notification.
Purchase Organization and Mapping
Apple Card automatically organizes purchases by purchase category – entertainment, food and drinks, and so on – and merchant. Categories are color-coded for easy visualization and totaled monthly for easy budgeting. With features like that, who needs a paid budgeting app?
Apple Card also automatically maps purchases, showing you where you’ve spent money recently, literally. If a real-time fraud protection notification slips your notice, perhaps seeing a purchase in a city you’ve never visited will jog your memory.
Apple Card’s spending summaries, visible in the Wallet app, reveal how much you’re spending, and on what, in any given week or month. You can view spending trends over time here too, which comes in handy for the periodic budget reviews you shouldbe doing.
Payment Due Dates & Frequency
By default, Apple Card statements are due at the end of the month. If you prefer to pay balances more frequently – and reduce interest charges when you can’t pay off your balance in full before the statement due date – you can set weekly or biweekly payments too.
Apple Card’s built-in interest calculator automatically tallies expected interest charges when you pay less than the full balance due on your card before the end of the grace period.
Credit card issuers are required to reveal on each statement the true cost of making only the minimum payment due in comparison with at least one larger monthly payment.
However, this is a far more robust and interactive interest calculator that’s significantly more likely to nudge you to boost your monthly payment.
If the interest calculator isn’t enough, Apple Card also provides “smart payment suggestions” that encourage cardholders to increase their monthly payments, thereby decreasing their total interest liability.
It’s not clear how Apple Card arrives at these suggestions, but they appear to be based on cardholders’ spending patterns and payment history.
Interest-Free Installment Payments
Apple Card offers interest-free monthly installment payments for select Apple products purchased through the company’s sales channels. You can easily see the size of your installments and how much you have left to pay in the app.
Apple Card has a text-based support system that’s available 24/7. If you run into an issue with the card or have a question that doesn’t concern a disputed charge, which you can handle through the real-time fraud protection interface, this is your ticket to a resolution.
Apple Card charges no fees to cardholders: no foreign transaction fees, balance transfer fees, or annual fees.
These are among Apple Card’s principal advantages.
1. No Fees
Apple Card doesn’t charge any fees to cardholders. This makes it all but unique, as even avowedly low-fee cards assess fees for less common occurrences such as late and returned payments.
2. Cash Back Accrues Daily
Apple Card is among the only widely available credit cards to accrue cash back on a daily basis, rather than at the end of the statement cycle.
Although the accrual frequency doesn’t affect net cash-back earnings or cash back earning rates, it’s certainly nice to see your spending subsidized in near-real-time.
3. Solid Cash Back Rates on Apple & Apple Pay Purchases
This card earns 3% cash back on virtually all purchases within the Apple ecosystem, excluding purchases with Apple Pay merchants. This 3% category covers, but isn’t limited to, the following:
Purchases at physical Apple Stores
iTunes Store purchases
App Store purchases
Apple Card also earns 2% cash back on purchases made with Apple Pay merchants. So if you’re able to limit your spending to the Apple and Apple Pay ecosystems, you’ll net somewhere north of 2% cash back on this no-annual-fee card, depending on your exact spending mix.
4. Above-Average Security Features
Apple Card is more secure than your average credit card. The physical card doesn’t have a card number or CVV, so you won’t have to worry about what could happen between the moment you lose your card and the moment you freeze your account.
The virtual card is denoted by a unique device number locked away in your iPhone’s Secure Element, far from prying eyes.
5. Real-Time Fraud Protection
Apple Card has another security feature worth touting: real-time fraud protection that alerts you whenever your card is used to make a purchase and lets you flag potentially fraudulent transactions with a single tap.
Compared with the traditional dispute resolution process, this is a snap, even when flagged charges turn out to be legitimate.
6. Easy, Flexible Payments
Apple Card’s default payment due date – the last day of the month – is easy to remember, even without the helpful reminders.
If you’re trying to budget on an irregular income and prefer not to wait until the end of the month to pay off your entire balance, Apple Card’s customized weekly and biweekly payment intervals have you covered.
Other credit cards let you pay off balances throughout the month, but few make it as easy as Apple Card.
7. Interest-Reduction Features
Apple Card’s interest calculator and interest-reduction suggestions are classic examples of “nudge” theory in action. By revealing just how much you’ll save over time by paying a little more upfront, these features nudge you to make smart financial decisions.
Of course, it’s always best to pay off your balance in full by the statement due date, but when unexpected expenses make that impossible, it’s nice to feel like your credit card issuer is on your side.
8. Useful Budgeting and Spending Control Features
With so many budgeting and spending control features, Apple Card feels like a personal budgeting suite with a spending aid built in.
Maybe that’s the point. Though most small-business credit cards have basic expense tracking and reporting features, Apple Card’s package is unusually robust for a consumer credit card.
If what’s keeping you from building and sticking to a household budget is the inconvenience inherent in standalone budgeting software, this is a potential game-changer.
9. Text-Based Customer Support
Apple Card’s text-based customer support is a low-friction alternative to menu-laden, over-automated phone support and unpredictable email support.
Whether this feature is as efficient as Apple and Goldman Sachs promise remains to be seen, but it’s difficult to see it being worse than the status quo – for relatively simple issues, at least.
10. No Penalty Interest Charges
Apple Card doesn’t charge penalty interest. While it’s best never to find yourself in a position where penalty interest would apply, the assurance that you won’t be unduly penalized for a lapse beyond your control is certainly welcome.
Consider these potential disadvantages before applying for Apple Card.
1. Requires Apple Pay and Apple Hardware
Apple Card’s biggest drawback is its exclusivity. The card requires Apple Pay, which runs exclusively on Apple hardware, meaning it’s not appropriate for Android or Windows device users.
If you’re set on applying for Apple Card but don’t have an iPhone or other compatible Apple device, Apple Watch is your most cost-effective option. Apple Pay runs on Apple Watch just fine, and you can pick up refurbished older versions – Series 1, 2, and 3 – for less than $100.
That’s still a significant outlay, though, and no other credit card on the market requires compatible hardware.
2. Only 1% Cash Back on Non-Apple Pay Purchases
Apple Card earns just 1% cash back on non-Apple Pay purchases. If your daily, weekly, and monthly consumption habits involve merchants that mostly accept Apple Pay, you shouldn’t have trouble earning the higher 2% cash-back rate, but not all merchants do.
Square has a non-exhaustive list of major merchants that do accept Apple Pay. Do yourself a favor and review it before applying for this card.
3. Goldman Sachs’ First Credit Card
Apple Card is the first consumer credit card issued by Goldman Sachs Bank. Apple touts this as an advantage, arguing that Goldman Sachs isn’t bound by the constraints of legacy credit card issuers such as Chase and Barclays.
And it’s not as if Goldman Sachs is entirely new to the consumer finance realm. Its Marcus by Goldman Sachs loan and savings products are innovative and well-liked.
That said, it’s not hard to imagine a first-time credit card issuer experiencing some growing pains, especially given Apple Card’s novelty. At a minimum, don’t be surprised to see iterative changes to Apple Card as Goldman Sachs figures out what works and what doesn’t.
If you’re a committed Apple Pay user with the hardware to back it up – an iPhone, Apple Watch, or maybe an iPad – then it might make sense for you to ditch your traditional credit cards and going all-in on Apple Card.
Users who restrict their spending to Apple Pay merchants only stand to earn 2% cash back across the board, about as good as it gets on a consistent basis for premium cash-back credit cards. To do better than that, you’ll need to upgrade to a premium travel rewards credit card with a hefty annual fee.
We’ll get straight to the point: The cost of home insurance varies widely, but the average American homeowner pays $1,249 a year in premiums, according to the Insurance Information Institute’s 2018 figures, the most recent available.
(This is based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. It provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.)
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In this article
Home insurance premiums can vary widely in part because of:
Your history of claims
Your credit score
The age and condition of your home
However, there are ways that homeowners can save money on their insurance costs, which we’ll get into. We’ll also walk through which areas in the U.S. are the cheapest and most expensive, typical coverages and more.
[ Read: Home Insurance Quotes, Explained ]
How much does home insurance cost by state?
As you can see below, the average home insurance premium varies widely by state. As you might expect, weather events figure big in the average annual premium by state, although there are other factors, of course, such as your credit score and the age of the home. The figures in this table come from 2018 data provided by the Insurance Information Institute.
Average annual premium
Average annual premium
Average annual premium
Based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. Provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.
Most expensive states in home insurance premiums
Below are the most expensive average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within the state, and of course, there are more factors in your premium than the location of your home.
Rhode Island: $1,630
Cheapest states in home insurance premiums
Below are the cheapest average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within each state, and of course, there are more factors in your premium than the location of your home.
What determines the cost of homeowners insurance?
The cost of an individual homeowners insurance policy is determined by a wide range of factors. Some of those factors are within your control, and some of them are not.
For instance, home insurance can be more expensive in areas with a high risk of flooding or fires than in places where natural disasters are uncommon. Newer homes often cost less to insure than older dwellings — especially those in need of repairs. Insurance companies also look at your personal credit history before covering your home, so people with good credit histories could receive a lower premium than those with poor credit histories.
Every insurance company calculates rates differently. Some carriers place a higher value on credit score and claims history, while others look more closely at the condition and age of the home. Below is a more comprehensive list of the considerations that might determine your homeowners insurance premium.
[ Read: The Best Homeowners Insurance Companies]
State, city and neighborhood: Some states are more prone to wildfires, earthquakes, and hurricanes than others.
Location of home: This information is pulled for crime and claim statistics in your home’s area.
Construction of the home: Is the home made out of wood, brick, or vinyl siding?
Heating system: Is the home heated with an HVAC or wood stove?
Security system: Homes with security systems might be less likely to be broken into.
Previous claims on the home: If the home has a history of water and electrical issues, then the homeowner may be more likely to file a future claim.
Homeowner’s previous claims: If the homeowner has a history with other insurance companies, he or she may be more likely file a claim again in the not-so-distant future.
Credit score: People with low credit scores may be more likely to file a claim.
Nearest fire station: The distance between your home and the nearest fire station can be a factor.
Marital status: Married couples are statistically less likely to file claims with insurance companies.
Replacement cost: The cost to replace an older home and bring it up to code can be more expensive than replacing a new home.
Pets: Certain animals might be considered a greater risk for liability claims.
Outside structures: Things like pools, sheds or greenhouses can also affect your policy rate.
Aside from these factors, the cost of an individual policy can also be determined by which features you chose to include in your coverage. A few of the options that can affect the cost are:
Extra coverage add-ons
Bundled insurance policies
[ More: Complete Guide to Home Insurance ]
Types of coverage
There are many different types of homeowners insurance coverage. Some coverages, like dwelling and liability coverage, can come standard with most policies. But insurance companies also often sell add-on policies that offer protection in certain areas. Here are some of the most common home insurance coverages you might find:
Dwelling coverage is insurance that covers qualified damages to the home itself. If the siding of your home tore off in a major storm, dwelling insurance might cover the cost of repairs. Insurance companies might sell add-ons for roof damage, water back/sump pump overflow, flood insurance and earthquake insurance.
Personal property coverage pertains to the cost of replacing possessions in your home, such as furniture. If someone broke into your home and stole personal items, personal property coverage might reimburse you. If you need to protect valuables, your agent might recommend you purchase a scheduled personal property endorsement for higher coverage limits.
Personal liability coverage protects against lawsuits for property damage or injury. If a delivery driver slipped and fell on your icy driveway, liability coverage might pay for their medical expenses and court costs if they sued you. Some insurance companies offer add-on policies that extend your liability coverage limits.
Loss of use coverage might cover additional living expenses you have after your home has been damaged. This might include hotel stays, groceries and gas while your home is being repaired. If your house is under construction after a covered claim, loss of use coverage might pay for your temporary hotel and food expenses up to your policy’s limit.
Generally speaking, your agent may recommend that your home insurance coverages be based on your lifestyle, where you live and the value of your assets.
Keep in mind that your agent may recommend you add coverage as time goes on. If you adopt a puppy six months after you purchase your home insurance policy, your agent may recommend you add pet coverage when the time comes. Or, if you take on a remote job, you can contact your insurance company and see if you should add home business coverage for a small fee.
Every home insurance coverage has a policy limit. A policy limit is the highest amount of money your insurance company will give you after a covered loss. For example, if your dwelling coverage limit is $400,000, that may limit how much is paid out if your home is damaged or destroyed by a covered peril to no more than $400,000, although factors like your deductible may come into play.
When you purchase a home insurance policy, you may be able to set your own policy limits. As a rule of thumb, you may be recommended to have enough dwelling coverage to rebuild your home in its current state, enough personal property coverage to cover the full value of your personal items and enough liability coverage to protect your personal assets.
[ Read: What is Dwelling Insurance? ]
Reimbursement coverage types
There are three different coverage options commonly provided by home insurance companies. Each option affects your premium differently.
Actual cash value (ACV) is based on the current market value, or how much your home and personal property is worth, with depreciation factored in. Most home insurance policies offer ACV reimbursement by default. It can be the lowest option.
Replacement cost value (RCV) works in the same way as ACV, but without depreciation factored in. That means you might get a higher payout after a covered claim. RCV home insurance policies can be more expensive than ACV policies, and you may need to purchase an endorsement to get it. Your agent may recommend this if you own valuables or have an expensive home.
Guaranteed replacement cost (GRC) is also referred to as extended replacement cost (ERC), and this option can cover the complete cost of rebuilding the home, even if that cost exceeds the policy limit. GRC can be the most expensive replacement cost type, and not all insurance companies offer it. Your agent may recommend this if you live in areas with extreme weather, wildfires, earthquakes or any place where home destruction is more likely.
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Discounts and ways to save on home insurance
Homeowners insurance can be costly, so before selecting a plan, shop around to find the best deal based on your needs. It can be helpful to consult an insurance agent, read consumer reviews and check online insurance quotes to find companies with the lowest rates. Here are some other ways to save money on home insurance:
Ask about available discounts: Some companies offer discounted policy rates if your home is in a gated community, if you bundle with your car insurance or if you’re part of a homeowner’s association.
Bundle your insurance policies: Oftentimes, companies that sell home, auto and life coverage may deduct up to 15% off your premium if you buy two or more policies from them.
Make your home safer: Some providers may offer a discount if you install fixtures that make your home safer, such as smoke alarms or a security system, that reduce the likelihood that damage or theft will occur in the first place.
How do past claims impact home insurance cost?
It depends on the nature of the claim. Just how much a claim raises your premium varies in part on the provider and the nature of the claim.
There are also further complications when you make the same type of claim twice. Not only can this increase what you pay each month, but, depending on you and your home’s history, it’s possible the provider may even decide to drop you.
Though your premium may increase if you are found at fault, it’s also possible for your monthly bill to increase even if you’re not found to be liable. Your home may be considered riskier to insure than other homes.
Home insurance cost FAQs
No, states do not require homeowners to get insurance when they purchase a home. However, if you choose to get a mortgage loan, most lenders will require you to have some insurance.
To determine how much coverage you should purchase, talk to your agent about your home inventory, your overall worth, and of course, comfort level. Also discuss factoring in the location of your home, and evaluate risks based on weather, fires and other events that could potentially damage or destroy your home.
There are a few ways to potentially get home insurance discounts. Discount options include things like:
Bundling your home insurance policy with another policy (such as auto).
Going claims free for extended periods of time.
Making certain home improvements.
Living in a gated community.
Installing a security system.
In 2018, 34.4% of home insurance losses were wind and hail related, 32.7% were fire or lightning related and 23.8% were water damage or freezing claims. Only 1% of claims were related to theft, and less than 2% of losses were liability claims. These figures are according to the Insurance Information Institute.
In Florida the most common claims may be related to hurricanes, wind damage, water damage and flooding. In California, earthquake, flood and wildfire claims may be more common. When you purchase insurance, talk to an agent about the specific risks in your area and ask about separate insurance policies you might need, like flood or earthquake coverage.
Too long, didn’t read?
The cost of your insurance can vary widely because of such factors as location, your credit score and your home’s age. There are discounts your insurance carrier may offer, such as policy bundling and security systems.
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Naked options are a type of option strategy where the investor does not hold a position in the underlying asset. This options strategy can be a way to make money for nothing, or—as recent history has shown with the Gamestop frenzy of early 2021—a way to suffer incredible trading losses.
What is a Naked Option?
A naked, or “uncovered,” option is an option that is issued and sold without the seller setting aside any shares or cash to meet the obligation of the option when it reaches expiration.
When an investor buys an option, they’re buying the right to buy or sell a security at a specific price either on or before the option contract’s expiration. An option to buy is known as a “call” option, while an option to sell is known as a “put” option.
Investors who buy options pay a premium for the privilege. To collect those premiums, there are investors who write options. Some hold the stock or the cash equivalent of the stock they have to deliver at the option’s expiration. The ones who don’t are sometimes called naked writers, because their options have no cover.
Naked writers are willing to take that risk because the terms of the options factor in the expected volatility of the underlying security. This differs from options based on the price of the security at the time the option is written. As a result, the underlying security will have to not only move in the direction the holder anticipated, but do so past a certain point for the holder to make money on the option.
Recommended: A Guide to Options Trading
The Pros and Cons of Naked Options
There are risks and rewards associated with naked options. It’s important to understand both sides.
Naked Writers Often Profit
The terms of naked options have given them a track record in which the naked writer tends to come out on top, walking away with the entire premium. That’s made writing these options a popular strategy.
Those premiums vary widely, depending on the risks that the writer takes. The more likely the broader market believes the option will expire “in the money” (with the shares of the underlying stock higher than the strike price), the higher the premium the writer can demand.
But Sometimes the Options Holder Wins
When an option writer sells an option, they’re obligated to deliver the underlying securities (in the case of a call option) or cash (in the case of a put) to the option holder at expiration. But because a naked writer doesn’t hold the securities or cash, they need to buy it or find it if the option they wrote is in the money, meaning that the investor exercises the option for a profit.
In cases where the naked writer has to provide stock to the option holder at a fixed price, the strategy of writing naked call options can be disastrous. That’s because there’s no limit to how high a stock can go between when a call option is written and when it expires.
Naked Options in Recent Headlines
The high-profile trading drama surrounding the stock of video game retailer GameStop showcased some of the danger of naked options. As the stock soared to a peak of $483 per share in late January of 2021, there were naked call options in the hands of investors that entitled them to buy the stock for $87 per share.
While that sounds like great news for the options holders, it had the potential to be catastrophic for the naked writer—because they’d have to find the money to buy the stock to cover those options. And because they weren’t holding the stock during its runup, they would have to either go into their cash reserves or sell other investments to buy the stock they were required to deliver.
But during that period of wild trading in GameStop, naked writers were still at work. With the stock trading at nearly $200, naked options writers sold 33,000 put options betting the stock would close at under fifty cents in the near future. Those writers potentially stood to pocket the entire premium.
How to Use Naked Options
While there are some large institutions whose business focuses on writing options, some individual investors can also write options.
Because naked call writing comes with almost limitless risks, brokerage firms only allow high-net-worth investors with hefty account balances to do it. Some will also limit the practice to wealthy investors with a high degree of sophistication. To get a better sense of what a given brokerage allows in terms of writing options, these stipulations are usually detailed in the brokerage’s options agreement. The high risks of writing naked options are why many brokerages apply very high margin requirements for option-writing traders.
Generally, to sell a naked call option, for example, an investor would tell their broker to “sell to open” a call position. This means that the investor would write the naked call option. An investor would do this if they expected the stock to go down, or at least not go any higher than the volatility written into the option contract.
If the investor who writes a naked call is right, and the option stays “out of the money” (meaning the security’s price is below a call option’s strike price) then the investor will pocket a premium. But if they’re wrong, the losses can be profound.
This is why some investors, when they think a stock is likely to drop, are more likely to purchase a put option, and pay the premium. In that case, the worst-case scenario is that they lose the amount of the premium and no more.
How to Manage Naked Option Risk
Because writing naked options comes with potentially unlimited risk, most investors who employ the strategy will also use risk-control strategies. Perhaps the simplest way to hedge the risk of writing the option is to either buy the underlying security, or to buy an offsetting option. The other risk-mitigation strategies can involve derivative instruments and computer models, and may be too time consuming for most investors.
Another important way that options writers try to manage their risk is by being conservative in setting the strike prices of the options. Consider the sellers of fifty-cent GameStop put options when the stock was trading in the $190 range. By setting the strike prices so far from where the current market was trading, they limited their risk. That’s because the market would have to do something quite dramatic for those options to be in the money at expiration.
With naked options, the investor does not hold a position in the underlying asset. Because this is a risky move, brokerage firms may allow their high-net-worth investors to write naked options.
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