Citi® / AAdvantage® Executive World Elite Mastercard® overview
The Citi® / AAdvantage® Executive World Elite Mastercard® (see rates and fees) is best for American Airlines flyers who value lounge access. It provides a full Admirals Club membership, as well as several other benefits that make flying American Airlines more enjoyable, such as a free checked bag, priority check-in, priority airport screening and priority boarding privileges, along with a boost toward elite status. Card Rating*: ⭐⭐⭐
*Card Rating is based on the opinion of TPG’s editors and is not influenced by the card issuer.
While many credit cards offer airport lounge access, the types of lounges each card gets you into can vary greatly. There’s only one cobranded credit card that includes complimentary access to the American Airlines Admirals Club lounges: the Citi / AAdvantage Executive World Elite Mastercard.
The card has a $595 annual fee, which might seem steep but is still much less expensive than an Admirals Club membership.
This card underwent major (mostly negative) changes, effective July 23, 2023. TPG director of content Nick Ewen wasn’t thrilled with them.
Today, we’ll review all the refreshed benefits on this American Airlines cobranded card to help you decide whether to carry — or keep — it in your wallet.
Citi / AAdvantage Executive World Elite welcome offer
The Citi / AAdvantage Executive World Elite Mastercard is currently offering its best-ever bonus. Through Sept. 6, it’s offering 100,000 bonus miles after spending $10,000 within the first three months of account opening. This bonus is worth a very high $1,770, based on TPG’s most recent valuations.
Citi / AAdvantage Executive World Elite benefits
What sets this card apart from the competition is that it provides complimentary Admirals Club access. The primary cardholder receives a full Admirals Club membership, which allows you and your immediate family or two traveling companions access to the club when you have a same-day boarding pass for American or one of its partners. Your credit card will be tied to your AAdvantage account number, so you don’t have to carry it to get club access.
Admirals Club membership ordinarily costs between $750 and $850, depending on your status level with American. That means the annual fee covers the lounge access — and that’s without all the other benefits factored in.
Reward your inbox with the TPG Daily newsletter
Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts.
You can add up to 10 authorized users. They cost an additional $175 annual fee for the first three authorized users and $175 for each authorized user thereafter. Each authorized user receives Admirals Club access for themselves and up to two traveling companions. Just be aware that authorized users only get Admirals Club access, as opposed to a full Admirals Club membership.
There are three statement credits available:
Up to $120 back on eligible Avis or Budget car rentals every calendar year
Up to $120 back on eligible Grubhub purchases (up to a $10 statement credit each monthly billing statement)
Up to $120 in Lyft credits ($10 Lyft credit each month), but you have to take three eligible rides each month first to receive this credit
Here are some other valuable perks the card offers:
Enhanced airport experience: You and up to eight travelers on the same reservation will get priority check-in (where available), priority airport screening (where available) and priority boarding privileges. You can even check in at any business-class check-in position (or first-class check-in when business class is not available), regardless of the class of service in which you’re traveling.
First checked bag free on domestic itineraries: On domestic itineraries flown by American or any regional subsidiary, the first checked bag for you and up to eight traveling companions on the same reservation is free. The flight must be marketed, sold and operated by American in order to get the free checked bag.
25% off eligible inflight purchases: This essentially means 25% off inflight food and beverages when you pay for them with the card (not including inflight Wi-Fi).
Global Entry/TSA PreCheck fee statement credit: Get an up-to-$100 statement credit when paying the Global Entry fee ($100) with the card or when enrolling in TSA PreCheck ($78). You’ll receive the credit once every four years. Because you also receive TSA PreCheck when enrolling for Global Entry, there’s no real reason you should ever just enroll in PreCheck.
This card removed travel protections a few years back but has reintroduced trip cancellation and interruption, trip delay, and lost baggage protections as well as car rental insurance coverage as part of the card’s refresh.
Finally, are no foreign transaction fees, making this card a good choice when traveling abroad.
Earning miles on the Citi / AAdvantage Executive World Elite
With the Citi / AAdvantage Executive World Elite Mastercard, you’ll earn 4 miles per dollar on eligible American Airlines purchases. Then, if you spend $150,000 on purchases in a calendar year, you’ll earn a boosted rate of 5 miles per dollar spent on American purchases for the remainder of the calendar year.
You’ll also earn 10 miles per dollar spent on eligible car rentals and hotels booked through American’s car rental and hotel booking sites, respectively.
And you’ll earn 1 mile per dollar spent on all other eligible purchases.
Cardholders earn a bonus of 10,000 Loyalty Points after reaching 50,000 Loyalty Points in a status qualification year. They will receive another bonus of 10,000 Loyalty Points after reaching 90,000 Loyalty Points in a status qualification year.
You will receive the bonuses regardless of how you earn the Loyalty Points. For example, you could earn 50,000 Loyalty Points by buying American Airlines tickets and shopping through the AAdvantage portal and get the 10,000 bonus just by holding the card.
Redeeming miles on the Citi / AAdvantage Executive World Elite
The lowest round-trip tickets in the U.S. tend to start at 7,500 miles one-way for flights less than 500 miles long.
Web specials previously offered include domestic cross-country flights for 5,000 miles each way in economy or 15,000 miles each way in first class, flights to Europe from 9,000 miles each way and flights to Brazil from 15,000 miles each way.
Alternatively, you could get a ton of value redeeming your AAdvantage miles for premium-cabin awards on partner airlines, including Cathay Pacific, Etihad and Finnair.
Related: How to redeem miles with the American Airlines AAdvantage program
Senior credit cards editor Matt Moffitt’s favorite way of redeeming AAdvantage miles is to book business-class flights on Etihad or Qatar Airways to the Middle East, India and Africa.
Which cards compete with the Citi / AAdvantage Executive World Elite?
American is not a transfer partner of any of the major points programs except Bilt Rewards, so the biggest competitors of this card are mostly other cobranded American Airlines cards, but you can also get tons of value from a more general premium card.
If you want a lower annual fee: The Citi / AAdvantage Platinum Select World Elite Mastercard is a solid mid-level credit card that offers elite-status-like benefits, all for a lower annual fee of $99. For more information, read our full review of the Citi / AAdvantage Platinum Select.
If you’re not an avid AA flyer: It could make more sense to stick to a premium travel rewards card such as The Platinum Card® from American Express, which allows you to earn up to five points per dollar on airfare (when booked directly with the airline or Amex Travel on up to $500,000 on these purchases per calendar year) and take advantage of myriad airline transfer partners. For more information, read our full review of the Amex Platinum.
For additional options, check out our full list of premium travel cards.
Related: Choosing the best credit card for American Airlines flyers
The information for the Citi / AAdvantage Platinum Select card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Is the Citi / AAdvantage Executive World Elite worth it?
Since the price of an Admirals Club membership is at least $750 each year, the Citi / AAdvantage Executive World Elite Mastercard should catch the eye of any frequent American flyer’s attention. If you want Admirals Club access and to boost your AA mileage balance with a sign-up bonus (while also easing elite status requirements), this card might be a good fit. However, you might want to look elsewhere if you’re looking for a card that will give you a better return on your spending.
Bottom line
With full Admirals Club membership and several other American Airlines benefits, the Citi / AAdvantage Executive World Elite American Airlines is best for flyers who can maximize its lounge access. If that’s you, then the card could definitely be a fit.
Official application link: Earn 100,000 miles with the Citi / AAdvantage Executive World Elite Mastercard after spending $10,000 on purchases in the first three months of account opening. Offer ends Sept. 6.
Additional reporting by Matt Moffitt, Ryan Wilcox and Stella Shon.
Buying a Home with 1099 Income can present unique challenges for self-employed individuals. Understanding the implications of 1099 income on mortgage loans is crucial. Lenders carefully assess tax returns and stable income to determine eligibility.
Strategies such as maximizing chances of approval and exploring alternative documentation options can help self-employed borrowers qualify. Government-backed and conventional mortgage options, as well as home equity for down payment assistance, are available.
Overcoming challenges in the mortgage process requires addressing higher interest rates, documenting income, and navigating common hurdles. Assessing affordability and staying informed about the future of home buying for self-employed buyers is essential. Recent changes and technological advancements are shaping the lending landscape.
Understanding 1099 Income and Its Implications on Home Buying
When it comes to buying a home, it’s important to understand the implications of 1099 income. This type of income is earned by individuals who are considered self-employed, meaning they work as independent contractors or freelancers. It’s essential to grasp how 1099 income affects mortgage loans and what lenders look for when determining eligibility for home financing.
What is 1099 income and who is considered self-employed?
1099 income refers to the earnings received by individuals who work on a contract basis, rather than being traditional employees. These individuals are considered self-employed as they are responsible for their own taxes and don’t receive benefits like health insurance or retirement plans from an employer. Self-employed individuals include freelancers, consultants, and independent contractors across various industries.
The impact of self-employment on mortgage loans
Being self-employed can have specific implications when applying for a mortgage. Unlike traditional W-2 employees who have a consistent income and verifiable employment, self-employed individuals may face additional scrutiny. Lenders assess the stability and predictability of income to evaluate the borrower’s ability to make mortgage payments.
Qualifying for a mortgage with 1099 income: What lenders look for
Lenders typically consider several factors when qualifying self-employed borrowers with 1099 income for a mortgage. These factors include the length of self-employment, consistency of income, and documentation of tax returns. Lenders may require a minimum of two years of self-employed tax returns to establish a track record of income stability. They also evaluate the borrower’s debt-to-income ratio and liquid assets to ensure they can handle mortgage payments and other financial obligations.
The Importance of Tax Returns and Stable Income
When it comes to buying a home with 1099 income, understanding the role of tax returns and demonstrating stable income is essential. Lenders thoroughly analyze tax returns to assess your financial situation and determine your eligibility for a mortgage loan. Here are the key aspects to consider:
Analyzing your tax returns: What lenders assess
Lenders carefully scrutinize your tax returns to evaluate your income stability and ability to repay a mortgage. They review your gross income, deductions, expenses, and net income to get a comprehensive understanding of your financial standing. Additionally, lenders examine your Schedule C, which reports business profit and loss, to gauge the viability of your self-employment and the consistency of your income stream.
Demonstrating stable income as a self-employed borrower
As a self-employed borrower, proving stable income is crucial to reassure lenders of your ability to make regular mortgage payments. One way to establish this stability is by maintaining consistent income over a period of time. Providing documentation such as bank statements, profit and loss statements, and invoices can help demonstrate a steady income stream. Showing a history of consistent income is beneficial in building trust with lenders.
The role of two years of tax returns in mortgage approval
Two years of tax returns serve as a benchmark for lenders to verify the sustainability of your income. This requirement helps lenders assess the consistency and predictability of your earnings. Typically, lenders average your income across the two-year period to determine how much you can afford to borrow. Keep in mind that a significant decrease in income from one year to another may require additional explanation or documentation to strengthen your mortgage application.
Understanding the importance of tax returns and stable income is vital for self-employed individuals aiming to purchase a home. By analyzing your tax returns, demonstrating stable income, and meeting the requirements set by lenders, you can improve your chances of securing a mortgage loan.
Strategies for Self-Employed Borrowers to Qualify for Home Loans
When it comes to buying a home with 1099 income, self-employed borrowers face unique challenges. However, there are strategies to maximize your chances of qualifying for a home loan:
Maximizing your chances: Tips for self-employed borrowers
Maintain a strong credit score: Lenders consider credit history and scores to assess your financial responsibility.
Save for a down payment: A larger down payment increases your chances of loan approval and improves your loan terms.
Manage your debts: Keep your debt levels low and avoid taking on new debts before applying for a mortgage.
Keep clean financial records: Maintain organized financial records, including bank statements, tax returns, and profit/loss statements.
Alternative documentation options for income verification
Traditional income verification methods, such as W-2 forms, may not be applicable for self-employed individuals. Consider alternative options:
Bank statements: Provide several months’ worth of bank statements to demonstrate consistent income deposits.
Profit and loss statements: Prepare accurate profit and loss statements to showcase your business’s financial health.
Letter from a certified public accountant (CPA): A letter from a CPA can verify your self-employment status and income.
Understanding debt-to-income ratio and its impact on loan approval
Lenders calculate your debt-to-income (DTI) ratio to assess your ability to repay the loan. To improve your chances of loan approval:
Minimize your DTI: Reduce your monthly debt obligations and aim for a DTI ratio below the lender’s maximum threshold.
Increase your income: Boosting your income through additional revenue streams can help improve your DTI ratio.
Pay off existing debts: Lowering your outstanding debts reduces your monthly obligations and improves your DTI ratio.
Mortgage Options and Requirements for Self-Employed Buyers
Mortgage options for self-employed buyers offer various opportunities to secure financing for buying a home with 1099 income. Understanding the available options can help navigate the loan process successfully.
Government-backed loans for self-employed individuals
Government-backed loans, such as FHA loans, VA loans, and USDA loans, provide viable mortgage options for self-employed individuals. These loans often have more flexible requirements compared to conventional loans, making them accessible and attractive for those with 1099 income.
Conventional mortgage loan options for self-employed borrowers
Conventional mortgage loans are another option for self-employed borrowers. These loans typically require more extensive documentation to prove income and financial stability. Self-employed individuals may need to provide additional paperwork, such as profit and loss statements, bank statements, and business tax returns, to demonstrate their ability to repay the loan.
Exploring home equity options for down payment assistance
Self-employed buyers can explore home equity options to assist with their down payment. Utilizing the equity built in an existing property can help secure a mortgage with favorable terms and potentially avoid private mortgage insurance (PMI). Home equity loans or lines of credit can provide the necessary funds for the down payment, allowing self-employed individuals to fulfill their homeownership dreams.
Overcoming Challenges and Navigating the Mortgage Process
As a self-employed borrower, there are unique challenges to overcome when navigating the mortgage process. Addressing higher interest rates is one of the first hurdles to tackle. Lenders often consider self-employed individuals as higher risk borrowers, resulting in slightly higher interest rates compared to traditionally employed borrowers. It is important to factor in these rates when assessing affordability and determining the long-term financial implications of homeownership.
Documenting your business and personal income is another critical aspect for self-employed borrowers. Lenders require verifiable proof of income to assess your loan eligibility. This includes providing tax returns for your business and personal finances for the past two years. Accurate and complete documentation is crucial to establish a clear understanding of your income stability and ability to repay the mortgage.
Common Hurdles and How to Overcome Them in the Loan Process
Difficulty Meeting Traditional Income Requirements – Self-employed borrowers often face challenges meeting the traditional income requirements set by lenders, as their income may fluctuate or be less predictable compared to salaried employees. To overcome this hurdle, you can work with a knowledgeable mortgage broker who specializes in assisting self-employed individuals. They can help navigate through alternative documentation options and find lenders who are more flexible with income verification.
High Debt-to-Income Ratio – Another common hurdle self-employed borrowers encounter is a high debt-to-income ratio. This ratio compares your monthly debt payments to your monthly income. To improve your chances of loan approval, consider reducing your overall debt by paying off high-interest debts or consolidating them into more manageable payments. Additionally, increasing your income or finding ways to demonstrate consistent income over time can help lower your debt-to-income ratio.
Limited Work and Income History – Having a limited work and income history as a self-employed borrower can be a challenge when seeking a mortgage. Lenders typically prefer borrowers with a steady work history and established income. However, you can showcase your industry experience, expertise, and success through a well-crafted business plan and professional portfolio. Demonstrating a stable and promising future in your line of work can help offset the lack of a traditional employment history.
Important Considerations for Self-Employed Buyers
As a self-employed buyer, there are several important considerations to keep in mind when purchasing a home. These include assessing affordability, understanding the impact of self-employment on your mortgage, and exploring the benefits of FHA loans for self-employed individuals.
Assessing affordability and determining your monthly income
Before diving into the home buying process, it’s crucial to assess your affordability. As a self-employed individual, your income may vary from month to month, making it essential to calculate your average monthly income. Consider your tax returns, invoices, and any other financial documents to determine a reliable estimation of your income. This will help you determine how much you can afford to spend on a mortgage payment each month.
Understanding the impact of self-employment on your mortgage
Self-employment can have a significant impact on your mortgage application. Lenders typically scrutinize self-employed individuals more closely due to the potential volatility of their income. It’s important to provide a comprehensive picture of your business and finances to alleviate any concerns. Prepare to provide documentation such as profit and loss statements, bank statements, and contracts or agreements with clients to demonstrate the stability and consistency of your income.
Exploring the benefits of FHA loans for self-employed individuals
For self-employed buyers, Federal Housing Administration (FHA) loans can offer several benefits. These loans have less stringent requirements compared to conventional mortgages and may be more accommodating for self-employed individuals. FHA loans typically have lower down payment requirements, lenient credit score criteria, and flexible income verification options. Exploring FHA loan programs tailored to self-employed individuals can provide viable financing options for buying a home.
The Future of Home Buying for Self-Employed Borrowers
The landscape of home buying for self-employed individuals is constantly evolving, with recent changes reflecting the needs and challenges of this growing segment of borrowers. Technological advancements and innovations in mortgage lending are also playing a crucial role in shaping the future of home buying for self-employed borrowers. Let’s explore some key aspects that are shaping the future of home buying for self-employed individuals.
Recent changes in the lending landscape for self-employed individuals
In recent years, there have been significant changes in the lending landscape that specifically address the needs and realities of self-employed borrowers. Lenders have started offering more flexible mortgage options tailored to accommodate different types of income, including 1099 income. These changes have made it easier for self-employed individuals to qualify for mortgages, as lenders now consider a wider range of income documentation and alternative verification methods.
Potential developments and opportunities for self-employed home buyers
Expanded lending options: The lending industry is constantly exploring new ways to cater to the unique needs of self-employed individuals. This includes the development of specialized loan programs and products that are specifically designed for self-employed borrowers, offering more favorable terms and conditions.
Enhanced income verification methods: Technology-driven income verification methods, such as bank statement analysis and cash flow analysis tools, are gaining traction. These methods provide a more accurate assessment of a self-employed borrower’s income, accounting for fluctuations and seasonality, which can help strengthen their loan applications.
Increased support for gig economy workers: As the gig economy continues to grow, more and more individuals rely on income from freelance work, contract jobs, or side hustles. The lending industry is recognizing this shift and exploring options to accommodate gig economy workers, ensuring fair access to homeownership opportunities.
Overall, the future of home buying for self-employed borrowers looks promising. With ongoing changes in the lending landscape and advancements in technology, self-employed individuals can expect more accessible, efficient, and tailored mortgage solutions to fulfill their homeownership dreams.
About the author – Eric Jeanette started as a Realtor in 1993 and eventually transitioned to lending. His companies Dream Home Financing and FHA Lenders provide mortgage information and education to consumers. They also provide those same consumers with a free lender match service through a network of lenders for conventional, FHA/government, subprime, self-employed and many other niche loan programs.
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
The U.S. Bank Altitude Connect Visa Signature Card is a fantastic travel rewards credit card for people who aren’t wedded to a particular airline or hospitality family.
Notable perks include a big new account bonus with qualifying spend, competitive rewards on eligible purchases, and potentially valuable add-ons like complimentary airport lounge access.
Is the U.S. Bank Altitude Connect card perfect? Of course not — no credit card is. But it’s definitely worth checking out if you’re in the market for a new premium spending aid.
What Is the U.S. Bank Altitude Connect Visa Signature Card?
The U.S. Bank Altitude Connect Visa Signature Card is a cash-back card that offers solid earning rates and travel-related benefits.
It starts with a great sign-up bonus: Spend $2,000 in eligible purchases within the first 120 days of account opening to earn 50,000 bonus points. That’s worth up to $500 towards cash back, travel, gift cards, merchandise and more.
This card earns up to 5x points on eligible prepaid hotels and car rentals booked directly in the Altitude Rewards Center and 4x points on other eligible travel, gas station, and EV charging station purchases.
Other bonus categories (2x points) include grocery stores, grocery delivery, dining, and streaming services. In addition to 2x points on streaming subscription purchases, you also get a $30 annual credit for streaming services, like Netflix, Hulu, Spotify, Disney+, Apple Music and more.
Not only does U.S. Bank Altitude Connect earn bonus points on travel-related expenses, the card also has several travel-related benefits:
Complimentary Priority Pass Select membership, which gives you four free visits to over 1,300 airport VIP lounges worldwide
Trip cancellation/interruption coverage
Trip delay reimbursement
SmartDelay access on eligible travel delays
Other notable benefits include a statement credit up to $100 every four years to cover Global Entry, TSA PreCheck, or NEXUS application fees, plus a cell phone protection plan that provides up to $600 in reimbursement if your cell phone is stolen or damaged when you pay your monthly cell phone bill with your card.
There’s a $95 annual fee for this card after the first year. There are no foreign transaction fees.
What Sets the U.S. Bank Altitude Connect Visa Signature Card Apart?
This card has several features that help it distinguish itself from other credit cards in its category.
Excellent sign-up bonus. This card has one of the better sign-up bonuses in its class (sub-$100 annual fee). It’s worth up to $500 towards cash back, travel, gift cards, merchandise, and more.
4x points on gas and EV charging. This is one of the highest rewards rates for vehicle fuel. There are cards with quarterly rotating bonus categories of 5x on these types of purchases, but the U.S. Bank Altitude Connect Visa Signature card earns 4x points year-round without a cap.
Streaming credit. The card comes with a $30 annual credit for streaming services, including Netflix, Hulu, Spotify, Disney+, Apple Music and more. This can help offset the $95 annual fee, since this credit is easy to use.
Global Entry, TSA PreCheck or NEXUS. The card delivers a statement credit up to $100 every four years for Global Entry, TSA PreCheck or NEXUS. Since the annual fee is waived for the first year, this credit makes the card worth holding for at least two years if you want one of these services.
Key Features of the U.S. Bank Altitude Connect Visa Signature Card
The U.S. Bank Altitude Connect Visa Signature card offers a solid earning rewards rate on travel and gas categories, a streaming service credit and other travel-related credits and benefits.
Sign-Up Bonus
Spend $2,000 in eligible purchases within the first 120 days of account opening to earn 50,000 bonus points. This bonus can be worth up to $500 at redemption.
Earning Rewards
This card earns rewards as follows:
5 points per $1 spent on prepaid hotels and car rentals booked directly in the Altitude Rewards Center
4 points per $1 spent on other travel and on purchases at gas stations and EV charging stations
2 points per $1 spent at grocery stores and on grocery delivery, dining, and streaming services
All other eligible purchases earn 1 point per $1 spent.
Redeeming Rewards
You can redeem your points for one cent each towards cash back, travel purchases, gift cards, merchandise, and more.
Points can be redeemed in the U.S. Bank Mobile App, in the Rewards Center in online banking at usbank.com, or by calling the 24-hour Rewards Center. They’re generally worth $0.01 apiece at redemption.
Important Fees
This card charges a balance transfer fee of $5 or 3% of the amount of each transaction and a cash advance fee of $10 or 5% of the amount of each transaction. There is a $41 late payment fee and a $41 return payment fee.
The annual fee is $95 after the first year, when it’s $0. There is no foreign transaction fee.
Additional Benefits
This card has several additional benefits:
A $30 annual credit against eligible streaming service purchases
A complimentary Priority Pass Select membership that entitles you to free or reduced-price access to more than 1,300 airport lounges worldwide
Up to $600 in cell phone protection coverage when you pay your bill in full with your card
Trip cancellation/interruption coverage and trip delay reimbursement
SmartDelay on qualifying travel delays, entitling you to complimentary access to select airport lounges when your flight is delayed
Up to $100 in statement credits every four years against eligible Global Entry, TSA PreCheck, or NEXUS application fees.
Credit Required
This card requires good or better credit to qualify. If your FICO score is much below 700, or your personal credit history is limited, then you’ll likely have trouble being approved.
Pros & Cons
The U.S. Bank Altitude Connect Visa Signature Card has some attractive upsides along with a couple drawbacks worth noting.
Very generous sign-up bonus
Great rewards program
Lots of nonrewards benefits, like airport lounge access
Relatively low fees
Limited rewards flexibility
$95 annual fee after the first year
Pros
Overall, this is a generous travel rewards card with a surprisingly strong lineup of nonrewards benefits.
Sign-up bonus worth $500. This card has an excellent sign-up bonus: Spend $2,000 in eligible purchases within the first 120 days of account opening to earn 50,000 bonus points. This is a very competitive offer relative to other cash back cards.
Strong bonus point offers. If you spend a lot on hotels and car rentals, and you don’t mind booking through U.S. Bank’s in-house travel agent, then you could earn 5 points per $1 spent on those purchases. Even if you book another way, you’ll still earn 4x points on travel, at gas stations, and even at EV charging stations and you’ve got a very compelling rewards program.
Plenty of benefits. This card’s most valuable benefit could be a complimentary Priority Pass Select membership, good for up to four visits per year — a rarity on a card with such a low annual fee. The cell phone protection and travel insurance coverages, along with SmartDelay access, are potentially valuable as well. And it’s always nice to get $100 off your Global Entry, TSA PreCheck, or NEXUS application fee.
Low fees. The $95 annual fee is waived the first year, and there are no foreign transaction fees.
Cons
This card’s point system leaves something to be desired, and the annual fee could be an issue for users who can’t spend fast enough to offset it.
No flexible rewards points. Award travel enthusiasts love Chase Ultimate Rewards and American Express Membership Rewards points because they can be transferred to airline and hotel programs. When you do this skillfully, it’s possible to realize much more than $0.01 in value per point redeemed. But with this card, you can’t transfer your points to airline and hotel programs, so you can’t get more than $0.01 per point at redemption.
Annual fee after the first year. Though it’s waived the first year out, this card does have a $95 annual fee after that. This isn’t ideal for light spenders.
How the U.S. Bank Altitude Connect Visa Signature Card Stacks Up
This card’s closest competitor is probably the Bank of America Premium Rewards card. Here’s how the two cards compare.
U.S. Bank Altitude Connect Visa Signature Card
Bank of America® Premium Rewards®
Annual Fee
$95, waived the first year
$95
Sign-Up Bonus
Very good
Even better
Rewards Rate
Up to 5x points
Up to 2x points, but Preferred Rewards members can earn more
Foreign Transaction Fee
None
None
Credit Needed
Good or better
Good or better
The U.S. Bank Altitude Connect Visa Signature Card has a more generous rewards program than the Bank of America Premium Rewards card, and it’s nice that it waives the annual fee in the first year. But Bank of America has a slightly better sign-up bonus and better perks for existing Bank of America deposit customers.
Final Word
The U.S. Bank Altitude Connect Visa Signature Card is a great card for earning a valuable sign-up bonus and extra points on common purchases. It’s also a card that showers you with valuable perks and benefits, while keeping the fees low. If you aren’t ready to dive into a travel rewards card that lets you transfer your rewards to airline miles and hotel points, then this is one of the best travel rewards cards available.
The Verdict
Our rating
U.S. Bank Altitude Connect Visa Signature Card
If you want a premium travel rewards card with plenty of benefits, but you don’t want to pay a very large annual fee, then the U.S. Bank Altitude Connect Visa Signature Card is a good option. It features bonus reward points, airport lounge access, cell phone protection and credits towards TSA PreCheck or Global Entry. And with no annual fee the first year, there’s little risk in giving this card a try.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
@media (max-width: 1200px)
body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;
Jason Steele is one of the nation’s leading experts in credit cards and travel rewards since 2008. Jason is also the founder and producer of CardCon, which is The Conference for Credit Card Media. Jason lives in Denver, Colorado where he enjoys bicycling, snowboarding and piloting small airplanes.
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
Many freelancers and independent professionals get by without a separate business bank account. They commingle their personal and business funds on the reasoning that it all ends up in the same place eventually.
To the extent that this happens because self-employed folks without serious business chops feel overwhelmed by the idea of separating business and personal finances, it shouldn’t. Not with small-business and freelancer-friendly business banking options like nbkc Free Business Checking.
With no minimum balance requirements or monthly fees, nbkc Free Business Checking is designed for value-conscious entrepreneurs. While it’s nowhere near perfect, it’s worth considering if the alternative is a messy status quo.
What Is nbkc Free Business Checking?
nbkc Free Business Checking is a small-business checking account with no monthly fee, no minimum balance requirement, and FDIC insurance up to statutory limits.
nbkc Free Business Checking has some other features worth noting, including free overdraft coverage, free domestic wire transfers, a Mastercard debit card, a generous ATM surcharge allowance, and robust mobile capabilities. However, it has no debit card rewards program and doesn’t pay interest on balances. It lacks some nonbanking features that many similar accounts offer, such as custom expense tracking and built-in invoicing.
What Sets nbkc Free Business Checking Apart?
nbkc Free Business Checking stands out from other small-business bank accounts for several reasons:
Very few fees. This account has no monthly fee, no overdraft fees, no wire transfer fees, and very few of the less-common fees other bank accounts typically charge.
No minimums or transaction limits. nbkc Free Business Checking has no minimum balance requirements and no limits on transaction count or value. Many other business checking accounts impose such limits, which can be costly and inconvenient.
Generous ATM surcharge reimbursement. nbkc reimburses up to $12 in out-of-network ATM surcharges each month. That should be plenty for most users.
No rewards. One notable downside of this account is its total lack of a debit card rewards program. As more business accounts offer returns on debit card spending, this omission looms ever larger.
Key Features of nbkc Free Business Checking
nbkc Free Business Checking has all the features you’d expect from a basic business checking account, and few extras beyond that.
Account Fees & Minimums
There’s no minimum balance to open or maintain your account. There’s also no monthly maintenance fee and very few fees for other account activities.
Account Yield
This account pays no interest on any balances. Nbkc has no business savings account either, leaving no way to earn interest on business balances.
Debit Card & ATM Access
This account comes with a Mastercard debit card that works at millions of in-person and online points of sale worldwide.
As part of the MoneyPass network, nbkc offers fee-free withdrawals at tens of thousands of ATMs across the United States. Out-of-network ATM withdrawals may incur fees that nbkc can’t control, but nbkc reimburses them up to $12 per monthly statement cycle.
Overdraft Coverage
nbkc Free Business Checking offers complimentary overdraft coverage at its discretion. If the bank allows an overdraft transaction to go through, it charges no fee for the privilege. However, nbkc reserves the right to deny overdraft transactions at its discretion, also with no fee.
Mobile Features
nbkc’s mobile app has solid ratings from verified users in the Apple App Store and Google Play marketplace. It shares its core functions and capabilities with the desktop banking interface:
Remote check deposit
Person-to-person payments
Scheduled and one-time bill payments
Expense tracking
Viewing and managing statements
Deposit Insurance
This account comes with federal deposit insurance up to the current limit of $250,000. If nbkc goes out of business, the FDIC steps in to ensure you lose nothing below this amount.
Pros & Cons
nbkc Free Business Checking is a straightforward small-business bank account with some clear advantages and some equally notable downsides.
No monthly fee
No minimum balance requirements
Generous ATM fee reimbursements
Free overdraft coverage
No interest on balances
No rewards
Few nonbanking features
Pros
nbkc Free Business Checking is affordable, easy to understand, and easy to use.
No monthly fee. This account charges no monthly fee, no matter how little (or how much) you keep in your account. This is excellent news for budget-conscious freelancers and small-business owners.
No minimums. There’s no minimum deposit or ongoing balance required to keep this account in good standing. Again, that’s good news for users without lots of cash to spare.
No transaction limits. Unlike some business bank accounts, nbkc Free Business Checking has no upper limit on transaction volumes. This is good if your business makes or receives lots of small-dollar transactions each month.
Generous ATM fee reimbursement. nbkc reimburses up to $12 in out-of-network ATM fees each statement period. That’s in addition to free withdrawals at tens of thousands of MoneyPass ATMs around the country.
Free overdraft coverage. nbkc charges nothing to process overdraft transactions. Though it may decline these transactions on a case-by-case basis, there’s no nonsufficient funds fee associated with a denial either.
Comprehensive mobile app. nbkc has a straightforward, easy-to-use mobile app that replicates the traditional online banking interface in a smaller format. Some competing business bank accounts are unacceptably clunky or feature-poor on mobile.
Cons
Nbkc Free Business Checking isn’t particularly rewarding and lacks some of the potentially valuable business capabilities available from some similar accounts.
No interest on balances. This account pays no interest on balances. If you want to earn a return on your company’s emergency savings fund or any other funds you don’t need right away, you’ll need to open a savings account with another bank.
No debit card rewards. nbkc has no debit card rewards program. In other words, there’s no return on spending here, unlike at many competing business banks.
Few nonbanking features. nbkc Free Business Checking is a very basic bank account. It has few useful nonbanking features, such as built-in invoicing, tax management, or accounting (beyond basic expense categorization).
How nbkc Free Business Checking Stacks Up
nbkc Free Business Checking competes against dozens of other small-business checking accounts, each with its own unique mix of features and capabilities. One of its top competitors is the NorthOne Deposit Account, a more expensive and more capable option for growing businesses.
nbkc Free Business Checking
NorthOne Deposit Account
Monthly Fee
$0
$10
Minimum Balance
$0
$0
Subaccounts
No
No, but has a built-in envelope budgeting feature
Yield
None
None
ATM Access
About 40,000 free ATMs and $12 in monthly reimbursements
Unlimited (no ATM withdrawal fees anywhere)
With no monthly fee and a generous ATM reimbursement allowance, nbkc Free Business Checking is ideal for small, budget-conscious freelancers and business owners who don’t ask much more of their business accounts. NorthOne is a better fit for entrepreneurs who need more features and services.
Final Word
nbkc Free Business Checking is an easy-to-use business bank account that’s even easier to understand. If you’re a freelancer or self-employed individual with straightforward business finances and no need for bells and whistles, it’s a reasonable choice — though not quite the best in the category.
If your financial needs are more complicated or you’re planning to grow your business in the coming years, nbkc Free Business Checking probably isn’t powerful enough for you. Fortunately, other business bank accounts are.
The Verdict
Our rating
nbkc Free Business Checking
nbkc Free Business Checking is a basic business checking account designed for freelancers and owners of small businesses with simple finances. With no monthly fees or minimums, it delivers solid value for users who don’t ask much of their business banking partners. But it lacks the firepower for larger businesses and enterprises with more complicated accounting needs.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
@media (max-width: 1200px)
body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
Chances are you’ve heard the term financial plan in a news story or in conversation with coworkers or family. Having a financial plan sounds smart, but not everyone knows what goes into a proper document and why they need one.
Thankfully, these plans aren’t difficult to put together. If you want, you can create a simple financial plan yourself. Those that prefer a more in-depth document can hire a financial planner to put one together for them.
So what exactly is a financial plan and how do you create one? Here’s what you need to know.
What’s Ahead:
What does a financial plan include?
A financial plan is a document you or a professional put together that guides your personal finances. The plan can be as detailed or minimal as you’d like. It should inspire you to make progress both over the short-term and long-term.
While many people end up with a written financial plan, your plan isn’t set in stone. You can adjust it as your life and goals change over time. That’s why it is essential to revisit and revise your financial plan regularly.
If you’re financially savvy, you may be able to create a financial plan yourself. After all, it’s just a document that outlines your current financial situation, where you want it to be, and how to get there. You could easily use Google Docs, Google Sheets, and free investment calculators to put together a document you could call your financial plan.
That said, a well thought out financial plan should include the following sections.
Current situation
In order to figure out where to go, you must first know where you’re starting. A financial plan can gather valuable information about your current finances including your income, expenses, cash flow, debt, savings, and investments.
If you track your finances, coming up with this data is much easier than starting from scratch. Either way, it’s important to know what tools you have to work with.
Look at your bank, debt, and investment statements to find relevant information about each financial item. Once you have a list of your current financial positions, you can find out how much money you can put toward your goals. You can also use this starting point to come up with realistic near-term and long-term goals.
Future financial goals and how you’ll achieve them
A financial plan is a road map for your finances’ future. You should set short-term, mid-term, and long-term goals for your money within your plan. Goals can include getting out of consumer debt, building an emergency fund, reaching a specific dollar amount of investments before retirement, and more.
A financial advisor can help you think of goals you might miss. Since they create financial plans for a wide variety of clients, they can fill in the spots you may not be thinking of that are still extremely important.
Retirement planning
One of the biggest goals is being able to retire. Your plan should address how you plan to fund your retirement and how you will build the financial means to do so.
Retirement planning is more than picking a retirement number. You have to decide how much to invest each year, what types of accounts to invest in, and which investments to choose. Once you reach retirement age, you have to have a drawdown strategy that preserves your funds so you have money until you pass away.
Tax planning
Tax planning is another important concept you should include in your financial plan. It allows you to keep more of your money to put toward your goals. It does this by making smart decisions about your money to reduce the total amount of taxes you’ll owe over your lifetime.
Some tax planning strategies are as simple as putting the right types of investments in the correct tax-advantaged accounts. Other strategies are more complex. For example, one requires keeping track of the basis of your investments so you can perform tax-loss harvesting. Financial advisors can help expose you to strategies you may not know of. By learning more strategies, you may be able to keep more of your hard-earned money.
How you’re protecting your finances
It’s also crucial to manage how you’re protecting your family and finances. Insurance is often a vital tool people use to do this. You’ll want to consider your needs for car insurance, homeowners insurance, renters insurance, life insurance, disability insurance, long-term care insurance, and umbrella insurance, among many other types.
In addition to insurance, you’ll want to make sure you’re taking care of any estate planning that needs to be done. You may want to set up a will, trust, advance medical directive, or other estate planning documents to make sure your wishes are respected when you pass away. Your plan can use specific strategies to make sure there are as few tax impacts as possible when you die.
What’s the purpose of a financial plan?
The purpose of a financial plan is to develop a thoughtful representation of how to reach your financial goals while protecting your family and finances. It should give you a roadmap about how to reach your goals and secure a bright financial future.
Creating a financial plan makes you think critically about what you want your future life to look like. This can be a great way to set bigger goals or make adjustments if you’re not happy with your current life or lifestyle.
Who needs a financial plan?
You may think only people with large amounts of money need a financial plan. That couldn’t be more wrong. Honestly, anyone can benefit from having one.
Financial plans can help you figure out what you need to do to have a successful financial future. It gives you a snapshot of where you’re starting and what you need to do to get where you want to go. A lot of what a financial planner helps you with when developing your document isn’t common knowledge to someone that doesn’t know a lot about finances.
Once you know what goals you need to accomplish and when you need to achieve them, you can be more motivated to move forward faster. Often, having a financial plan that you review and update regularly can be a great motivating factor. It can assist with getting your finances in good shape for your future and retirement.
How do you make a financial plan?
If you’re financially savvy, you may be able to create a financial plan yourself. After all, it’s just a document that outlines your current financial situation, where you want it to be, and how to get there.
You could easily use Google Docs, Google Sheets, and free investment calculators to put together a document you could call your financial plan.
Take inventory of your current situation
The first thing you should do is see where you’re starting. First, work on tracking your spending and income. You can do this manually or by using free software like Empower. Next, calculate your net worth. This involves gathering information about your assets (such as cash and investments) and debt (such as car loans and mortgages). It can be done with a simple spreadsheet or using a service like Empower.
Once you have this information, make sure you keep it up to date. Continue tracking your spending on a monthly basis. Consider updating your net worth once per month, quarter, or year based on your goals.
(Personal Capital is now Empower)
Set goals you want to reach on a timeline
After you know where you’re starting, you get to figure out where you want to go. There are several financial goals you can set depending on your current situation and where you want to end up. One key is setting a timeline for reaching your goals. This helps you calculate whether it is realistic to meet your goals on the timeline you want.
For instance, if you want to save $20,000 in three years, you’d have to save $556 per month. If that isn’t realistic, you either need to find a way to make more money, cut spending, or find a more suitable goal.
Goals could include:
Make sure to include realistic timelines so you don’t get discouraged and throw out your financial plan.
Determine what actions are needed to reach your goals and take action
After you have your goals and your timelines, it’s time to start strategizing. Goals are only useful if you’re trying to actively reach them.
Based on your timeline and available financial resources, figure out how to allocate your money toward your goals. For some goals, such as preparing for retirement, you’ll need to figure out what investments to invest in. For other goals, such as paying off debt aggressively, you may need to find ways to increase your income to achieve them faster.
Based on these results, take action and set up systems to make reaching these goals a reality.
Monitor your progress
A financial plan works best when you monitor your progress. If you create one and never look at it again, it doesn’t do much good. Set up monthly, quarterly or yearly check-ins to look back at your financial plan so you can see how you’re making progress.
No one is perfect. You may not reach your goals on the timeline you had hoped or a favorable market may help you reach your goals ahead of schedule. The key is knowing where you are compared to your plan.
Make changes and update your plan as needed
If things aren’t going as planned, it’s time to take action again. If you’re falling behind on your goals, find a way to catch up and change your plan to reflect that. Catching up may not always be possible, though. In these cases, you may need to change your goal timelines.
Keeping your financial plan and goals up to date doesn’t mean you failed. It means you’re taking control of your finances. People that have information and measure their progress often make much more progress than those that financially float along in life without these tools.
It may be a good idea to hire a professional
However, you may not be aware of blind spots or better strategies financial experts could help you implement. That’s why most people prefer to hire a financial planner or financial advisor to draft the document for you. They do this for a living. Good financial advisors know the ins and outs of what you need in your plan. But, more on this below!
Do you need a financial planner or advisor?
There are several types of financial advisors you can hire to create a financial plan. Some financial advisors try to get you in their ecosystem to earn commissions on trades or by selling you insurance products. Ideally, you want to avoid these types of advisors. There are exceptions, such as when you’re confident they have your best interests in mind.
Instead, you’ll want to hire a fee-only fiduciary financial advisor who is legally required to make decisions in your best interests. These advisors don’t receive a commission for selling products. Instead, you have to pay them.
Their advisors aren’t incentivized to sell. You’re only charged a flat annual fee based on the services you need. You don’t have to pay an assets under management (AUM) fee, either. They offer several types of planning including retirement, education, life, income tax, insurance, estate, legacy, retirement income, and asset management planning.
If you’d rather work with a financial advisor in person, you can find one using the Paladin Registry. The Paladin Registry is a free service that matches you with a financial fiduciary that can address your concerns and financial planning needs.
The service has you fill out some basic information about your situation. Then, Paladin Registry searches its database to connect you with one to three suitable financial fiduciary matches for you to compare. They even vet and document the suggested advisors’ qualifications for you.
Once you get your list of potential advisors, you get to interview the candidates and select the best one. Paladin Registry even offers a complimentary guide to help you figure out the best way to interview your financial advisor candidates. Once you choose an advisor, they can create a financial plan for you.
Summary
Putting together a financial plan can be a great exercise. It allows you to understand where your finances are today. It also makes you think about where you want your finances to be in the future and how to get there. You can put together a financial plan yourself. That said, you could miss things you aren’t aware you need to include or strategies that could help you achieve your goals faster.
Many people choose to hire a financial advisor to put together a financial plan. You can hire a service or find an advisor to meet in person using a service such as Paladin Registry. No matter how you decide to create your financial plan, make sure you have one. That way, you know what goals you’re working toward to have a successful financial future.
Read more:
Empower Personal Wealth, LLC (“EPW”) compensates Webpals Systems S. C LTD for new leads. Webpals Systems S. C LTD is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.
Just outside of Chicago is the picturesque town of Naperville, where you’ll find beautiful natural scenery like the DuPage River. If you’re considering moving to Naperville, then you may be wondering whether to rent versus buy a home in the area. Even in today’s real estate market, there are pros and cons to consider if you’re renting or buying a home in Naperville, making it that much harder to decide what fits your goals.
If you’re looking to buy a home in Naperville, the current median sale price for a home is $587,201 as of July. Or if you’re checking out apartments for rent in Naperville, the average monthly rent for a two-bedroom apartment is $2,263. Depending on what you can afford and today’s mortgage rates, it may be that renting is cheaper than buying. But, there are many reasons why buying a home now may be more beneficial for your needs than renting. In this Redfin article, we will delve into the pros and cons of renting and buying in Naperville, helping you make an informed decision based on your unique circumstances. Let’s get started.
Advantages of buying a home in Naperville
Increase in investment opportunities
The home prices in Naperville, and the surrounding areas, have been steadily increasing year over year. This trend shows market growth and a greater possibility in investment return. Becoming a homeowner is more likely to offer a good financial gain in the future.
Money in your own pocket
The question, “Why rent when you can own?” applies much to our market. Owning a property allows you to stop paying another to live and start building equity into your own asset. In addition, the rental market in Naperville is typically lucrative, leaving a great opening to become an investor if you wanted to rent your home to another in the future.
Disadvantages of buying a home in Naperville
Interest rates
The increase in interest rates has made home buying more expensive. Home prices have still stayed strong and lenders are finding new creative ways to help with the rate increase, but buyers are still up against finding the right affordability. This increase in interest rates has made buyers have to adjust their monthly budget to fit their home buying wants or make exceptions in their home search to better fit their budgetary needs.
Low inventory
If you consider yourself more of a picky buyer, you may have a difficult time finding the perfect home as we have low inventory in the Naperville area. With low inventory, you’re more likely to run into multiple offers and bidding wars. In addition, buyers are having to make exceptions for some of their home wants or compete in those multiple offers, especially when homes are updated or renovated.
Determining if you are ready to buy a house in Naperville
There are several factors to consider if you’re deciding whether to rent vs buy in Naperville this year. Here are five points to look at:
1. Time of year: Naperville is a highly seasonal market. Time of year is a huge factor to consider when both selling and buying. You’ll typically see more inventory available in the spring and summer. During this time, homes usually sell faster, at a higher price, and you’ll have more competition. Less inventory is typically available in the fall and winter. However, there is typically less competition during that time and more likely to get a home at a lower price.
2. Financial stability: Before starting your homebuying journey, it’s important to understand your finances – including having a good credit score and a stable income. Be sure to set aside some additional funds for down payment, closing costs, home inspection fees, and additional expenses that are part of the homebuying process. It’s also good to build an emergency fund in case you incur any unforeseen costs.
3. Personal goals: You’ll also want to evaluate your personal goals and priorities before deciding to buy a home in Naperville. Are you looking for a move-in ready home or a renovation project? Do you want a home with modern upgrades or historic charm? Determining what’s important to you in a home can help you figure out if buying a home in Naperville aligns with those goals.
4. Long term commitment: Compared to renting an apartment, buying a home is a significant financial investment and time commitment. So, if you’re not sure you’ll be living in the area for more than a few years, it may be better to continue renting vs buying in Naperville.
5. Housing market conditions: When considering buying a home in Naperville, it’s essential to evaluate the current housing market conditions and how they impact how much house you can afford. Understanding whether it’s buyer’s or seller’s market can help you gauge competition – and help adjust your expectations. Currently, Naperville is in a seller’s market, meaning there are more buyers looking to purchase a home than there are homes on the market.
If you’re unsure whether you’re ready to buy, consider consulting with your real estate or financial advisor to fully understand your options.
Is it competitive to buy a home in Naperville?
We’re seeing less inventory in the Naperville market, making home buying competitive. It’s common to see multiple offers on properties, and a home’s time on the market to be short before it goes under contract. This is especially true when it comes to homes that are under 20 years old or were recently renovated to trending styles. Offers typically include over list price, appraisal waivers, and as-is or waived inspections. With high interest rates, we have also seen an increase in cash or large down payment buyers.
Advantages of renting a home in Naperville
Maintenance costs and availability
Just as home prices have risen, so have the costs of contractors and materials. If you have home maintenance that you want to complete, it can be more costly and take a while to find a contractor. Renting helps you avoid these additional costs, as many of these costs will be covered by your landlord.
Easier to move on from a property
Leases typically have an end date and tenants can choose to leave when following the cancellation terms of the contract. This allows tenants a little more flexibility to “get up and go” without the uncertainty of selling their investment as they don’t own the property.
Disadvantages of renting a home in Naperville
Renewal changes and rent increases
Typical leases have a set time of expiration, whether it’s 6-months, 12-months, or month-to-month. When your lease ends, your landlord has the ability to end the lease, make modifications to the lease, or change the charges of the lease. This can leave you having to find new living options or increase in your monthly expenses to continue to live in the property. In addition, some leases allow cancellations prior to the lease ending, which may have a renter trying to find a new option of living quicker than they anticipated.
Limitations to design
When renting, you’re paying to live in the landlord’s property. Therefore, there are typically more restrictions to using their property. This usually includes many limitations on personalizing the space such as type of flooring, painting, light fixtures, etc. This makes it more difficult if you want to add your own touches to make the home feel more like your own.
Renting vs buying in Naperville: A real estate agent’s final thoughts
I personally believe there is never a “bad” time to buy a home. The biggest focus should be to review your main goals for buying to identify if it’s a good time for you specifically. Ask yourself – How long do I see myself in this home? Do I have an interest in renting it in the future?; and if so, is the property rentable? Does this home fit all of my needs? Can I take on the disadvantages of buying a home? If you’re finding answers to be more yes than no, it’s a great time for you to buy.
If you’ve been seeking life insurance coverage, it is likely that you have seen ads from several of the large life insurers such as New York Life.
Many such life insurance companies have been in the business for a century or more – which is a good sign, as it can signify financial strength and staying power, as well as the ability to pay its claim obligations.
New York Life Insurance Company has been in business for nearly 170 years. The company traces its history to 1845, when its first life insurance policy was sold with a face amount of $5,000.
Fast forward to the present time, and as of year-end 2013, New York Life had in excess of $425 billion in assets under management, and the company has continued to set records over the past several years – even during a volatile market and economic times.
Why Consider Life Insurance Coverage Through New York Life?
While there are many life insurers to choose from in the market place, New York Life Insurance is a strong contender. First, this company is quite solid when it comes to its credit outlook – especially in terms of its financial ratings. The insurer has earned top ratings from A.M. Best (A++), Standard & Poor’s (AA+), Fitch (AAA) and Moody’s (Aaa). This means that the company is extremely strong in terms of its ability to meet both its current and future financial obligations – including paying its policyholder claims.
When it comes to product offerings, New York Life provides a nice variety, including all of the major forms of life insurance.
Including:
Term
Whole
Universal
Variable
Along with all the product offerings, all of the industry-standard life insurance coverage products are provided as well, including:
Cash Surrender Option: Returns a policyholder’s balance after cancellation
Survivorship Policy Option: Extends coverage to a second party
Other policy options available include, one for a return of premium and a term conversion option that provides the company’s term life insurance policyholders with flexibility. These policies only go up to $1,000,000 of life insurance coverage.
Additional options can be found with mortgage life insurance, as well as whole life vanishing premium options that provide protection for homeowners with mortgage balances and who wish for their life insurance premiums to decrease as their mortgage balance goes down.
For younger individuals who may have smaller budgets – but who still need coverage – New York Life offers some policies that start with an initial face amount of $5,000. These can provide a great way to get a plan started and then grow with it over time.
With its permanent policies, New York Life offers access to cash value via loans and/or withdrawals, as well as many plans that have guaranteed interest rates, and periodic dividends with paid-up addition options.
Policyholders may also choose plans that include flexible death benefits – which may include level and/or variable options. There are also a wide variety of additional riders that can be chosen to add more flexibility and customization to one’s coverage.
New York Life also offers a nice variety of how policyholders are able to make their premium payments. In addition to setting up automatic payments from a checking or other type of bank account, customers may alternatively opt to pay via credit card (hello airline points credit card for a free trip somewhere). They can also pay online or pay premiums over the phone.
In addition to the products that it offers, New York Life also provides excellent customer service. There are numerous options for getting in touch with a representative, including phone and email, as well as online chat, click to call, Twitter, and Facebook. This shows that the company is very up to date in terms of its communications strategies – and it also makes itself available to its customers in a variety of ways, making it easy for clients and policyholders to get their issues resolved. This could be one reason why the company has very few complaints on file.
At this time, one of the few drawbacks with regard to company communication is that New York Life does not offer mobile access to their clients’ accounts or documents, nor does the company provide a mobile website for smartphone web browsers. This means that customers are required to call into the company’s customer service center during business hours if they want specific account related information.
Other Considerations When Purchasing Coverage
In addition to the insurer, there are a number of other factors to consider when you purchase life insurance coverage.
These can include the following:
Type of Coverage
One of the biggest factors in narrowing down your life insurance choice is the type of coverage that you need.
For example, there are two primary categories of life insurance.
These are term and permanent.
With term, you obtain pure death benefit protection, whereas permanent life insurance offers a death benefit component along with either a cash value or investment feature, too. Because term life is considered to be plain vanilla coverage, it is oftentimes the most affordable type of coverage – especially for those applicants who are young and in relatively good health. Term life, however, is offered for only certain periods of time – or terms – such as 10 years, 15 years, 20 years, or 30 years.
Permanent life insurance coverage, however, as its name implies, provides permanent protection for the remainder of the insured’s life, provided that the premium is paid. For those who have “temporary” needs such as paying off a 30-year home mortgage, term life insurance is often the best choice. On the other hand, for those who have an indefinite need for coverage, a permanent policy may be the better option.
Amount of Death Benefit Protection
The right amount of death benefit protection is also important. Having too little coverage could leave survivors in a financial predicament, still having to pay expenses of the decedent and/or struggling with ongoing expenses following the insured’s death, that in itself is good reason to look into a burial insurance policy to help protect your family.
Length of Term
For those who are purchasing term life insurance, buying the proper length of coverage is also essential. If, for instance, the need is short-term, then a 10-year plan will likely be sufficient. However, it may be necessary to purchase a 20 or 30-year option for long term obligations.
Need To be Covered
The need that is being insured for is another factor in choosing which type of life insurance will be best.
For example, is your goal to cover lost income, or are you insuring to pay off a particular debt balance?
This makes a big difference in the amount and the type of coverage that you purchase.
It may also prompt you to increase or decrease your coverage amount on a regular basis as your life changes.
Premium Cost
The cost of your life insurance premium can also make a difference.
Here is where comparing different life insurance policies and companies will serve you well, as the cost of identical coverage can oftentimes be priced vastly different by differing carriers. Therefore, be sure to shop and compare before making your final decision.
Underwriting Guidelines
The underwriting guidelines can sometimes make the difference between getting coverage or being declined.
This is especially the case for someone who has certain health issues. Therefore, be sure to check the company you are applying through regarding their underwriting guidelines.
How and Where to Obtain the Life Insurance Coverage You Need
In obtaining the life insurance coverage that you need quickly, it is oftentimes best to first compare several different policies and premium quotes.
This way, you will be able to review exactly what is available to you – as well as what you may be charged for this coverage.
If you’re on the lookout for a full service online bank, you might come across CIT Bank. Founded in 2009, CIT Bank is now a division of First-Citizens Bank & Trust Company, which is a leading financial institution with more than $218 billion in assets.
The bank offers a variety of products, including savings and checking accounts, CDs, custodial accounts, and home loans. It stands out for its competitive interest rates that you may not find at traditional banks as well as no monthly maintenance fees or monthly service fees.
While there are no physical branches, live chat support on CIT’s website and mobile app as well as automated phone assistance is available 24/7. If you prefer to speak to a CIT representative directly, you can reach them during regular business hours: Monday through Friday, 9 a.m. to 9 p.m. ET, or Saturday from 10 a.m. to 6 p.m. ET.
CIT Bank doesn’t have an ATM network but it will reimburse you up to $30 per month if you incur out-of-network ATM fees. Rest assured that it’s insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 for an individual account or $500,000 for joint accounts, meaning your money will be safe, no matter what happens to the bank. Let’s take a closer look at CIT Bank so you can decide whether it makes sense for your unique situation.
CIT Bank Pros and Cons
Before you move forward and open an account with CIT Bank, it’s a good idea to consider the benefits and drawbacks.
Pros
Competitive rates: Since CIT Bank has less overhead costs than brick and mortar financial institutions, its yields on deposit accounts and several CIT Bank CDs are competitive. It can allow you to make the most out of your hard earned money.
No fees: Unlike other bank accounts, CIT deposit accounts do not have any monthly maintenance fees, or other common fees. You can use the money you save on fees to meet your financial goals faster.
ATM fee reimbursement: CIT Bank reimburses you up to $30 per month for out-of-network ATM fees. This means you can withdraw cash from any ATM without worrying about high costs.
Small minimum deposit requirements: You don’t need a lot of cash to open up CIT Bank accounts. Many. of the accounts only require $100 to start.
24/7 customer service: CIT’s live chat and automated phone support is available round-the-clock. If you have a question or concern, you’ll be able to receive assistance right away.
Cons
No physical branch locations: CIT is an online only bank, meaning there are no branches for an in-person banking experience. If you decide to bank with CIT, you should feel comfortable with online banking and mobile banking.
Limited product selection: Compared to other financial institutions, CIT’s product line is slim as there are no credit cards, car loans, or IRAs. Fortunately, its lineup of checking accounts, savings accounts, custodial accounts, CDs, and mortgages is still impressive.
Low rates on select CD accounts: Some CDs have lower rates than you may be able to find elsewhere. The good news is you can calculate your returns in advance and won’t have to worry about fluctuations in the market.
No checkbooks: CIT’s eChecking accounts do not include checkbooks. However, you can use CIT to pay other individuals and businesses electronically via Zelle, Apple Pay, and Samsung Pay.
CIT Bank Products
CIT Bank offers a variety of products to help you meet different financial goals. Here’s an overview of each of its current offerings.
Checking Accounts
You can open the CIT Bank eChecking account with as little as $100. It’s unique in that it offers interest on your balance. To earn as much interest as possible, you’ll need to keep at least $25,000 in your account.
As an online checking account holder, you’ll get a debit card with chip technology and 24/7 account access. Plus, you’ll be able to deposit checks and make unlimited withdrawals with the CIT Bank mobile app. In addition, you’ll have access to Zelle, Apple Pay, and Samsung Pay. Unfortunately, the eChecking account doesn’t come with paper checks.
Savings Accounts
CIT Bank offers a few CIT Bank savings accounts you might want to explore., including the CIT Bank Savings Connect, the Savings Builder account, and Platinum Savings account. The CIT Bank Platinum Savings account provides an interest rate of up to 12 times the national average.
There are no fees and interest compounds daily so that you can earn as much as possible. All you need is $100 to open this account. This account is ideal if you’d like to meet your savings goals quickly without a lot of effort.
With the CIT Savings Connect account, you can reap the benefits of a great interest rate and enjoy easy access to your funds. Several noteworthy perks of the Savings Connect include an interest rate of up to 11 times the national average, online banking and mobile banking, remote check deposit, and no monthly service fees.
The CIT Savings Builder is a two-tiered CIT savings account with an interest rate that’s twice the national average. As long as you make at least one $100 deposit per month or maintain a balance of $25,000 or more, you can earn a competitive rate on it. Since the Saving Builder account earns daily compounding interest, you’ll be able to maximize your earning potential. Just like the other CIT saving accounts, the Savings Builder doesn’t have any account opening or maintenance fees.
CIT Money Market Account
The CIT Bank money market account is the way to go if your ultimate goal is to grow your savings and stash your emergency fund. With a minimum opening deposit of $100, you can earn more than two times the national average.
In addition, there is no monthly service fee and you can deposit checks and transfer money using the CIT Bank mobile app. In addition, you’ll be able to earn twice the national average. Just like with the other accounts, you may only make six transactions per statement cycle and can deposit checks and make transfers with the CIT mobile banking app.
CDs
Certificates of Deposit (CDs) might be worth exploring if you like the idea of guaranteed returns. CIT offers several types of CDs, including:
Term CDs: Term CDs are traditional CDs that are widely seen at other banks and range from six months to 60 months. With a term CD, you can lock in an interest rate for a certain time period, regardless of what happens to the market. The longer term you choose, the more interest you’ll earn. You’ll need at least $1,000 to open a term CD.
No-Penalty CDs: Most CDs require you to lock up your money for a set period of time. If you’d like to access it before, you’ll have to pay a penalty. A no-penalty CD is exactly what it sounds like: a CD that doesn’t charge a penalty if you withdraw funds before your term is up. It requires a $1,000 minimum opening deposit and you may be able to access your money after seven days.
Jumbo CDs: If you have a lot of cash saved up, a jumbo CD might make sense. It requires $100,000 to open and doesn’t come with any account opening or monthly maintenance fees. Its terms range from two to five years and the longer you keep your money in one, the higher rate you can lock in.
RampUp CDs: RampUp CDs are for current CIT Bank customers with CDs. With a RampUp CD, you can increase your rate one time during your term if CIT Bank raises rates after you have already opened your account. You’ll need to reach out to CIT Bank directly to learn more about what type of rate you might qualify for.
Custodial Accounts
Custodial accounts are opened under the Uniform Transfers to Minors Act (UTMA). If you have a child under 18, a CIT custodial account can help you save money for their future. You’ll serve as the custodian and have complete control of the account until your child turns 18 or a later age that you designate.
You can contribute as much money as you’d like and may not have to pay federal taxes on part of the earnings. With a custodial account, your child may enjoy money for college, a vehicle, home down payment, and other expenses that can steer them toward a bright future.
Home Loans
CIT Loans does offer mortgages but you have to submit your contact information on its website to start the process and learn more about your options. You’ll need to state the value of the home you’re interested in, your desired loan amount, your zip code, and your credit score range. If you already bank with CIT, you may be eligible for two relationship discounts that lead to a lower rate.
Ten percent of your balance in a CIT bank account may give you 0.1% off your rate. If you keep 25% of your balance in a qualifying cit bank savings account, you might lock in a 0.2% discount. Since the CIT website has limited information about its mortgages online, it’s a good idea to fill out the form and request further details.
CIT Bank Fees
As we mentioned above, CIT Bank doesn’t charge any opening fees or monthly maintenance fees. Also, you can open most accounts with only $100. The bank won’t charge any domestic ATM fees and will reimburse you up to $30 per month for any fees you incur for using other ATMs. If you use an international ATM, however, CIT Bank will charge a monthly fee of 1% plus the fee imposed by the ATM provider. Other fees you should be aware of include:
Debit card replacement fee: 100
Overdraft fee: $30
Returned deposit fee: $10
Bill stop payment fee: $30
Outgoing wire transfer fee: $10
CIT Mobile App
With the CIT mobile banking app, you can bank on the go from just about anywhere. The mobile app is versatile so you can use it to log into our accounts via a password or fingerprint. You can also transfer funds between CIT accounts and an external bank account and take a photo to deposit checks.
Plus, the app allows you to check your balances and transaction history, send and receive money via Zelle, and make secure payments with Samsung Pay and Apple Pay. If you’d like, you can sign up for text banking, which will give you the chance to check your account balances and transactions through text. Many reviewers state that the CIT mobile app is very intuitive so you shouldn’t have any trouble using it, even if you don’t consider yourself tech savvy.
CIT Bank Reputation
Before you go ahead and open a CIT Bank account, you might want to know about its reputation. It has an A- rating on the Better Business Bureau (BBB). On TrustPilot, CIT earned 2.3 out of 5 stars due to negative customer reviews.
Most of the negative reviews have to do with poor customer service and difficulty opening deposit accounts. The majority of the five-star reviews praise CIT for a convenient banking experience and fast response times from the customer service team. You can always try out CIT Bank and move on to another financial institution if you’re unsatisfied for any reason.
How to Access Your Money
Even though there are no physical branches, CIT Bank makes it easy to fund your account and withdraw money.
Deposits
You can fund your account through these methods.
Mobile app: With the mobile app, you can deposit checks and make transfers quickly and conveniently.
ACH transfer: The simplest way to fund your account is to transfer funds electronically from your external bank accounts. Note that it may take up to two business days for the money to show up.
Check: You can mail a physical check to CIT Bank.
Wire transfer: CIT Bank accepts funds via wire transfer.
Withdrawals
Here’s how you can make withdrawals:
CIT Savings Connect: The CIT Savings Connect allows you to make up to six withdrawals or transfers per statement cycle. Keep in mind that any withdrawal and transfer requests you submit via mail don’t count toward this limit. The same goes for telephone requested withdrawals and transfers.
ACH transfer: Free ACH transfers between your account and an external bank account are available.
Check: You can call CIT and ask them to mail you a check without paying a fee.
How to Get Started
To open an account with CIT Bank, visit their website and click the green “Open Account” button on the home page. You can complete the application in 5 minutes or less. Be prepared to provide the following information:
Your home address
Your phone number
Your email address
Your Social Security number
You’ll also need to fund your new account. You can transfer funds from an external checking or savings account, wire funds to your new account, or mail a check to the following address: CIT Bank, N.A. Attn: Deposit Services, P.O. Box 7056, Pasadena, CA 91109.
Lastly, CIT will make two test micro-deposit to your account. You’ll receive an email within three business days that asks you to verify them. The bank will process your transaction as soon as you do.
CIT Bank Alternatives
While CIT Bank offers a lot of benefits, it’s not right for everyone. If you decide CIT isn’t the best choice for your unique needs and preferences, consider these alternative options. Some are online banks while others are traditional financial institutions with brick and mortar locations.
Ally Bank
Like CIT Bank, Ally Bank is an online only bank that offers low fees and high rates. Its product lineup includes checking accounts, savings accounts, CDs, credit cards, mortgages, car loans, personal loans, and retirement accounts. Perhaps the greatest benefit of Ally Bank is that it doesn’t charge any fees.
Capital One
Capital One has approximately 300 branches in select states and more than 50 Capital One Cafes that allow customers to open accounts, deposit cash and checks, and hang out. It also offers no-fee access to more than 70,000 ATMs and attractive rates on savings accounts and CDs. This bank might make sense if you want competitive rates but prefer the option of an in-person banking experience that is not available with CIT.
Chime
Chime isn’t a traditional bank or online bank like CIT. It’s a mobile banking app that provides banking services through Bancorp Bank, N.A. and Stride Bank. The Chime checking account comes with exciting perks like automated savings tools, early direct deposits and free access to over 60,000 fee free ATMs across the country. The Chime high yield savings account is also a solid choice thanks to its competitive interest rate and lack of monthly fees as well as minimum balance requirements.
Citibank
Citibank sounds like CIT Bank but is one of the largest banks in the world. It has hundreds of locations in the U.S. and thousands overseas. If you frequently travel abroad for business or pleasure and want access to branches and ATMs, it should be on your radar. It offers a plethora of accounts but they do come with fees. The good news is many of the fees can be waived if you meet certain balance or direct deposit requirements.
Discover Bank
When most people think of Discover, credit cards come to mind first. But Discover is actually an online bank that’s similar to CIT Bank. Its plethora of products include checking and savings accounts, personal loans, student loans, home equity loans, and mortgage refinancing. Discover also offers cash back on debit card purchases and, of course, credit cards with various rewards.
PNC Bank
PNC Bank is a traditional bank with brick and mortar locations. Some of its most popular products are the PNC Standard Savings account and Virtual Wallet, which combines a traditional checking and savings account. PNC also offers numerous CDs and free budgeting tools. It offers online banking, like CIT Bank, plus a robust mobile app.
Huntington Bank
Huntington Bank is a leading bank in the Midwest with branches in states like Ohio, Michigan, and Indiana. It provides checking and savings accounts, personal loans, auto loans, mortgages, credit cards, insurance, and investment options. Other perks include a 24-hour grace period, all day deposits, and online bill pay. You can download the Huntington app and bank on the go, like you’d be able to with CIT.
Bank of America
Known as one of the largest banks in the country, Bank of America has more than 6,000 locations throughout the U.S. Just like CIT Bank, it has a highly rated mobile banking app. In addition to checking and savings accounts, it has a Preferred Rewards program, which comes with perks like higher interest rates, waived fees, and cash back for certain transactions.
TD Bank
TD Bank has a strong presence in the Eastern part of the U.S. It offers many of the same products as CIT, such as personal checking accounts, personal savings accounts, and mortgages accounts. TD stands out for its generous bonuses and minimal fees. We can’t forget its intuitive mobile app, which makes it a breeze to bank on the go.
Citizens Bank
Citizens Bank is a national bank with locations in the New England, Mid-Atlantic and Midwest regions. Just like CIT Bank, it doesn’t charge monthly maintenance fees as long as you meet specific criteria, like making one deposit per month.
Additionally, many accounts are free of minimum balance requirements. In addition, Citizen offers the Peace of Mind overdraft protection program which will send you an alert if you overdraft your account. Other perks include an overdraft fee grace period and early paycheck deposit and early paycheck deposit.
Bottom Line
If you feel comfortable with online banking and would like to take advantage of the best annual percentage yield APY available, CIT Bank is a great choice. You’ll enjoy access to a plethora of products and watch your money work for you. While you won’t get to bank in-person, you can perform pretty much any banking task online or on your mobile phone via the CIT banking app.
CIT Bank FAQs
What types of products does CIT Bank offer?
CIT Bank offers deposit accounts, like checking accounts, high yield savings accounts, and money market accounts. It also provides CDs and home loans.
Who is CIT Bank for?
CIT Bank is a good fit if you’re looking for an online bank with high interest rates and low fees. You’ll be able to open and manage CIT Bank’s savings accounts and checking accounts from the comfort of your own home. If you prefer a traditional bank with physical locations, you might want to explore other options, like Bank of America, PNC Bank, and Huntington Bank.
Is CIT Bank FDIC insured?
Yes, CIT Bank is insured by the Federal Deposit Insurance Corporation. This means that if the bank fails for any reason, the federal government will protect your money up to $250,000 per depositor. The FDIC insurance can give you the peace of mind of knowing your money will be safe and sound, regardless of what happens to CIT.
Do I need a lot of money to open a CIT Bank account?
Each CIT account has its own requirements. However, many of its deposit accounts can be opened with as little as $100. This is great news if you’d like to start your savings journey but don’t have a lot of cash at your disposal.
Is it safe to bank with CIT?
CIT makes security a top priority. If you open an account with the bank, it will be protected with safety measures like antivirus protection, SSL encryption, firewalls, and account monitoring. With CIT, you don’t have to be skeptical about entering your personal information.
Is CIT Bank legitimate?
CIT Bank is a division of First Citizens Bank, which dates back to the 1800s. Plus it’s FDIC-insured.
Where can I go to find CIT Bank’s routing number?
Log into your online account to find your CIT Bank routing number. For online-only accounts, this number is 124084834.
Does CIT Bank have physical branches?
CIT Bank is a digital bank. This means there are no branches and you must do all your banking on your laptop, computer, or mobile device. Many reviewers state that the CIT website and mobile app are very easy to use so you don’t have to worry about a learning curve.
Is CIT Bank compatible with Zelle?
Yes. You can use Zelle to quickly send and receive money through the CIT Bank mobile app. Fortunately, you won’t have to pay any fees to do so as Zelle is free to use.
Should I open an account with CIT Bank?
You might benefit from a CIT Bank account if you’re looking for a financial institution that offers high interest rates and low fees. However, you should feel comfortable with online and mobile banking as you won’t be able to step into a local branch to deposit a check or ask a question.
A divestiture, also known as a divestment, involves the liquidation of a company’s assets, such as building or intellectual property, or a part of its business, such as a subsidiary. This can occur through several different means, including bankruptcy, exchange, sale, or foreclosure.
Divestitures can be partial or total, meaning some or all of the company could be spun off or otherwise divested, depending on the reason for the company getting rid of its assets. Corporate mergers and acquisitions are a common example of one type of divestiture.
What Are Reasons a Company Would Divest Itself?
Often a divestiture reflects a decision by management that one part of the business no longer helps it meet its operational goals. A divestiture can be an intelligent financial decision for a business in certain situations.
If one aspect of a business (e.g., a product line or a subsidiary) isn’t working, has become unprofitable, or is likely to soon consume more capital than it can create, then instead of letting that be a continued drain on resources, a company can divest.
This not only does away with the troublesome aspect of the company, but also frees up some money the company can put toward more productive endeavors, such as new research and development, marketing, or new product lines.
There are many other potential reasons for a company to divest itself of a particular aspect of its business as well. The growth of a rival may prove overwhelming and insurmountable, in which case divesting might make more sense than continuing to compete.
A company may choose to undergo a divestment of some sort, such as closing some store locations, in order to avoid bankruptcy, to take advantage of new opportunities, or because new market developments might make it difficult for part of the company to survive.
Companies also sometimes must divest some of their business because of a court order aimed at breaking up monopolies. This can happen when a court determines that a company has completely cornered the marketplace for its goods or services, preventing fair competition.
💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.
What Happens in a Divestiture?
When a divestiture involves the sale of part or all of a company, the process has four parts. The first two parts involve planning for the actual divestment transaction itself. Once management decides which part of the company to divest and who will be buying it, the divestment can begin.
1. Monitoring the Portfolio
When pursuing an active divestiture strategy, the company’s management team will review each business unit and try to evaluate its importance to the company’s overall business strategy. They’ll want to understand the performance of each part of the business, which part needs improvement, and if it might make sense to eliminate one part.
2. Identifying a Buyer
Once the business identifies some or all of the company as a potential divestment target, the team moves on to the next problem that logically follows: Who will buy it?
The goal is to find a buyer that will pay enough for the business to cover the estimated opportunity cost of not selling the business unit in question. If the buyer does not have the liquidity to make the purchase with cash, they might offer an equity deal or borrow money to cover the cost.
3. Executing the Divestiture
The divestiture involves many aspects of the business, including a change of management, company valuation, legal ownership, and deciding which employees will remain with the company and which ones will have to leave.
4. Managing the Financials
Once the sale closes, attention turns to managing the transition. The transaction appears on the company’s profit-and-loss statement. If the amount that the company receives for the asset it sells is higher than the book value, that difference appears as a gain. If it’s less the company will record it as a loss.
The company will typically share the net impact of the divestiture in its earnings report, following the transaction.
What Are The Different Types of Divestitures?
There are several different ways companies can define divest for themselves. A few of these options include:
• An equity carve-out, when a company can choose to sell a portion of its subsidiaries through initial public offerings but still retain full control of them.
• A split-up demerger, when a company splits in two, and the original parent company ceases to be.
• A partial sell-off, where a business sells one of its subsidiaries to another company. The funds from the sale then go toward newer, more productive activities.
• A spin-off demerger, in which a company’s division becomes a separate business entity.
What Causes a Company to Divest?
A divestiture strategy can be part of an overall retrenchment strategy, when a company tries to reinvent itself by slimming down its activities and streamline its capital expenditures. When that happens, the company will divest those parts of the business that are not profitable, consuming too much time or energy, or no longer fit into the company’s big-picture goals.
Factors that could influence a company to adopt a divestiture strategy can be lumped into two broad groups:
External Developments
External developments include things outside the company, such as changing customer behavior, new competition, government policies and regulations, or the emergence of new disruptive technologies.
Internal Developments
Internal developments include situations arising from within the company, such as management problems, strategic errors, production inefficiencies, poor customer service, etc.
Divestiture Strategy Example
Imagine a fictitious company called ABC was the parent of a pharmaceutical company, a cosmetic company, and a clothing company. After some time and analysis, ABC’s management determines that the company’s financials have begun deteriorating and they need to make a change in the business.
Following the four-step process above, they begin by finding the weakest points of business. Eventually, they decide that the pharmaceutical branch of the company is under-performing and would also be the easiest for the company to divest. It makes more sense to stick to clothing and cosmetics.
After identifying a buyer (perhaps a larger pharmaceutical company or a promising startup looking to expand), the divestment transaction occurs. The employees who work in the pharmaceutical branch either lose their jobs, or they get roles working for the new owner of that part of the business. The cash infusion that ABC gets as a result of the sale of its pharmaceutical branch will go toward new marketing efforts and creating new product lines.
💡 Quick Tip: It’s smart to invest in a range of assets so that you’re not overly reliant on any one company or market to do well. For example, by investing in different sectors you can add diversification to your portfolio, which may help mitigate some risk factors over time.
The Takeaway
Divesting is essentially the opposite of investing. It involves a company selling off parts of its business. A divestiture can have some positive outcomes on the value of a company, and there are several business reasons that a company would choose to divest. Depending on the circumstances, this process could theoretically be either a positive or a negative for shareholders.
Investors could see news of a divestment as a sign that a company is struggling, leading them to sell the stock. While this initial reaction could be one likely outcome, the company could eventually wind up doing even better than before if it manages itself better as a leaner company. In either case, the divestiture is one factor that investors can use in their analysis of that company’s stock.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an account gives you the opportunity to win up to $1,000 in the stock of your choice.
Photo credit: iStock/NeoLeo
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
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.
Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
Are you discounting your services in order to get deals done? Listen to today’s podcast and learn why you should always charge what you’re worth. Real estate veteran Steve Shull, coauthor of The Full Fee Agent, outlines proven techniques for getting your full fee on every transaction. Steve also shares his no-nonsense approach to prospecting, the one thing it takes to succeed in real estate, and the best tool for any type of negotiation: tactical empathy.
Listen to today’s show and learn:
Steve Shull on playing for the Miami Dolphins in Superbowl XVII [2:28]
Steve’s introduction to real estate and Mike Ferry [4:22]
Steve’s first couple years in real estate [5:11]
Real estate sales in simple terms [7:23]
Mike Ferry’s four options for drumming up real estate business [8:00]
A no-nonsense approach to prospecting [8:32]
Building a custom real estate CRM back in 1991 [9:39]
How sports can help you succeed in real estate [13:46]
The name of the real estate game: listings [16:39]
The mistake most real estate agents make [17:30]
Real estate is not rocket science; it’s a battle for consistency [19:36]
Chris Voss’ Never Split the Difference [23:26]
How Chris Voss’ book completely changed Steve’s real estate scripts [27:27]
The Full Fee Agent by Chris Voss and Steve Shull [27:32]
What it means to be a full-fee agent [28:08]
The false premise that the entire real estate industry is built on [34:08]
The root of all evil in real estate [42:50]
How to respond to a client who asks you to cut your commission [45:49]
Transactional versus relational paradigms [47:14]
Tactical empathy [48:43]
A story detailing the power of tactical empathy [51:50]
What you’ll learn by reading The Full Fee Agent [55:44]
Steve Shull
Steve Shull grew up outside of Philadelphia, Pennsylvania. He attended The College of William and Mary in Williamsburg, Virginia. He graduated with a BS Degree in 1980. Steve then played four years in the NFL as a linebacker with the Miami Dolphins. He was one of the tri-captains in the 1982 Super Bowl. A knee injury ended his career in 1983. Steve then went to graduate school at The University of Miami and received my MBA. He worked on Wall Street as an institutional fixed income sales person for five years. From 1991 thru 1993 Steve sold residential real estate in the Fullerton, CA. area. In his first year with his partner, they closed 53 transactions. In his second year, they were on pace to sell 100 homes when Steve came up with the idea to create a coaching program which marked the beginning of his real estate coaching career in 1993. In 2007, Steve was one of founding partners of Teles Properties. He helped the company open four offices in Beverly Hills, Brentwood, Newport Beach and Pasadena before leaving in 2012. Steve is married to his wife Katerina and they have two daughters and they live in Brentwood, CA.
Related Links and Resources:
Thank You Rockstars!
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email. -Aaron Amuchastegui