Lee wrote with an innocent question about photography equipment yesterday. Little did she realize I’d already been thinking about the broader issues of her dilemma. Here’s an abridged version of her message:
A friend asked me about cameras. He went shopping last weekend and saw lenses that ranged from $200 to $700. He felt that the lower-end lenses would not work for him, but he wasn’t prepared to spend $700, so he went home. Now he’s reconsidering. Of course the one he liked was $700. He thinks he should go to a camera store for some professional advice. What do you think?
Ah, the lure of photography. About five years ago, I spent a couple thousand dollars on camera equipment. Before I started Get Rich Slowly, I seriously considered trying to become a professional photographer. (A dream perhaps best left unpursued.) I believed that by throwing money at the hobby, I could improve my results.
This year, I’ve discovered the joy of running. On the surface, it’s a sport you can pick up with no equipment at all — you can just run in a pair of sneakers. As with anything else, I’ve discovered there are tons of things to buy: running shoes, special socks, water bottles, logbooks, and high-tech heart-rate monitors.
Which expenses are worth it and which are not?
When you begin pursuing any sport or hobby, it can be difficult to decide where to spend your money. The initial temptation is to buy the best gear now. But I’ve learned from experience that the best gear is worthless if I’m not skilled enough to use it. Before you spend money on a new pastime, consider the following:
Know your goals. What is your aim? What kinds of photographs do you wish to make? Or, if you’re looking to purchase a bike, what is your objective? Do you want to commute five miles back-and-forth to work? Do you want to train to ride one-hundred miles? Are you just looking for something to putter around on with the kids? Be realistic. Be honest. Use your answers to help guide your decision.
Educate yourself. When I was starting out, I didn’t like the quality of my photographs, so I did what many people do: I threw money at the problem. I bought expensive filters and lenses. I bought Photoshop. None of these things helped. My images still looked lousy. What did help was spending $150 on a community college photography course. An amateur photographer is going to get a much better return for her money by taking a photography class (or three) than by purchasing a new lens.
Practice, practice, practice. Too often people believe that the equipment is going to increase their skill at something — golf, photography, whatever — when actually it’s practice that will help them improve. There’s no sense buying an expensive driver if you can’t hit the ball straight off the tee. Once you’ve hit a few thousand balls (or snapped a few thousand photos), then you might begin thinking about how new equipment might further improve your strengths.
Don’t take advice from a salesperson. Yes, she knows a lot about the subject, but in general, her primary goal is to sell things. She wants you to buy more. Instead, find a friend who can give you advice on the equipment you’re researching. Use Google. If you need advice, get it from somebody who doesn’t have a vested interest in your purchase. Once you’ve done your research, then ask for a salesperson’s help.
Borrow from a friend. Kris’ sister thought she might want to learn how to knit. Rather than buying a bunch of equipment, Tiffany borrowed a few of Kris’ knitting needles to give it a try. She did take up the hobby, but by borrowing Kris’ stuff first, she was able to learn the ropes before shelling out her own money.
Consider used equipment. Check Craigslist or eBay. Find a dealer of used equipment in your town. You can often find high-quality items for cheap if you’re patient and know what you’re looking for. A friend of mine recently saved 33% off a fancy heart-rate monitor simply because he was patient and willing to buy used.
Rent! For many sports and hobbies, renting is a great way to get a taste of the high-end. How often do you scuba dive? Ski? Instead of buying equipment that will mostly sit unused, consider renting when you need it. This not only will save you space, but can actually be less expensive in the long run. Renting is also a good way to try before you buy.
Beware a hobby or sport that is driven by purchasing more stuff. Some hobbies are simply sales pitches in disguise. I’ve written before about my own obsession with the card game Magic: The Gathering, a game specifically designed to get suckers people to spend more money. Kris was once into scrapbooking. She loved it, but she came to realize it was more about buying new Stuff than actually creating memories. Like many scrapbookers, her supplies now sit in the closet, unused.
Fancy equipment is not a panacea. In most hobbies and sports, skill is more important. Don’t get me wrong — good equipment can make your pastimes more pleasurable. But it’s difficult to know which equipment is worth the expense until you’ve gained some experience.
My photography instructor used to tell us, “A professional photographer can produce amazing shots from a crappy disposable camera. But a $5,000 camera won’t help a beginner make better photos.” This idea isn’t just true with photography — it’s true with knitting and biking, and even with running, too.
When my husband started using a virtual wallet, I was concerned. We share a joint credit card and I was bothered about the security side of carrying around credit card information on a cell phone. In my mind, paying for things with your cell phone seemed too easy and a bit dangerous.
Through a combination of reassurance from my husband and a significant number of Google searches on “are virtual wallets safe,” I began to feel more comfortable with the idea.
I know I’m not alone when it comes to questions about the safety of virtual wallets. So, let’s talk about it. What are virtual wallets and, most importantly, are they safe?
What’s Ahead:
What are virtual wallets?
A virtual wallet, sometimes referred to as an e-wallet, is an electronic wallet that lives on your mobile device. Virtual wallets can store all of your payment-related information including credit cards, debit cards, rewards cards, membership cards, and coupons, allowing you to pay for things electronically. No more trucking around your bulky wallet or disorganized purse.
Depending on the type of mobile device you use, you may have a virtual wallet already installed on your phone. For instance, iPhone users will have access to Apple Wallet. Other virtual wallets can be obtained by downloading an app onto your mobile device.
Virtual wallets vs. mobile wallets
The terms virtual wallets and mobile wallets are often used interchangeably. However, there is a difference. A mobile wallet is a type of virtual wallet that can be accessed by downloading an app on a mobile device like a smartphone or wearable watch.
A popular example of a virtual wallet is PayPal. However, when PayPal is used on a mobile device it can function as a mobile wallet.
Popular examples of mobile wallets include Apple Pay, Samsung Pay, and Android Pay.
Banks like Chase, even offer digital wallets. With Chase accounts, you can get Chase Pay®, which allows you to simply and securely use your phone to make payments.
What are the most popular virtual wallets?
There are a variety of virtual wallets available for you to choose from. Some of the most popular virtual wallets include:
Samsung Pay.
Apple Pay.
Android Pay.
Chase Pay.
PayPal.
Google Wallet.
Venmo.
Zelle.
You can also check out wearables that offer mobile payment options like Garmin Pay and Fitbit Pay.
From a global perspective, virtual wallets like Alipay and WeChat Pay which are both based in China, service millions and millions of users.
How do I use a virtual wallet to make a payment?
While each virtual wallet will vary, there are some general steps associated with using an e-wallet.
The first thing you’ll need to do is launch or install a virtual wallet app. Next, you will have to add a new credit card or debit card. To do this you can take a picture of your card or enter the details manually.
When you’re ready to make a payment, you will launch the app and then choose the credit or debit card you want to use.
When it comes to actually making the payment, most smartphones use a technology called near field communication (NFP). NFP allows you to simply hold your phone above the payment pad or tap the payment pad to pay for your purchase.
However, not all mobile devices are equipped with NFP. In this case, you can use a mobile wallet like PayPal. Instead of tapping your phone onto the pay pad, you use your mobile phone number and a pin to make your payment.
Are virtual wallets safe?
When I heard about virtual wallets my first question was, are they safe? It seemed a bit risky to be carrying around all of my payment information on my phone. I mean, what if I lost my phone? Then what? Could someone hack in and access my virtual wallet?
It was this fear and lack of trust that prevented me from using a virtual wallet for a long time. However, virtual wallets are arguably even safer to use than your regular plastic credit or debit cards.
First, digital wallets eliminate the potential to expose important information like your credit card number, your pin, or the CVV number on your credit card. When you pay for something with your digital wallet it uses a process called “tokenization.” This means that your sensitive info (like credit card numbers) is removed and replaced with a one-time-use number that is generated by an algorithm. So, none of your sensitive data is ever made public in any way. Unlike when you swipe or tap a credit card.
Second, all of your payment information is encrypted. When you add a new debit card or credit card to your virtual wallet the information is encrypted and stored in the cloud. Even if someone steals your phone they would need your fingerprint or your passcode to access your virtual wallet.
On the other hand, if you drop your wallet somewhere or get pickpocketed, your credit cards can be easily used and the information can be stolen.
Is it easier for hackers to access your virtual wallet vs. your credit/debit card?
While no payment option is 100% hacker-proof, a physical credit card is much more susceptible to being hacked than a card in your virtual wallet. As I mentioned above, digital wallets provide multiple layers of security that aren’t present when it comes to your plastic credit card.
A physical credit card presents more opportunities for thieves or hackers to get your information. If someone steals your credit card they can easily make a purchase online, or even in a store as many merchants don’t confirm that you are the actual cardholder.
A virtual wallet requires a more intense authentication process that involves a password or proof from a biometric marker (fingerprint, retinal scan). Not to mention that you have to be able to unlock the phone before you can even gain access to the virtual wallet. There are simply more security steps involved.
If you believe that your virtual wallet has been compromised or you’ve lost your phone, it’s easy to suspend all payments. For instance, with Apple Pay, if you put your phone into lost mode, it will automatically suspend all of your payment cards. This is much easier than having to call up each bank or financial institution to cancel your cards if you lose your physical wallet.
Additionally, when you use a virtual wallet on your phone you also have the option of installing apps that will help you to locate your phone. So, if it is stolen the thief will have to figure out how to open your phone, won’t be able to authenticate, and you will be able to track their location.
Is the money in your virtual wallet FDIC insured?
The Federal Deposit Insurance Corporation (FDIC) has been around since the 1930s. It’s their job to ensure stability and public confidence in the financial system. The FDIC insured all deposit accounts including checking, saving, money market deposit accounts, and certificates of deposit up to a standard amount of $250,000 per depositor, per insured bank.
When it comes to whether or not your virtual wallet is FDIC insured the answer is a bit murky. However, as a rule of thumb, if your money is stored within a non-banking institution then the money is not insured. For instance, PayPal and Venmo are not considered banking institutions, so any money stored in these apps is not FDIC insured. There are some exceptions including Google Wallet. According to Yahoo Finance!, as of 2015 money stored in Google Wallet became FDIC insured.
Before you assume that any funds stored in your mobile wallet are FDIC insured, make sure you thoroughly investigate.
The pros and cons of virtual wallets
Pros:
Security. Despite my initial reservations about the security of virtual wallets, security is actually one of it’s biggest benefits. Because virtual wallets eliminate the need to use credit card numbers, CVVs, or pins, it makes them impervious to hacking.
Convenience. With a virtual wallet, you no longer have to carry around a wallet or a purse. You will also never have to worry about forgetting a particular credit card or rewards card at home because they are all nicely organized on your phone.
Time-saving. Paying with a virtual wallet can also save you time. No more waiting for a salesperson to swipe your card or enter your number.
Contactless payment. Many virtual wallets eliminate the need to touch the germy buttons on a debit machine or pass your credit card from your hand to the merchant. It makes for a clean and touchless payment experience.
Cons:
Not universally accepted. One of the main challenges associated with using virtual wallets is that they aren’t accepted by all retailers.
Compatibility. Not all virtual wallets will accept all credit cards. While most mobile wallets are accepted by the big banks, some business credit cards might not be accepted. You can check with your bank or log onto the mobile wallet website to confirm which cards are accepted.
Trust. As I admitted, a lack of trust was the reason I put off using a virtual wallet. And, I know I’m not alone. While virtual wallets offer additional security over a credit card this is not necessarily the shared perception among all Americans.
Battery. Unlike a conventional purse or wallet, your phone requires battery power to be used. If your phone runs out of batteries while you’re shopping, you can’t make a purchase until you recharge.
Variability. Not all virtual wallets will allow you to store all of your card information. For instance, some e-wallets will permit debit and credit cards only while others will permit everything from credit cards to reward cards and airline tickets.
Who should use a virtual wallet?
Virtual wallets are available to anyone with a desktop or mobile device. However, when it comes to whether or not you should use a virtual wallet there are a few questions you can ask yourself to decide if it’s right for you.
Do you want to increase your security?
Virtual wallets provide additional security features that just aren’t available for plastic debit or credit cards. If you want encryption and multiple steps of authentication, then perhaps a virtual wallet is the right choice.
Do you value time savings and convenience?
If you enjoy online shopping, virtual wallets can save you a lot of time when it comes to paying for your purchases. No more time wasted on manually entering your credit card number, expiration date, and CVV code. I mean, we’re not talking days or weeks in time savings, but a few minutes here and there adds up over the long haul.
Are you always looking for your credit card?
A virtual wallet provides a single organized location for all of your payment information. So, if you’re someone who is constantly leaving your credit card in your coat pocket or forgetting to bring your rewards cards when you go shopping, a virtual wallet could help to keep you more organized.
Who shouldn’t use a virtual wallet?
While virtual wallets offer a number of perks, they aren’t necessarily the right payment tool for everyone. Here are a few additional questions to ask yourself to see if perhaps a regular old wallet or purse is a better option for you.
Do you feel comfortable with a virtual wallet?
While virtual wallets are growing in use, there is still a segment of Americans that don’t trust them. If you feel uncomfortable or unsafe using a virtual wallet then you shouldn’t. While virtual wallets are arguably safer than using a physical credit card or debit card, you should stick to using what you feel most comfortable with.
Are you very concerned with your privacy?
While a virtual wallet can add some additional security over a plastic credit or debit card, it also introduces some new privacy concerns. When you use your virtual wallet, retailers and financial institutions can potentially collect data on the types of purchases you are making. This can then be used to help retailers develop targeted marketing. I mean, this is already happening if you are using social media, but it’s something to be aware of.
Do you continually forget to charge your mobile device?
If you are notorious for walking around with a dead smartphone then maybe you should skip the virtual wallet. Bottom line, if your phone is dead you can’t pay for things.
Summary
Like any technology available for use, virtual wallets come with pros and cons. You will have to decide if the added security features and convenience outweigh any trust or privacy concerns that you might have.
It took me some time to become comfortable with the idea of using a virtual wallet. I was not one of the early adopters. I’m an old Millennial and I’ve been using physical debit and credit cards for decades. As a result, it took a lot of research and just trying it before I saw the perks. For me, the benefits outweigh the risks. But, it’s up to you to decide if a virtual wallet is right for you.
Editor’s note: This is a recurring post, regularly updated with new information and offers.
Of all the personal travel cards on the market, the one that offers the most perks and access is The Platinum Card® from American Express.
It’s also one of the most expensive cards due to its $695 annual fee (see rates and fees) — but you can get your money’s worth with lounge access, up to $200 in annual Uber credits (for use in the U.S.), up to $200 in airline incidental fee credits and a statement credit of up to $100 per year at Saks Fifth Avenue. Enrollment is required for select benefits.
If you’re like me and spend more than $100 a year at Saks Fifth Avenue, this is like money in the bank. Even those who don’t typically shop at Saks can find value in this credit, which resets every six months — meaning the second half of the yearly credit is available now.
If you associate Saks Fifth Avenue with $4,000 Prada dresses, you aren’t wrong. However, you might be surprised to find that they also offer much more reasonable and affordable items.
Let’s take a closer look and see what this credit offers.
How the Saks Fifth Avenue credit works
The credit is available as two $50 statement credits per calendar year. Your first $50 statement credit is available from Jan. 1 to June 30, and your second $50 statement credit is available from July 1 to Dec. 31.
You need to enroll for this benefit to take effect, which you can do through your online Amex account.
There is no minimum purchase required to trigger these statement credits, meaning you could make a purchase of $50 (or less) once every six months and not owe anything out of pocket once the credit posts to your Amex Platinum account. To many people’s surprise, Saks offers items costing $50 or less. While the merchant’s frequent sales drop the prices of all sorts of items to palatable levels, some items are always below that price point.
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There are some limits to this cardmember credit, however.
First, you must enroll before you can use it.
Second, the terms state that this Amex Platinum statement credit is valid at Saks Fifth Avenue online or at locations in the U.S. and U.S. Territories. It is not valid on Saks Fifth Avenue gift cards or purchases at outlet locations (in stores and online), and it excludes purchases at restaurants located within the store and online bill pay for Saks credit.
Third, there is a $100 minimum (before taxes) for free shipping. You could choose to meet that minimum to avoid the shipping fee of $9.95 for orders under $100. Some readers have had success by asking American Express for a goodwill credit through their online chat function, using something like this:
Saks Fifth Avenue no longer participates in ShopRunner, which used to offer free two-day shipping. Now I have to pay a $9.95 shipping fee on orders under $100, which reduces the value of the $50 statement credit on my Amex Platinum offered every six months. Can I request a goodwill credit in the amount of $9.95 to offset this?
Finally, you may have to wait up to four weeks after an eligible purchase is charged to your card for a statement credit to be posted. That’s because Saks typically won’t charge your card until after your item(s) ship, which means waiting until the last minute to use this benefit may mean missing out on the statement credit due to potential delays in shipping.
Read more: How to maximize benefits with the Amex Platinum Card
However, if you’ve made a qualifying purchase with plenty of time before the June 30 or December 31 deadline, you should receive your statement credit in an average of four days.
Maximizing your Saks Fifth Avenue credit
If you’re not an avid Saks Fifth Avenue shopper, you might wonder how you can best take advantage of this credit each year — especially since many items they sell are in the “outrageously expensive” category. Here’s how to find the sweet spots and get the most out of this Amex Platinum benefit.
Know what to buy
Yes, Saks is home to $1,695 Gianvito Rossi knee-high boots and a $3,850 Givenchy bomber jacket (both a bit out of most people’s price range). But you can also find plenty of great items for under $50.
For example, one of my favorite sunscreen primers, Unseen Sunscreen from Supergoop (an amazing travel primer if you’ll be out in the sun), costs around $40 for a 1.7-ounce bottle at Saks. You can also find products from popular makeup brands such as MAC and Benefit for under $50.
If you have kids, you can use your Saks credit for many adorable kids’ items, such as dresses, raincoats and shoes.
Take advantage of sales
If you watch for sales, you can score a great deal on Saks items that normally cost over the $50 semi-annual credit. The Saks website has an entire section dedicated to sales items.
Like any department store, sale items can be hit or miss, but you can find excellent deals if you’re patient. Even if you have your eye on a sale item costing more than $50, think of your Saks credit as a $50 coupon.
You can find all items currently $50 or less at this link.
Always use a shopping portal
Any time you shop online, start through a shopping portal to earn points, miles or cash back on your purchase on top of your Saks credit. Numerous sites operate as shopping portal aggregators, which compare rewards to see which portal makes the most sense for you to use.
Rakuten offers anywhere from 1%-10% cash back (or 1-10 Amex points per dollar spent) on Saks Fifth Avenue purchases, depending on current promotions.
Bottom line
Whether you’re obsessed with Saks Fifth Avenue or have rarely shopped there, you should take advantage of the $100 annual Saks credit offered by your Amex Platinum card. If you’re unfamiliar with the brand, it can be overwhelming to know how to maximize the credit (especially since it’s broken into two $50 credits each year). However, these tips will help you find the best options to utilize the available statement credits.
Not a current Amex Platinum cardmember? Check out our full Amex Platinum card review to see if it should be the next card in your wallet.
Additional reporting by Ryan Smith, Ryan Wilcox and Benét J. Wilson.
For rates and fees of the Amex Platinum, click here.
On 02 August 2005, my friend Frank and his partner awoke at 2:45 a.m. to the dog barking and a neighbor knocking on their door. The apartment complex was on fire. They grabbed their dog and whatever they could carry and ran from the building.
“We lost everything,” he says. Later they’d find out that it was arson. A former employee of the apartment complex stole rent checks and set the office on fire. Frank was moving into a new apartment in ten days, and the new complex agreed to let them move in early. “We moved in with a plastic bag of groceries, paid for with a $50 food voucher from the Red Cross,” he says. The other 70 displaced tenants stayed in Red Cross shelters.
To make matters worse, Frank didn’t have renters insurance. “We didn’t think we’d ever need it,” he says. “You don’t see why you should pay this extra bill until you’re in a situation where you need it.” They had to start over from scratch.
Why Renters Skip the Insurance
There are any number of reasons renters don’t think insurance is a necessary expense. I myself didn’t have a policy until Frank’s situation motivated me to get one. Common reasons renters forgo an insurance policy include the following:
“What are the odds anything will happen?” The odds are not in your favor. The Bureau of Justice Statistics reports that renters are 50 percent more likely to be burglarized than homeowners.
“My landlord has insurance.” That means that your landlord (or condo association) has their valuables — the building — protected. Your belongings are not covered.
“I can’t afford renters insurance.” Many people are willing to spend a couple hundred dollars on clothes, but won’t spend the cash to protect themselves from the risk of losing everything they own. It’s possible to find a policy for $10-12 per month, though your premium will depend on location, the deductible, the insurance company, and coverage needs.
There are ways to lower the cost of coverage, including raising your deductible (make sure you can afford it, though) and having protective devices such as smoke detectors, extinguishers, and security alarms. Some insurance companies offer discounts to senior citizens. Also look for a multi-line discount, which is a discount for buying more than one type of policy from the same company (e.g., renters insurance and auto insurance).
I suspect that the main reason most people don’t have a policy, though, is that they don’t understand how renters insurance works, or why they need it.
Renters Insurance 101
Renters need a HO-4 policy. Condominium owners need a HO-6 policy. Both will cover personal property loss from “named perils,” which is insurance-speak for what you’re insured against. Your policy will likely include the following named perils:
Fire and lightning
Windstorm and hail
Smoke
Vandalism and malicious mischief
Theft
Accidental discharge of water
Other named perils covered sound like scenes from Die Hard (explosion, riot, damage caused by air crafts and falling objects), but I suppose you never know when German radical activists might terrorize your Christmas party.
Renters insurance also includes liability protection, which covers medical expenses for a person injured on your property and legal defense, if necessary. Additionally, if your apartment or condo becomes uninhabitable due to a named peril, your coverage will pay for somewhere to live in the meantime.
What is not covered: If you live an an area prone to floods, earthquakes, or hurricanes, you may need to purchase a rider, or separate policy. Also, if you have valuables that would exceed your policy limit, such as expensive jewelry or antiques, you’ll need a rider to recover the full loss.
Buying a Policy
Shopping for renters insurance is similar to shopping for other types of policies. Here are the basic steps:
Take inventory. This seems to be the step that most of us dread, but it’s where we should start. (Confession: I haven’t done it yet. It’s been languishing on my to-do list for almost a year now, but I’m going to make it a top priority.) If you lost everything, it’d be awful to have to recall every item you owned and it’s value. Better to document it. Here’s the plan of action:
Photograph or videotape each room.
List the value and serial and model number of items.
Attach receipts, if you have them.
Save the list and the photos or video to a DVD, and make at least three copies. Keep one copy in a fireproof place, one at an off-site location (could be a parent’s house or a safe-deposit box), and send one to your insurer.
There also are software programs that walk you through the process. The Insurance Information Institute provides free inventory software that helps you complete a room-by-room inventory.
Prepare. Write down a set of questions you want to ask your potential insurance providers. Some suggestions include:
Do you have brochures or any information you can send me in the mail? (Keep the ones from insurers that appear to be a good fit and use them to compare each provider’s policies.)
What could cause my rates to increase?
What discounts do you offer?
Does the liability insurance cover legal defense and medical expenses?
Do you pay actual cash value (ACV) or replacement cost coverage? (ACV coverage pays what your property was worth at the time it was destroyed or stolen, minus the deductible. Replacement cost coverage pays what it will cost to replace the items, minus the deductible. It costs more in premiums, but pays more if you file a claim.)
Do you offer separate policies for roommates? (Alternatively, talk to your roommate about splitting the cost of a policy.)
Shop around. To find the right provider and policy, consider the following:
Contact the insurance company that provides your auto insurance policy. Ask about multi-line discounts.
Call your local bank. Some banks offer insurance policies.
Search “renters insurance” online. Most providers have Web sites that give you a free quote.
Ask friends and neighbors which company they use, and if they are happy with their experience.
Updating Your Policy
Renters insurance is like many other forms of insurance – not fun to think about. But it isn’t a Ron Popeil rotisserie — don’t set it and forget it. Stay in touch with your agent to make sure you’re getting the best deal and taking advantage of new options or discounts. Also, be sure to contact her if your living situation changes, as in the following situations:
You moved. Each residence requires a unique policy.
You got a roommate: human or furball. You’ll need to decide on a separate or shared policy for the former. Make sure the latter is listed in your liability coverage.
You bought an expensive bauble or a pricey new toy. You need to have it listed in your policy, or you might need a separate rider to cover it.
It’s easier than you might think to find an affordable renters policy with good coverage, and it’s time and money well-spent. As my friend Frank says, “It’s the cheapest bill you’ll have. For very little money, we could have replaced everything we lost.”
If you are a renter, do you have renters insurance? If not, is there a reason you don’t have it?
You’ve paid rent year after year and what do you have to show for it? Zilch. Zero. Nothing.
If you’re starting to dream about building equity, now is a great time to make the leap. Interest rates are still low, and real estate prices haven’t started to spike yet. Before you apply to a lender, though, there are a few things you should know.
Applying won’t damage your credit
“If you are shopping around for a mortgage and worried that the inquiries will ding your credit score, don’t worry,” said Roman Shteyn, co-founder of Credit-Land.com. “The credit bureaus know that people may go to different providers to check interest rates especially for a big purchase like a house. Loan inquiries within 30 to 45 days of each other for the same thing are lumped together and treated as a single request, and your credit score should not be impacted.”
Your past matters to lenders
They will look at previous mortgages on your credit report to determine your creditworthiness
“We all know a foreclosure has a negative impact on your credit score,” says Shteyn “but many people don’t realize a short sale can be damaging as well. It can knock your score down 85 to 160 points depending on your score at the time and how it was reported to the credit bureau.” Occasionally, a lender will agree to report a short sale as paid which will not negatively affect a credit score. But this is rare.
A short sale is not as bad as a foreclosure, which will make it more difficult to get a loan. It will remain on your credit score for seven years, and lenders will see this black mark whenever you apply for credit during this period.
Lenders handle couples with different credit scores in a special way
If you’re applying for a mortgage loan as a couple, the mortgage lender will check both of your credit reports and credit scores. The bank reviews your debt, the length of your credit history and current credit activity.
Paying bills late and too much debt can negatively impact a mortgage approval, plus influence the mortgage rate. However, some couples believe that they’ll receive a low interest rate as long as one person has excellent credit — but this isn’t always the case.
Typically mortgage lenders use the lowest credit score to determine the mortgage rate. Therefore, if you have a 790 credit score and your partner has a 670 credit score, you’re not likely to receive the most favorable rate due to your partner’s less-than-perfect credit history.
To ensure the best rate, both of you need to maintain good credit before applying for a loan. This includes paying bills on time, paying off debt and checking your credit reports for errors.
For a lender, there’s nothing like responsibility
Make other loan and debt payments on time, especially over the months leading up to the filing of your mortgage application. Every 30-, 60- or 90-day delinquency on a loan or credit card is going to reduce the credit score the lender considers as part of the loan file. That score, in turn, will determine how good a loan you get — if you get one at all.
You need to be strategic about your personal finances
Consider paying off more debt and putting down a smaller amount at closing. This move leaves borrowers with larger mortgages, but it will allow them to replace non tax-deductible, high-interest rate debt (like credit card debt) with lower-rate mortgage debt that features deductible interest.
If you have a financial setback and need to miss a payment on your other debts, miss the credit card payment first, followed by the payment on any installment loan you might have and finally, the payment for an existing mortgage. That’s because credit scoring systems look at the performance of similar loans first when deciding what type of score to assign.
Before you apply, think about the future
If your next few years are full of big life changes and multiple new financial obligations, apply for a mortgage first. Numerous credit inquiries, such as new applications for credit cards, can hurt a borrower’s credit score, especially if they’re filed in the months prior to the home loan review process.
The value of your potential home can make or break the deal
Sometimes it’s not your fault that your mortgage application is denied. If your home isn’t worth enough, lenders might not approve your request for a mortgage. Say you agree to pay $200,000 for a home and are asking for a mortgage loan of $190,000. If an appraiser determines that the home is worth only $160,000, a mortgage lender might not grant you a loan, even if you are willing to pay the higher amount.
The 3 big don’ts
We can talk about the things you should do when applying for a mortgage all day long, but realistically, avoiding the big mistakes should be your first concern. Here are five things you should remember.
Don’t make any big purchases over the next couple of months. It makes less money available for the down payment and it might require you to get yet another loan.
Don’t upgrade too fast. Lenders consider what’s known in the industry as “payment shock” when approving loans. Somebody who goes from a relatively small monthly housing payment to a huge one either won’t qualify for a mortgage or will end up having to cover too much loan with too little money.
Don’t just get pre-qualified for a mortgage, get pre-approved. Home buyers must allow their lenders to pull credit reports, check debt-to-income ratios and perform other underwriting steps. But that puts a borrower much closer to obtaining a loan and locking in a rate and term.
Average mortgage rates tumbled yesterday following a first-class inflation report. In some cases, they are now back below 7% for an excellent borrower wanting a conventional, 30-year, fixed-rate mortgage. Phew!
First thing, markets were signaling that mortgage rates today might fall but perhaps only a little. However, these early mini-trends often switch speed or direction later in the day.
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.122%
7.147%
+0.15
Conventional 15-year fixed
6.297%
6.321%
+0.1
Conventional 20-year fixed
7.34%
7.403%
+0.03
Conventional 10-year fixed
6.872%
6.985%
+0.05
30-year fixed FHA
7.065%
7.685%
+0.02
15-year fixed FHA
6.503%
6.972%
+0.16
30-year fixed VA
6.75%
6.959%
+0.25
15-year fixed VA
6.625%
6.965%
Unchanged
5/1 ARM Conventional
6.75%
7.266%
Unchanged
5/1 ARM FHA
6.75%
7.532%
+0.11
5/1 ARM VA
6.75%
7.532%
+0.11
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock a mortgage rate today?
The chances of mortgage rates falling far and for long later this year improved yesterday. That day’s inflation report helped a lot.
But I reckon we’ll probably need a heap more similarly rate-friendly data in order to bring about that significant and sustained fall. And, while it’s possible such a heap will be delivered quickly, it’s probably more likely we’ll see any improvements late this year or sometime in 2024.
So, my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCK if closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:
The yield on 10-year Treasury notes tumbled to 3.81% from 3.91%. (Very good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were higher. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $75.65 from $75.94 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices rose to $1,964 from $1,959 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — held steady at 81 out of 100. (Neutral for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might fall. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
What’s driving mortgage rates today?
Yesterday
Yesterday’s consumer price index (CPI) was a real tonic for mortgage rates. Comerica Bank’s chief economist said that “the fever is breaking“ for inflation.
And The Wall Street Journal (paywall) suggested: “Inflation cooled last month to its slowest pace in more than two years, giving Americans relief from a painful period of rising prices and boosting the chances that the Federal Reserve will stop raising interest rates after an expected increase this month.“
Note that the Journal’s writers (and many others) still expect a rise in general interest rates on Jul. 26. And that might limit how far mortgage rates can fall in the short term.
But other things could also limit the extent and duration of further decreases in mortgage rates. More and more people are talking up the possibility of a “soft landing.“ That refers to the Fed successfully driving down inflation without throwing the country into a recession.
But those of us wanting lower mortgage rates were kind of hoping for a recession. Of course, we didn’t want the bad stuff for the wider population. But mortgage rates tend to fall when the economy is in trouble and rise when it’s doing well.
So, while some falls in mortgage rates might be on the cards later in the year or in 2024, they might not be as big as we’d once been able to hope.
The rest of this week
This morning’s producer price index (PPI) for June was nothing like as important to mortgage rates as yesterday’s CPI. It and tomorrow’s import price index (IPI) are generally seen as secondary inflation measures. But, with markets hyper-sensitive to inflation news right now, they’re worth observing.
Today’s PPI was probably good for mortgage rates. The headline figure (PPI for final demand) came in at 0.1% in June, compared with the expected 0.2%. Just don’t expect it to have as positive an effect as yesterday’s news.
Please read the weekend edition of this daily report for more background on what’s happening to mortgage rates.
Recent trends
According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.
Freddie’s Jul. 6 report put that same weekly average at 6.81%, up from the previous week’s 6.71%. But Freddie is almost always out of date by the time it announces its weekly figures.
In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. Andwe now update this section on Fridays.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q2/23) and the following three quarters (Q3/23, Q4/23 and Q1/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. They were both updated in June.
In the past, we included Freddie Mac’s forecasts. But it seems to have given up on publishing those.
Forecaster
Q2/23
Q3/23
Q4/23
Q1/24
Fannie Mae
6.5%
6.6%
6.3%
6.1%
MBA
6.5%
6.2%
5.8%
5.6%
Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change, unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
There are lots of different ways to get a mortgage these days – you can walk into a physical bank branch, call a mortgage broker, or even start a loan application on your smartphone.
While the mortgage broker model isn’t new by any means, a company called “Credible” is shaking things up on that front, promising real-time mortgage rates from multiple mortgage lenders without the “annoying calls or emails.”
They also let you compare rates and close your loan all in one place. Let’s learn why this company is different and if they make sense for your mortgage needs.
Credible Launched Back in 2012
Company founded by former investment banker in 2012
Initially focused on student loan refinancing
Has since delved into personal loans, credit cards, and mortgages
Lets you compare personalized loan offers from multiple lender partners anonymously
Acquired by Fox Corp. in late 2019
The company is relatively new, having been founded less than a decade ago in San Francisco.
But that didn’t stop it from being acquired by none other than Fox Corp., better known for TV shows like The Simpsons rather than finances.
Originally a student loan marketplace, the company has since expanded to personal loans, mortgages, and credit cards.
Our focus will be the mortgage piece of the pie, this being a mortgage blog and all.
In late 2018, Credible announced a “first-of-its-kind mortgage marketplace” that offers actual rates to consumers in just two or three minutes, all without affecting the applicant’s credit score.
But that’s not all – you also get a streamlined origination platform that allows you to complete much of the loan process without leaving Credible’s website, similar to Rocket Mortgage.
Their digital process utilizes “smart logic” to cut down on the number of questions asked to borrowers, as well as documentation requests, by making sure they are pertinent to your unique situation.
Additionally, the Credible platform automates the collection of things like pay stubs, bank statements, and tax documents, making the application process both faster and easier to complete.
Many of these items can be gathered electronically by simply granting access to your financial institution, without having to exit the Credible website.
However, they also have licensed loan officers available to those who would like additional support along the way. And they don’t work on commission, so they should have your best interests in mind.
How Credible Works to Get a Mortgage
First, you tell them a little about yourself and your property, just like most other mortgage companies.
This includes your property address, whether it’s a primary, second, or investment home, property type, estimated value, and mortgage balance.
Next, they ask if you have a second mortgage or if you’re looking to take cash out in addition to refinancing your existing loan balance.
One neat feature is they provide estimates of your property taxes and homeowners insurance for you, but you can adjust those numbers if needed.
They then ask for a source of income and average annual income, along with how much you have in assets.
If it’s a home purchase loan, they’ll ask you how far along you are in the process (just looking or found a home, etc.), and what your down payment will be.
You can generate a pre-approval letter instantly and see how much you can afford based on your inputs.
Lastly, you enter your name, date of birth, and phone number, agree to their terms and conditions, and get your loan options.
They note that they take privacy seriously, and that they’ll NEVER sell your information to external companies, nor will you receive phone calls from lenders.
A Soft Credit Check Provides Accurate Rates
Once you click “See My Rates,” a soft credit check (doesn’t affect your credit score) is conducted to look up your credit history and credit scores to ensure your pre-qualified rates are accurate.
If any of their partner lenders have home loan options that fit your profile, you’ll see a notification on your Credible Dashboard within minutes.
Credible will also reach out via email, phone, or text, but only once they have received responses from all potential lenders.
Note that these are just pre-qualified rates, and you’ll still need to qualify, like you would any other mortgage.
Once you select a loan option, you will be asked to provide additional information, and a hard credit pull will take place (these do affect your credit).
If your credit and application pass muster, the mortgage lender partner will provide you with an offer that you can review.
Then you’ll begin the loan process by signing disclosures, providing financial and personal documentation, and so on.
What Types of Home Loans Does Credible Mortgage Offer?
They offer home purchase and refinance loans
Including conventional conforming and jumbo loan amounts
FHA, VA, and USDA loans don’t seem to be available at the moment
Credible has two main mortgage options available – Home Loans, which is designated for purchase transactions, and Mortgage Refinancing, which as the name implies is for refinancing an existing home loan.
This means both prospective home buyers and current homeowners can take out a mortgage using Credible.
In terms of loan types available, I’ve been told that they only offer conventional loans, aka non-government. That means no FHA, VA, or USDA. It’s unclear if that will change soon, but I assume it will.
They also offer jumbo loans, those that exceed the conforming loan limit.
So if your loan scenario fits those criteria, there’s a good chance their lender partners will provide you with pre-qualified rates.
Which Mortgage Lenders Does Credible Work With? And How Do They Get Paid?
The first two lenders to join Credible were Quicken Loans and UWM
There are now several others including loanDepot and Stearns
Credible acts as a mortgage broker and only gets paid if the loan funds
They receive a percentage of the loan amount from the lender who closes your loan
While they don’t list all the mortgage lenders they work with, they do displays the logos of Caliber Home Loans, JMAC Lending, loanDepot, Quicken Loans, Stearns Lending, and UWM.
Originally, they started with just Quicken Loans and UWM, so it’s possible there are even more lender partners today.
As noted, you don’t need to work with those companies directly, or talk to anyone at those companies.
Instead, you can continue to complete your loan application on the Credible website, or ask for assistance from a Credible loan officer.
This is similar to how a mortgage broker works – they handle everything and you never actually deal with the wholesale lender providing the financing.
In terms of how Credible gets paid, it’s also like how a mortgage broker gets paid. If and only if the loan funds, they receive compensation from the corresponding lender.
That means they don’t charge you any fees directly, but rather take a cut, which is a flat percentage of your loan amount, such as say 1% or 2%.
For example, on a $500,000 loan they might make $5,000 to $10,000, depending on the terms they have with their lender partner.
Should I Use Credible to Find a Mortgage?
If you like the idea of a mortgage broker in terms of shopping around
But don’t actually want to deal with a human being
Credible could be a good option for your home loan needs
Just note that they may not offer all loan types at this time
However they do come highly rated by both Trustpilot and the BBB
If you live in one of the states where Credible offers mortgages, you might be wondering if they’re a good choice.
They refer to themselves as “Your trusted online mortgage broker,” which highlights the fact that they aren’t a direct-to-consumer lender. Nor are they a mortgage lender at all.
Rather, they connect you to trusted lender partners and earn a commission if your home loan funds.
As noted, they don’t charge any fees directly, nor do they hit your credit report with a hard inquiry. Despite this, you get to compare real, pre-qualified rates from a variety of lenders in minutes.
So if you aren’t the type to shop around, but still want the benefit of shopping around, you could give them a whirl.
And you can take advantage of their digital platform, which should make the loan process easier, smoother, and quicker.
However, you’re still at the mercy of one of the lenders they match you up with, so customer experiences will certainly vary based on your unique loan scenario and the lender you’re paired with.
Another potential negative is they don’t seem to offer all types of mortgages – those looking for an FHA, VA, or USDA loan may want to search elsewhere until they add those loans to their stable of offerings.
In terms of customer satisfaction, they have an excellent rating on Trustpilot and an A+ rating with the Better Business Bureau.
They could be a good alternative to LendingTree, which provides a similar shopping experience without the ability to complete the loan process on their own website.
Credible vs. LendingTree
Credible
LendingTree
Type of business
Online mortgage broker
Mortgage lead provider
Compare mortgage rates from multiple lenders
Yes
Yes, but after providing contact info
Get pre-approved
Yes
No
Credit check
Soft pull
Soft pull
Do they sell your information?
Keep your data private
Share with lenders you are matched with
How they get paid
When your loan funds
After you fill out lead form
How to apply for a mortgage
Digital process via their own website
Depends on lender you match with
If you’ve checked out Credible, you might be wondering how it compares to LendingTree.
While the pair sound similar, they’re actually pretty different. Credible is an online mortgage broker that matches you up with wholesale mortgage lenders.
And LendingTree is merely a lead generation service that matches you with retail mortgage lenders.
The key difference is that Credible will be your loan guide throughout, and only gets paid once your loan funds.
LendingTree will simply share your information with multiple lenders, at which point you’ll need to pick one to work with. After that, LT is out of the picture.
Credible’s pitch is that you can shop anonymously, whereas LendingTree will provide your contact to multiple lenders upfront.
Additionally, Credible allows you to complete the entire loan process online with the latest digital tools, and even generate pre-approval letters instantly.
However, both services may match you with the same lender. For example, if you use either you could wind up getting your home loan from Rocket Mortgage.
Buying new furniture can be an exciting way to personalize and update your home, whether your taste runs towards a sleek, modern look, a funky boho vibe, or anything in between. But furniture can be expensive, so you’ll likely want to shop at the right time to get the best possible deal.
When precisely that is will typically vary based on what you are hunting for. Indoor furniture may be on sale in the winter and summer, but outdoor pieces may be marked down at the end of summer and in the fall.
To help you save a bundle on your new furnishings, no matter what you may be looking for, read on for smart intel and advice.
When Is the Best Time to Buy Furniture?
The best time of year to buy furniture depends on which kind of furniture you’re talking about. Here are some rules of thumb to keep in mind as you redesign your living space.
Indoor Furniture
Like many other manufactured goods, sales on indoor furniture are dependent on the release of new pieces: when a showroom needs to make room for next season’s stock, they put the older stuff on sale. New furniture designs tend to be released in spring and fall, which means the best sales happen at the end of the winter and summer seasons.
So for indoor furnishings like beds and couches, shopping at your local furniture stores in January/February and July/August and paying special attention to any seasonal or holiday sales may offer decent savings on the cost.
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Outdoor Furniture
Outdoor furniture, on the other hand, tends to be released in the late winter and spring between February and April. Shoppers might consider the earlier part of that range the best time of year to buy furniture for outdoor spaces in plenty of time for the long, sunny days of summer.
However, furniture shops also generally want to have that stock off their floor by August, which means there are usually some great outdoor furniture sales to shop over the summer and particularly towards early fall.
Custom Furniture
Having a piece (or three) hand-built to your specifications can bring your interior design dreams to life. However, on-demand, custom-built furniture typically costs more and is less likely to go on sale the way ready-made furniture does.
That said, buying custom furniture can be better for your budget in the long run if it means you won’t be itching to change your furniture again in a couple of years — or if it means your furnishings are of higher quality and, hopefully, a longer life. Plus, buying custom designs from a small business, or even an individual crafter, can feel more rewarding than purchasing something from a big-box store.
Recommended: Budgeting for Basic Living Expenses
Furniture Shopping on Holiday Weekends
As is true of many major purchases, holiday weekends and annual sales can offer excellent opportunities to buy furniture on the (relatively) cheap. Some holidays that routinely bring furniture sales include:
• Presidents Day
• Memorial Day
• Fourth of July
• Labor Day
• Black Friday and other winter holiday sales events.
Many retailers offer regular sales in addition to these events, so it’s always a good idea to watch for promotions. Signing up for the store’s email newsletter can help keep you apprised of their ongoing sales events, and many dealers also offer clearance stock year-round that could be worth perusing.
Recommended: 25+ Tips for Buying Furniture on a Budget
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General Furniture-Buying Tips
No matter what time of year you shop for your furnishings, the following tips can help you find a good deal and get the most for the money you do spend.
You can also benefit from them if you’re budgeting to buy a house and putting in offers; you want to get the best possible price if you’ll be filling a home with new furniture.
Being Patient
Furniture — especially furniture you want to keep around for a decade or longer — is a big purchase. It’s worth waiting to find the right piece rather than dropping a bunch of money on one that’s only okay.
If you’re furnishing your new home for the first time and need something fast, consider visiting a local thrift shop or surfing Craigslist. You might be able to find an inexpensive, pre-owned piece that’s only temporary, but still workable — and won’t eat too much into your budget.
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Shopping Around
With so many design aesthetics and price points to choose from, furniture shopping is not a time for brand loyalty. You likely shop around for the best deals on groceries or when looking to switch bank accounts, so apply the same principle here. Shopping around at different dealers can help you find the best deal for your needs, but also give you more ideas and inspiration when it comes to creating a cohesive look for your home.
Recommended: Passive Income Ideas to Build Wealth
Consider Shopping Online
Online shopping for furniture can open a whole new world of color and design options. Some discount furniture retailers don’t offer physical storefronts, which can make shopping a little tricky. Choosing certain pieces of furniture, like couches and armchairs, for example, may be easier if you try them before you buy them.
Many online furniture retailers do offer return policies, which can help make your purchase less stressful, knowing that if it doesn’t work out, you’re not stuck with the product. And at online stores that do have brick-and-mortar locations, you could visit in person, try out a certain model, and then order online later, which may give you a better opportunity to compare the pieces you’re considering side-by-side.
Asking About the Warranty
Since furniture does tend to be a major expense, you want to make sure it’s built to last and has some guarantee to go with that. Many furniture sellers do offer warranties (just as some home warranties exist), and the fine print may also specify what the return policy is. In short, it’s worth getting familiar with.
💡 Quick Tip: When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.
The Takeaway
Shopping for furniture during certain times of the year can help you save money on a potentially expensive project like furnishing your home. When budgeting to buy a house, furnishings are just one of many things to save for, so it’s a goal that might take a backseat to expenses that are essential to homeownership, like the down payment and monthly mortgage, among others.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Your first job thrusts you into the adult world and the tricky balancing act of managing your money. The key to a healthy, wealthy, and low-stress lifestyle is not to get rich, but to master this balance as early as possible.
Here are six money-related moves to make during your first job so you feel good about your future.
What’s Ahead:
1. Open a Checking Account and Set Up Direct Deposit
If you don’t have one already, you’ll need a checking account to safely store your money.
The two most common reasons Americans are hesitant to open bank accounts are a) they don’t think they have enough cash, and b) they want to avoid bank fees. But many banks won’t charge you a penny for opening an account. And as long as you maintain the required minimum balance, if there is one, you won’t get charged any low balance fees and might be able to avoid maintenance fees.
The next question would be: which bank? You might’ve heard shifty things about some brick-and-mortar banks in the headlines, so who can you trust? Chime® and LendingClub are two great online-only options for modern banking.
Chime
Designed to help young people build their savings while they bank, Chime offers a safe and rewarding place to keep the money from your first job — and even get it early.*
When you set up direct deposit with Chime, you may be able to get your paychecks up to two days in advance if you qualify for early direct deposit.3 What’s more, Chime not only doesn’t charge overdraft fees but will cover up to $200 in overdrafts for eligible accounts with a feature called Chime Spot Me®. If you overdraw, Chime will “spot” you the money and deduct it from your next deposit at no cost to you.5
For its simple tools and variety of features to help make your life easier when money is tight, this is an ideal first checking account.
Open a Chime account or read our Chime review.
* Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. 3 Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date. 5 Chime SpotMe is an optional, no fee service that requires a single deposit of $200 or more in qualifying direct deposits to the Chime Checking Account each month. All qualifying members will be allowed to overdraw their account up to $20 on debit card purchases and cash withdrawals initially, but may be later eligible for a higher limit of up to $200 or more based on member’s Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your limit. Your limit may change at any time, at Chime’s discretion. Although there are no overdraft fees, there may be out-of-network or third party fees associated with ATM transactions. SpotMe won’t cover non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. See Terms and Conditions.
LendingClub
If you want a bank with more features that’ll pay interest on your balance, check out LendingClub. LendingClub offers a fee-free checking account that earns interest and cash back.
LendingClub’s Rewards Checking account pays 1.00% APY on balances between $2,500 and $100,000 (and 0.15% on balances above this). It’s not much, but the interest will add up the more you deposit. Plus, you can earn 1.00% cash back on qualifying purchases you make with your LendingClub debit card. And like Chime, users may be able to get their paychecks up to two days ahead of schedule.
Open a LendingClub account or read our LendingClub review.
Related: Best No-Fee Checking Accounts
2. Get the Right Credit Card
Once you’ve opened a checking account, your next step is to apply for a credit card. This can be through your current bank or a new institution altogether.
As a good rule of thumb, you should look for cards that have no annual fees and come with benefits like cash back and free stuff. But as you’re browsing rewards cards, make sure you choose one that actually makes sense for your spending habits.
Most likely, a fancy metal card that offers a high rewards rate on one category wouldn’t be as useful to you as a more basic rewards card that offers less cash back on more categories. Watch out for high annual fees and high interest rates with any rewards card.
One of the best cash back credit cards out there is the Chase Freedom Unlimited®. We recommend this card for anyone looking to build their credit when they start earning money from their first job.
For starters, this card offers a wide array of cash back categories. These are:
5% back on travel booked through the Chase Ultimate Rewards® portal
3% on dining, takeout, and drugstore purchases
1.5% on everything else
For a card with no annual fee that you can qualify for with average or good credit, you can’t do a lot better.
Read our Chase Freedom Unlimited® review.
Secured Credit Cards
Depending on your income and credit score, you might not qualify for the exact card you want. Most unsecured credit cards like the Chase Freedom Unlimited® have income requirements and want to see a certain credit score from applicants. Frankly, it can be tough to meet these as a newbie.
Secured credit cards can be a great option for people applying for credit for the first time. These are called secured because they require a security deposit, which is used as collateral in the event that you can’t pay back your balance. Secured cards tend to be easier to qualify for than unsecured cards but help you build credit all the same.
The OpenSky® Secured Visa® Credit Card is one of the best secured cards out there. With this card, you’ll put down a security deposit of between $200 – $3,000 when applying and this will become your credit limit.
All of your payment activity is reported to the three major credit bureaus, so making your payments on time will set you up for success and a better credit score.
What’s unique about the OpenSky® Secured Visa® Credit Card is that it doesn’t require a credit check or affect your credit when applying.
Read our review of the OpenSky® Secured Visa® Credit Card.
3. Start Budgeting
Budgeting is like driving. When you’re first starting out, it’s awkward, anxiety-inducing, and decidedly un-fun. But eventually, it kind of becomes second nature.
Effective budgeting can help you save money and feel less stressed. Knowing precisely how much money you have and where it’s going means there are no surprises and helps you plan for your financial goals. But making a budget and following it is a whole lot easier said than done.
If you’ve ever tried and failed to stick to a budget, it’s probably because you weren’t using the right tools. Trust us when we say the right tool makes all the difference.
We recommend PocketSmith and YNAB to beginners. If you want to make sure the money you’re earning from your new job is being put to good use, start with one of these budgeting products.
PocketSmith
PocketSmith is not your average budgeting app.
Yes, it’ll track your income and expenses and sound warning bells when you’re about to go over budget. But its most unique and useful feature is financial forecasting. With this, can insert a “dummy expense” and see how it’ll affect your finances as far as 30 years into the future. For example, if you want to go on a $3,000 vacation, you can see how much of a hit your money will take a year or two from now from that trip.
This feature is especially helpful for people with a new source of income.It takes a lot of practice to learn what you can afford to buy with each paycheck, and PocketSmith can save you from making some costly mistakes.
Start budgeting with PocketSmith or read our Pocketsmith review.
YNAB
You Need a Budget (YNAB) makes zero-based budgeting not only possible but simple. By linking your bank accounts, the app pulls information about your cash flow to quickly show you how much you have to spend. Then, you “give every dollar a job” each month by allocating all of your money to different spending and expense categories. Throughout the month, YNAB logs your transactions for you to help you stay on track in each budgeting category.
YNAB offers a variety of visuals and resources to help you figure out what you’re doing as you’re doing it. If you’re budgeting (or even just making money) for the first time and want to start out on the right foot, this tool is for you.
Start budgeting with YNAB or read our YNAB review.
4. Start Building Good Credit
You’ve probably heard a used car commercial say: good credit, bad credit, no credit, no problem! So what exactly is “credit,” why is it important, and how can you build it?
Your credit score is a three-digit number between 300 and 850 automatically assigned to you and updated regularly by the big three credit bureaus: Equifax, Experian, and TransUnion. Each bureau will have a slightly different score for you, but they’ll be roughly the same. Your score essentially tells financial institutions how reliable you are and how likely you are to actually pay your debt.
Having good credit throughout your 20s and 30s pays off big time. For example, if you take out a $25k auto loan with a credit score of 750 instead of 650, you could end up paying ~$6,000 less in interest over 60 months.
Thankfully, building credit is pretty simple if you’re consistent.
Here are the two main things you can do to build good credit:
Spend less than 30% of your credit limit each month on your card – this is called your credit utilization ratio and it says a lot to lenders about how responsible you are
Pay your balance in full and on time – set up automatic payments to avoid missing due dates
Related: How To Build Credit the Right Way
5. Open a Retirement Account
Is it ever too early to think about retirement? Nope! In fact, opening a retirement account as soon as you get your first job is one of the best decisions you can make.
A retirement account is a specialized savings account that you add to while you’re working and withdraw from when you retire.
The sooner you open a retirement account, the longer your money has to mature and earn interest (and interest on that interest).
How much interest you earn depends on the type of retirement account you open. The two most common types of retirement accounts are 401(k)s and IRAs.
The main difference between a 401(k) and an IRA is that your employer opens a 401(k) on your behalf but you open an IRA yourself. Some employers will match your 401(k) contributions up to a certain percentage each year. 401(k)s are common for full-time employees on payroll and IRAs are more common among self-employed folks.
If your employer doesn’t offer 401(k) options, you can open an IRA yourself pretty easily.
So after you open an account, now what? Your bank can manage your retirement accounts for you or you can hire a third-party advisor to take over.
There are a lot of ways to go about getting help managing and optimizing your retirement accounts, but one of the best options for beginners is a robo-advisor.
A robo-advisor is an automated platform that uses an algorithm to help advise your investments. Blooom and Betterment are two of our favorites.
Related: How To Figure Out What Retirement Account To Open First
Blooom
Like other “robo-advisers,” blooom uses AI to optimize your retirement accounts.
To get started, you give blooom information about how much risk you’re willing to take with your investments and when you hope to retire. Maybe retirement is the last thing on your mind now that you’ve started a new job, but it shouldn’t be.
With blooom, there’s no pressure to know what you’re doing with your retirement accounts. The platform will make recommendations to make your 401(k) or IRA more profitable, rebalance your investments, and save more by avoiding hidden fees. They’ll even suggest an investment strategy for you and help you set goals.
Blooom can help manage both employee-sponsored 401(k)sand Roth IRAs at an incredibly low rate.
Start investing with blooom or read our blooom review.
Betterment
Betterment is another great choice. This robo-advisor can help you pick the right retirement accounts for your needs from a list of options. If your go-to retirement account is an IRA, Betterment can help you choose between traditional IRAs, Roth IRAs, and SEP IRAs.
To get started, all you’ll need to do is answer a few questions, and Betterment will build and manage an investment portfolio for you that aligns with your retirement goals. Then, they’ll handle rebalancing and managing your investments too according to your goals. Plus, Betterment offers tax-smart tools to help ensure your investments are always working efficiently.
Start investing with Betterment or read our Betterment review.
6. Sign Up for Health Insurance
Most medium- to large-sized employers offer health insurance and automatically deduct your premiums from your paycheck. Sometimes your company’s health insurance is optional and sometimes it’s required. Usually, you can save when you get health insurance through your work because employers can negotiate better benefits and premiums from providers.
Once you opt in, you’ll receive a benefits package detailing everything your insurance covers. Take the time to read through this carefully because understanding the benefits and perks of your plan can seriously pay off.
For example, one common perk of employer-sponsored health insurance is free or subsidized gym memberships, which can save you hundreds annually. You might also be able to save on everyday health items you buy anyway.
Choosing Health Insurance
If your employer doesn’t offer health insurance benefits, you’ll probably want to get some health insurance on your own to protect yourself from medical debt. Policygenius can help you choose the right provider for you.
Policygenius aggregates insurance quotes for any type of insurance you may need, ranging from auto insurance to life insurance to pet insurance. Basically, it does the hard work of comparison shopping for you.
The site saves you time and money by showing you only the best health insurance offers based on your answers to a few basic questions about what you’re looking for. Your privacy is protected and your personal details are not shared with any companies until you sign up.
Get insurance through Policygenius or read our Policygenius review.
Related: How To Pick a Health Insurance Plan
Summary
Becoming happy and well-off isn’t a matter of making money, but managing it. Making these six smart money moves when you get your first job shouldn’t take you more than a few hours and a few hundred bucks, and will accelerate you on your path to financial freedom.
Focus on doing these things – and doing them right – soon after you get that first paycheck.
Kris and I went grocery shopping this weekend. We stopped at Bob’s Red Mill — a local health-food store — to use some “buy one, get one free” coupons. “You can get anything you want,” Kris told me, “except hot cereal.”
“Why can’t I get hot cereal?” I asked. “I love hot cereal.”
“I know,” Kris said. “But you buy it all the time. You buy it faster than you eat it. Just last week, you bought another box of that blueberry oatmeal from Trader Joe’s. You never remember what we have at home. You need to shop with a list.”
She has a point.
A shopping list is a useful way to remind yourself what you do and do not need to purchase. But most frugality experts emphasize shopping with a list because it prevents impulse purchases. Impulse purchases wreck grocery budgets. In Why We Buy: The Science of Shopping, Paco Underhill writes:
Supermarkets are places of high impulse buying for both sexes — fully 60 to 70 percent of purchases there were unplanned, grocery industry studies have shown us.
More than half of all grocery purchases are unplanned! No wonder creating and sticking to a list can bring down grocery costs.
But that’s not the only way to save money at the supermarket. Over the past two years, I’ve published a lot of tips for saving money on your grocery bill. Some of these have been obvious — others less so. All of them can help you save at the supermarket. Here are some of the best:
Make a List — and Stick to It.
This is the cardinal rule of shopping. The list represents your grocery needs: the staples you’re out of, and the food you need for upcoming meals. When you stray from the list, you’re buying on impulse, and that’s how shopping trips get out of control. Sure, a magazine only costs $5, but if you spend an extra $5 every time you make a trip to the supermarket, you waste a lot of money.
The biggest package isn’t always the most cost-effective. Stores know that consumers want to buy in bulk, and so they mix it up: sometimes the bulk item is cheaper, sometimes it’s more expensive. The only way you can be sure is to take a calculator. Our grocery store posts unit pricing for most items, which makes comparisons easy.
Ditch the Basket or Cart.
If you’re dashing into the supermarket to pick up milk and bread, don’t use a basket. Baskets induce people to buy more. If you’re limited to what you can carry, you’re more likely to avoid impulse purchases. Only use a basket (or shopping cart) if it’s absolutely necessary.
Don’t Examine Things You Don’t Need.
The more you interact with something, the more likely you are to buy it, says Paco Underhill in Why We Buy: “Virtually all unplanned purchases…come as a result of the shopper seeing, touching, smelling, or tasting something that promises pleasure, if not total fulfillment.” Do you know why grocery stores place those displays in the aisles? To intentionally block traffic. They want to force you to stop, if only for a moment. It only takes a few seconds of idly staring at the Chips Ahoy! to convince you to buy them. Stay focused.
Live on the Edge.
Health-conscious shoppers know that the perimeter of the store is where the good stuff is. The baked goods, dairy products, fresh meats, and fruits and vegetables are generally placed along the outside edge of the supermarket, while the processed stuff can be found up and down the aisles. But shopping the edges isn’t just healthier — it’s cheaper too. Stock up on the fresh food first, then venture to the middle of the store.
Discard Brand Loyalties.
Be willing to experiment. You may have a favorite brand of diced tomatoes, for example, but does it really matter? Go with what’s on sale for the lowest unit price. You may find you like the less expensive product just as well. If you try a cheaper brand and are disappointed, it’s okay to return to your regular brand.
Choose Generic.
Better yet, try the store brand. Generic and store brand products are cheaper than their name-brand equivalents and are usually of similar quality. But do you know why you’re reluctant to try generics? The power of marketing. Most generics have unappealing packaging. If they cost less and taste the same, who cares?
Use Coupons Wisely.
Coupons really can save you money. But you have to know how to use them. Clip coupons only the things you need — staple foods and ingredients — not for processed junk food. Learn to use special coupons. Once each month, one local store sends us a “$10 off a $50 purchase coupon”. We know it’s coming, so we plan our trips around it.
Make One Large Trip Instead of Several Small Ones.
Each time you enter the grocery store is another chance to spend. By reducing the frequency of your trips, you’re not only avoiding temptation, but you’re also saving money on overhead (time and fuel).
Buy From the Bulk Bins.
Some stores offer bulk bins filled with baking ingredients, cereal, and spices. When you buy in bulk, you get just the amount you need, and you pay less. Much less. (One GRS reader recently shared how he saved over $150 by buying spices in bulk.)
Check Your Receipt.
Make sure your prices are scanned correctly. Make sure your coupons are scanned correctly. Sale items, especially, have a tendency to be in the computer wrong, and yet few people ever challenge the price at the register. You don’t need to hold up the line: simply watch the price of each item as it’s scanned. If you suspect an error, step to the side and check the receipt as the clerk begins the next order. If there’s a problem, politely point it out. It’s your money. Ask for it.
Shop Alone.
In Why We Buy, the author notes that people tend to buy more when shopping in groups than when shopping alone. “But men are especially suggestible to the entreaties of children as well as eye-catching displays.” Kris complains that we always spend more on food when we shop together. She’s right. If possible, shop alone.
Use a Grocery Price Book.
A grocery price book is an ongoing list of the items you most commonly purchase and how much you paid for them. This list allows you to detect price cycles, spot bargains, and plan your shopping trips for maximum savings. A price book allows you to practice strike-point shopping.
Shop on a Full Stomach.
Studies show that folks who shop when they’re hungry buy more. This is certainly true for me: If I go to the store for milk on a Sunday morning without eating breakfast, I’m likely to come home with donuts and orange juice and Lucky Charms, too.
Walk or Bike.
In our recent discussion about how to pay yourself first, Ross Williams suggested another way to reduce impulse purchases. By walking or biking to the store, you can automatically limit your spending. “It’s amazing how focused you can be when you are limited to one shopping bag full of groceries,” he writes. “Once you are very conscious of each purchase, it seems to carry over even to the small items where space isn’t really an issue.”
Any of these tips can help a savvy shopper save money at the supermarket. But when combined to create a cohesive shopping philosophy, they have the power to slash your grocery budget significantly. I’m not promising that you’ll be able to feed yourself for $15 a week, but you might be able to save enough money pay down your debt or to jump-start your savings!
Here are some related articles:
Kris requested I offer some final pointers for the gentlemen. “Check with your wife before you go shopping,” she says. “Check with your wife before you put anything into the cart. And remember: Just because you like a food doesn’t mean you need to buy it every time you go shopping.”