The proliferation of special-purpose credit programs should help increase homeownership rates among Black households, but it won’t happen without specialized expertise and intentionality, according to industry leaders.
The products have gained traction in the aftermath of 2020 racial justice protests following the death of George Floyd as businesses attempt to address wealth disparities between Blacks and whites. Since the end of the Great Financial Crisis, the difference in homeownership rates between Black and white households has widened, with the 2020 gap exceeding the difference that existed in 1960.
But offering SPCPs is not about doing “a good thing,” according to Nikitra Bailey, executive vice president of the National Fair Housing Alliance. They ought to be a business priority moving forward as well.
“We know that seven out of 10 future borrowers are going to be families of color,” she said at a September roundtable discussion organized by four government regulating agencies. “This is actually about the health and the financial safety and soundness of our mortgage market.”
Financial institutions that have taken the initiative to introduce SCPCs in the past two years say that success depends not only on having more minority loan and banking officers. Desired outcomes can only occur by bringing to the table historical knowledge and sensitivity to enable effective communication with the stakeholders they’re meant to serve. Those types of efforts may require a shift in the typical approach to customer acquisition and originator compensation.
“We’re building the trust within the community, recognizing that there’s still a level of mistrust with banks amongst minority communities,” said Michael Innis-Thompson, senior vice president and head of community lending and development and fair lending center of excellence at TD Bank, which has offered SPCPs since early 2022.
Recognizing the need to have professionals who both look like and can relate to their likely clients, TD created a network of community mortgage loan officers serving as “credible intermediaries” to help build that trust, Innis-Thompson said.
With community loan officers focused on outreach to low-to-moderate income people of color, “their payment structure is designed, so that they have a salary to compensate for the additional community work they do on top of loan commissions, versus a standard loan officer that’s on pure commission,” he said.
“There’s an incentive for them to continue to develop these relationships, and we designed it specifically that way.”
Much of the work involved with strengthening SPCPs entails finding partnerships in neighborhoods. With a great deal of nuance in each program as well as differences between individual SPCPs, there’s a fair amount of education required before the first transaction can take place, according to Dale Baker, president of home lending at KeyBank.
“We do sit down with Realtors, we do work with various community groups, trade associations, affinity groups, faith based organizations, to provide education. And, in exchange they help us with getting the information out to their members, constituency, et cetera, in order to take advantage of this funding,” he said. Baker also added that KeyBank has received interest from loan officers themselves who want to join the company as a result of their bringing SPCPs to the market.
The most constructive partnerships make the work for lending officers simpler, thanks to the backing of influential sources.
“When you’re dealing with community organizations, for example, those are trusted intermediaries that potential homebuyers go to. When they’re sharing the information, they consider it credible.” Innis-Thompson said.
The work behind special-purpose credit programs don’t end once the loan closes, but require regular monitoring to improve upon them. While the fine details may seem complicated, having analysts who can examine processes and identify missed opportunities is vital toward fulfilling the mission SPCPs were created to address. Even after their programs rolled out, lenders continue to sort through their data to see if they failed to offer the program to an eligible borrower.
“That’s a key point about any special-purpose credit programs — monitoring to see if it’s really having the effect that it was designed to have,” Innis-Thompson noted.
As borrowers gear up for federal student loan bills resuming this fall, they face a revamped landscape that includes a new repayment plan, servicer switches and long call wait times. Another imminent concern: scammers who want to take advantage of the moment.
“Whenever there’s confusion in the marketplace, that’s when the criminal fraudsters get active,” says Clayton LiaBraaten, senior executive advisor at Truecaller, an app that blocks spam calls.
Borrowers need to protect themselves, even as regulators crack down on scammers. In August, the Federal Trade Commission (FTC) caught a group of scammers who brought in roughly $8.8 million with false promises of “Biden Loan Forgiveness” in exchange for hefty upfront fees. The group claimed to be affiliated with the U.S. Department of Education and primarily targeted borrowers via calls and texts, the FTC said.
If you receive an unsolicited call or text about your student loans, it’s probably a scam. Here’s how to spot and avoid a student loan repayment scam — and what to do if you think you’re a victim of one, according to experts.
What to watch out for
Student loan scams vary widely, but they often contain a few key ingredients. Here are some common red flags.
Advertising from the ‘government’
Scammers will often use the word “federal” in their communications, LiaBraaten says. They might claim federal or government affiliation, or they could claim to be connected with the Education Department or your student loan servicer.
Aggressive advertising language can also indicate that communication isn’t from the government.
“If you are a student loan borrower, you need to be aware that the federal government isn’t soliciting you,” says Leslie Tayne, a financial debt attorney. “If it sounds like a sales pitch with guarantees and promises, that’s not coming from the federal government.”
Relief that costs money
If someone asks you to pay an upfront or monthly fee to access debt relief, it’s a scam.
It’s always free to enroll in or benefit from any legitimate federal student loan relief, such as income-driven repayment (IDR) plans, borrower defense to repayment, Public Service Loan Forgiveness and the IDR account adjustment.
And if you have questions about your loans or repayment options, you can call your servicer for free guidance.
Promises that are too good to be true
Keep your guard up if you receive calls with promises of instant student loan relief. Most federal relief programs require at least a decade of payments to qualify — and no company or person has the ability to negotiate a special deal with your loan servicer or the government, warns the Education Department.
“Legitimate loan forgiveness programs usually have these strict eligibility criteria, so any sort of instant forgiveness is a red flag,” says Ally Armeson, program director of the nonprofit Cybercrime Support Network. Scammers see an opportunity with people panicking around repayment and try to position themselves as saviors, she says.
How scammers reach you
Student loan scammers can get creative with their contact methods. Here are a few to watch out for.
Robocalls
Think twice if your phone rings with an unknown number. In the first half of September, scammers placed more than 350,000 student loan-related robocalls, according to Transaction Network Services, a financial infrastructure firm.
“Beware of unsolicited calls or communication,” Armeson says. “That is the number-one way that a scammer will weasel into your life.”
Snail mail
Scammers may also send letters through the mail. Read them closely. Even if it seems official or formal, a scam letter will often include grammatical or spelling errors, the Education Department says.
Texts and social media
Increasingly, scammers are also targeting borrowers with texts and social media messages, Tayne says. Scams that began on social media have accounted for $2.7 billion in reported losses since 2021, more than any other contact method, the FTC said earlier this month.
Official Education Department text messages will only come from the numbers 227722 or 51592.
Email
Scammers may try to sneak into your inbox. If an email looks suspicious, double-check the sender.
Legitimate emails from the Education Department will only come from these senders:
Protecting yourself from a student loan scam
Don’t engage if you receive a call about your student loans out of nowhere. Hang up if it’s a robocall; if a person is on the other side, quickly end the call.
“If someone says they are from a specific agency, department or loan servicer, just say, ‘you know what, let me hang up and do my research, and I’ll go from there by myself,'” Armeson says.
If you get an email or text about your student loans, don’t click on any links.
Use strong passwords and enable two-factor authentication on all of your online financial accounts, including your StudentAid.Gov and student loan servicer accounts, LiaBraaten says.
Never share your login information. With just your username and password, scammers can sign legally binding student loan documents electronically and make changes to your federal student loan account.
The Education Department and your servicer will never ask for your password.
What to do if you’re a student loan scam victim
If you believe a scammer has targeted you, immediately stop communicating with them. Then, take the following steps to get help and protect yourself from any further harm:
Contact your student loan servicer. Call your servicer and tell them what happened. Check the status of your loan and ask if the scammer did anything to your account.
Call your bank and credit card company. Ask them to stop any payments to a scammer.
Change your passwords. Change all passwords associated with your financial accounts and student loans, like your StudentAid.gov and servicer accounts.
Monitor your finances. Check to see if anyone has opened an unauthorized account or line of credit in your name.You can check your credit report for free each week on AnnualCreditReport.com.
Consider freezing your credit. If you think the scammer may have personal information, like your Social Security number, freeze your credit to prevent identity theft and fraud.
Save all communication records. If the scammer has texted or emailed you, save these records to send the information to the FTC and other law enforcement agencies.
Report possible scams to the FTC, which may use the report to spot trends, educate the public and bring cases against fraudsters in partnership with more than 2,800 law enforcement organizations.
If scammers took your money, the FTC will also give you advice on how to recover it. “The quicker you act, the better your chance of getting your money back,” the FTC website says.
You can also report the student loan scam to your state’s attorney general’s office or the Consumer Financial Protection Bureau for further assistance and investigation.
Many people are lured into the world of real estate investing by stories of millionaires who started their journey with no money down or no steady employment. But the reality is that making money in real estate isn’t easy; a good credit score, investment capital and steady income can help in the beginning.
You’ll also need to grasp the nuances of the local real estate market and learn how to manage financial aspects such as cash flow and property taxes. While real estate buying, selling, and renting may not be much like a game of Monopoly, it is possible to earn steady side income, supplement your retirement, or even build a full-time real estate investment business with the right tools, knowledge, and patience.
Unlike mutual funds, the stock market, cryptocurrency or many other investments, real estate is tangible. Real estate is a concrete asset—one can see, touch, and even reside in. That gives investors a sense of security. However, it also creates unique challenges.
Managed well, the stability and passive income from rental properties can be a safety net against more volatile investments.
This guide is here to clarify the process for beginners. It aims to empower you to make informed decisions, reduce risks, and lay a strong foundation for your real estate investing journey.
Benefits of Investing in Real Estate
The allure of real estate goes beyond the mere ownership of tangible assets. It presents a robust suite of financial benefits that have the potential to amplify wealth and provide stability in uncertain times. As we navigate the advantages, it becomes evident why many seasoned investors prioritize real estate in their portfolios.
Steady and Passive Income
Real estate investing, especially in rental properties, stands out for its potential to provide a consistent revenue stream. When you own a rental property, the monthly or quarterly distributions from tenants contribute to steady income, which can safeguard your finances against unexpected events or economic downturns.
This consistency contrasts with the often erratic nature of the stock market, which can fluctuate daily based on global events, company performances, and other factors. Additionally, for those aiming to attain financial freedom, the passive income generated from real estate can be a step closer to achieving that goal. Over time, as the mortgage payment decreases or remains static, rental rates may rise, increasing your monthly cash flow.
Appreciation Potential
Every investor dreams of their assets appreciating, and real estate often doesn’t disappoint. While there can be periodic downturns in the real estate market, historical trends suggest that properties generally gain value over the long run.
This means that not only can investors benefit from rental income, but they can also potentially see substantial gains when they choose to sell the property.
Tax Benefits
Navigating the world of taxes can be intricate, but real estate investors often find several advantages here. The ability to deduct mortgage interest and property taxes from taxable income can be a significant financial boon.
Furthermore, strategies like depreciation allow real estate investors to offset rental income, reducing their tax burden. Consulting with a financial advisor can help investors maximize these benefits and understand other potential tax advantages, such as 1031 exchanges or deductions related to property management.
Diversification
The saying “don’t put all your eggs in one basket” is sound investment advice. Diversification is a fundamental strategy to mitigate risks. By adding real estate to an investment portfolio, investors introduce a separate asset class that doesn’t directly correlate with the stock market or mutual funds. This can provide a buffer, ensuring that a downturn in one sector doesn’t wholly derail an investor’s financial trajectory.
Leverage
Leverage, in the context of real estate investing, refers to the ability to use borrowed capital to increase the potential return on an investment. When you purchase property with a mortgage loan, you’re often putting down only a fraction of the property’s total cost, while still reaping the benefits of its entire value in terms of appreciation and rental income.
This magnifies the return on investment, as the gains and income generated are based on the property’s total value, not just the down payment. It’s a powerful tool but should be used wisely. Over-leveraging or not accounting for potential rental vacancies can turn leverage into a double-edged sword.
Types of Real Estate Investments
As one dives deeper into the world of real estate, it becomes evident that this asset class is multifaceted, with various avenues to explore and invest in. The right choice often depends on an investor’s goals, risk tolerance, budget, and expertise. Here’s a closer look at some prominent types of real estate investments:
Residential Properties
Residential properties cater to individuals or families. They range from single-family homes to duplexes, triplexes, high-rise buildings with apartments, and other multi-unit properties. You may encounter the term “MDU” or “MUD,” which stand for multi-dwelling unit or multi-unit dwelling, to describe anything more than a single family home, or SFR (single family real estate).
Investing in residential real estate, especially the SFR market, is often a beginner’s first step due to its familiarity and the perpetual demand for housing. While these properties can be a reliable source of rental income, investors should be prepared for the challenges tied to property management, tenant turnover, and ongoing maintenance.
Commercial Real Estate
When one thinks of skyscrapers lining city horizons or sprawling office parks in suburban locales, that’s commercial real estate. These properties are tailored to businesses, and can include complete corporate headquarters or individual offices.
Commercial leases often run longer than residential ones, offering the potential for stable, long-term rental income. However, the entry point can be higher, with larger down payments and a more extensive due diligence process. Additionally, commercial real estate values can be closely tied to the business environment of the locality.
Industrial
Industrial real estate encompasses properties like warehouses, distribution centers, and manufacturing facilities. They’re integral to business operations, ensuring products move efficiently from manufacturers to consumers.
Investing in this sector can offer substantial rental yields, especially if the property is strategically located near transportation hubs. However, the nuances of industrial real estate, such as zoning laws and environmental concerns, necessitate a more in-depth understanding than residential or commercial sectors.
Retail
This sector includes shopping malls, strip malls, and standalone stores. What’s unique about retail real estate is that leases sometimes include a provision where the landlord gets a percentage of the store’s profits, termed as “percentage rent.”
In a thriving commercial area, retail properties can be quite profitable, with long-term leases and the potential for appreciating property values. However, investors should be mindful of shifts in consumer behavior and the evolving retail landscape, especially with the rise of e-commerce.
Multi-Purpose Commercial
A new breed of commercial real estate has emerged to compete with the growth of e-commerce. Multi-purpose commercial spaces blend housing units with office space and retail, often adding hospitality and entertainment venues.
Typically, these spaces are the domain of large real estate investment and property management firms. But if you invest in commercial office space or retail, you will be competing with these multi-purpose properties for tenants, so they are worth acknowledging.
Real Estate Investment Trusts (REITs)
For those not keen on direct property ownership, REITs present an attractive alternative. These are companies that own, operate, or finance income-producing real estate across various sectors. What makes REITs distinctive is that they’re traded on stock exchanges, similar to stocks.
By investing in a REIT, you’re buying shares of a company that manages a portfolio of properties, thus gaining exposure to real estate without the hassles of property management. Moreover, by law, REITs are required to distribute at least 90% of their taxable income to shareholders, leading to potentially attractive dividend yields. However, it’s essential to remember that like all publicly traded entities, REITs can be subject to market volatility.
9 Ways to Invest in Real Estate
Investing in real estate can seem tricky for beginners. But, with time and patience, anyone can master it. Focus on simple investment methods first to get to know your local property scene, meet experienced investors, and learn how to handle money wisely. As you learn and grow, you can dive into more complex investment options.
Here are some great ways for beginners to start in real estate:
1. Wholesaling
Acting as the bridge between property sellers and eager buyers, this method primarily focuses on securing properties at a rate below the prevailing market value. The secured contract is then transferred to an interested buyer, ensuring a margin for the wholesaler.
2. Prehabbing
Unlike intensive property renovations, prehabbing is about amplifying a property’s appeal through minimalistic enhancements. These properties, once given their facelift, usually attract investors with a keen eye for larger renovation projects.
3. Purchasing Rental Properties
An avenue promising consistent returns, this involves acquiring properties to lease them out. For those not inclined towards the intricacies of landlord duties, there’s always the option of hiring seasoned property management professionals.
4. House Flipping
A strategy that has garnered significant attention, house flipping involves a cycle of purchasing, upgrading, and promptly reselling properties, aiming for a profit. The emphasis is on swift transactions and keen market acumen.
5. Real Estate Syndication
Envision a collective where like-minded investors come together, pooling both resources and expertise. Such collectives venture into large-scale property acquisitions, and the ensuing profits or rental incomes are distributed among the participants.
6. Real Estate Investment Groups (REIG)
Primarily, these are conglomerates that steer their operations around real estate investments. By amassing capital from a plethora of investors, they dive into acquisitions of sizeable multi-unit residences or commercial holdings.
7. Investing in REITs
Real Estate Investment Trusts (REITs) revolve around the ownership and meticulous management of properties that yield income. However, investors don’t have to handle the management themselves. Instead, participants can relish the benefits of the real estate sector without the responsibilities of direct property ownership.
8. Online Real Estate Platforms
A fusion of technology with real estate, these platforms seamlessly connect potential investors with vetted property developers. This synergy enables backers to finance promising property ventures and, in exchange, enjoy periodic returns that encompass interest.
9. House Hacking
A blend of homeownership and investment, house hacking is about maximizing the potential of a multi-unit property or a single-family home. Investors live in one segment while leasing out the remaining portions. This dual approach can significantly reduce or even negate monthly housing expenses, serving as an excellent introduction to the world of property management for novice investors.
6 Steps to Get Started in Real Estate Investing
Starting on the path of real estate investing requires careful planning, due diligence, and a methodical approach to ensure that your investments are sound and have the potential for fruitful returns. Whether you’re dreaming of becoming a millionaire real estate investor or merely looking to diversify your investment portfolio, following a structured process can be the key to success. Here’s a step-by-step breakdown:
1. Assess Your Financial Health
Every investment journey should begin with introspection. As an aspiring real estate investor, it’s essential to have a clear understanding of your current financial standing. Ask yourself questions like:
How much capital am I willing to invest?
What are my short-term and long-term financial goals?
Do I have an emergency fund set aside?
Evaluating your risk tolerance is equally crucial. Some might be comfortable flipping houses, while others might prefer the steadiness of rental properties. Consulting a financial advisor at this stage can provide insights tailored to your financial health, enabling you to make informed decisions as you proceed.
2. Dive Deep into Market Research
Knowledge is power in the world of real estate. The local market can be significantly different from national or even statewide trends. Delve deep into understanding:
The demand for rental properties in your target area.
The average property values and rental rates.
The historical appreciation rates.
Any upcoming infrastructure projects or urban development initiatives.
Furthermore, familiarize yourself with real estate terminology. Phrases like “cap rate,” “loan-to-value,” and “operating expenses” will become a regular part of your vocabulary. The better informed you are, the more confidently you can navigate your investments.
3. Assemble Your Real Estate Team
No investor is an island. Success in the real estate business often hinges on the strength and expertise of your team. Look for professionals with a proven track record and positive reviews. Your team might include:
Real estate agents who understand the investor’s perspective.
Property managers to streamline tenant interactions and maintenance.
Lawyers specializing in real estate transactions.
Accountants familiar with the tax implications of real estate investments.
4. Explore Financing Options
The path to acquiring a property is paved with various financing methods. Traditional mortgages are common, but the real estate industry offers other mechanisms like:
Hard money loans.
Private money loans.
Real estate syndication where multiple investors pool resources.
Seller financing.
Each of these has different pros and cons, interest rates, and repayment terms. Understand each deeply to determine which aligns best with your financial strategy.
5. Analyze Potential Properties
The crux of real estate investing is ensuring that the numbers make sense. Before purchasing, assess the property’s potential for generating rental income. Break down:
Monthly mortgage payments
Property taxes
Maintenance costs
Potential vacancy rates
Your goal should be a positive cash flow, where the monthly income from the property (rent) exceeds all these expenses.
6. Negotiate and Close the Deal
Once you’ve zeroed in on a property, the negotiation phase begins. Here, understanding the property’s market value, any existing damages or repair needs, and the local real estate market dynamics can give you an edge.
When it comes to closing, be aware of all associated costs. These might include inspection fees, title insurance, and escrow fees. Being well-informed can help you negotiate these fees and ensure that you’re not overpaying.
Risks and How to Mitigate Them
Like any investment, real estate comes with its set of challenges and uncertainties. The difference between successful real estate investors and those who falter is often the ability to anticipate risks and prepare for them. Here’s an exploration of some prevalent risks in real estate and actionable steps to manage them:
1. Market Fluctuations
Real estate markets can be volatile, with property values rising and falling based on a myriad of factors.
Mitigation: To protect against market downturns, it’s essential to buy properties below their market value. Conducting comprehensive research and seeking expert investment advice can help investors make informed decisions. Remember, real estate is often a long-term game, so a short-term dip can be offset by long-term appreciation.
2. Unexpected Repairs and Maintenance
Properties can often come with surprises, from plumbing issues to roof repairs.
Mitigation: Regular property inspections can catch potential problems before they become major expenses. Setting aside a buffer fund specifically for maintenance can also cushion the financial blow of unforeseen repairs.
3. Vacancy Periods
There might be periods where your property remains unoccupied, leading to loss of rental income.
Mitigation: Properly vetting and building a good relationship with tenants can lead to longer lease periods. Diversifying your investment properties across different areas can also help, as vacancy rates might vary from one location to another.
4. Legal and Tax Implications
Real estate investors can sometimes find themselves entangled in legal disputes or facing unexpected tax bills.
Mitigation: Regular consultations with a tax professional or attorney familiar with the real estate industry can keep investors informed and protected.
Long-term Strategy and Growth
Real estate investing is not just about making a quick buck; it’s about building lasting wealth. Adopting a long-term perspective and continuously refining your strategy can pave the way for consistent growth in the real estate industry. Here’s how:
1. Define Your Real Estate Identity
Are you more comfortable with a buy-and-hold strategy, where properties are retained for long-term growth and steady rental income? Or do you thrive on the excitement of flipping houses, where properties are bought, renovated, and sold for profit? Understanding your preference can help tailor your investment strategy.
2. Reinvestment is Key
For those adopting a buy-and-hold strategy, reinvesting the rental income can substantially grow your real estate portfolio. By channeling profits into purchasing additional properties, investors can benefit from compounded growth.
3. Diversify Your Portfolio
As you gain experience, consider diversifying across various real estate sectors. Branching out into commercial real estate or exploring real estate investment trusts (REITs) can provide additional avenues for income and growth.
4. Continue Your Education
The real estate industry is continually evolving. By staying updated on market trends, attending seminars, and networking with other real estate professionals, you can adapt your strategy and seize new opportunities as they arise.
5. Scale Strategically
A real estate empire begins with just one property. With time, dedication, and a sound strategy, it’s possible to grow your holdings into a substantial full-time income. As you scale, ensure you’re not overextending; always prioritize the quality of investments over quantity.
Key Tips for Beginners
Embarking on a journey into real estate investing can be thrilling, yet the complexities of the industry can sometimes overwhelm beginners. Simplifying the learning curve is essential for novice investors to make informed decisions and find success. Here are some pivotal tips to guide those just starting out:
1. Start Small and Scale Gradually
Many millionaire real estate investors began their journey with a modest property. Purchasing a smaller, more manageable property as your first investment can help you navigate the nuances of the real estate business without being overwhelmed. As you gain confidence and experience, you can then venture into bigger and more diverse properties to scale your portfolio.
2. Prioritize Education
The world of real estate is vast and ever-evolving. Leverage online real estate platforms to learn about market trends, investment strategies, and financing options. Additionally, joining real estate investment groups can be invaluable. These groups not only provide mentorship but also offer opportunities to share resources, insights, and deals with other investors.
3. Location is Crucial
In the real estate realm, location often takes precedence over the type or condition of a property. A mediocre house in a prime location can fetch better returns than a grand mansion in a less desirable area. Research local market dynamics, neighborhood amenities, future development plans, and other location-specific factors before making an investment decision.
4. Networking is Key
Surrounding yourself with knowledgeable people can fast-track your learning process. By connecting with seasoned real estate investors, you can gain insights from their experiences, avoid common pitfalls, and even discover potential partnership opportunities. Attend local real estate seminars, join investor forums online, and participate actively in real estate conferences to grow your network.
5. Stay Updated and Adapt
The real estate industry is not static. Market conditions, property values, and investment strategies can change. Being adaptable and staying updated on industry trends will ensure you remain ahead of the curve and can capitalize on new opportunities.
6. Always Conduct Due Diligence
Before diving into any real estate transaction, thorough due diligence is imperative. From understanding property taxes and zoning laws to estimating potential repair costs and evaluating tenant profiles, leaving no stone unturned will protect you from potential setbacks.
8 Terms Beginner Real Estate Investors Should Know
Venturing into real estate can feel like you’ve entered a world with its own language. Don’t worry; everyone feels this way at the start. Knowing basic real estate terms can help you communicate confidently and make informed decisions.
Dive into these essential terms every beginner should grasp:
Appreciation: Appreciation is the increase in the value of a property over time. It’s one of the primary ways real estate investors make money, especially in growing markets. Appreciation can result from factors like inflation, increased demand, or improvements made to the property.
Capitalization rate (cap rate): Think of the cap rate as a tool to gauge the potential return on a property. It’s a percentage derived from comparing a property’s net operating income to its current market price.
Cash flow: This term captures the money dance – what’s coming in and what’s going out. In the context of rental properties, it means the rental earnings minus all the costs. Positive cash flow indicates you’re earning more than you’re spending.
Equity: Equity represents the value of ownership in a property. It’s calculated by taking the market value of the property and subtracting any outstanding mortgage or loans against it. As an investor pays down their mortgage or if the property appreciates in value, their equity in the property increases. This equity can be tapped into for various financial needs or reinvested.
Leverage: This term refers to the concept of using borrowed money, often in the form of a mortgage, to invest in real estate. It allows investors to purchase properties with a small down payment and finance the remainder. When used correctly, leverage can amplify returns, but it can also increase the risk if property values decline.
Net operating income (NOI): Simplified, NOI is the profit made from a property after deducting all operational costs. It’s your rental income minus all the expenses, showing the true earning potential of a property.
Real estate owned (REO): An REO property is one that didn’t sell at a foreclosure auction and is now owned by the bank. These properties are often sold at a lower price because banks aim to sell them quickly, making them attractive to investors.
Return on investment (ROI): In simple terms, ROI measures the bang you get for your buck. It’s calculated by comparing the profit you made to the amount you invested. The higher the ROI, the better your investment performed.
Conclusion
Real estate investing offers an avenue to diversify your portfolio, generate steady income, and potentially achieve long-term growth. With due diligence, a clear strategy, and the right team, beginners can successfully navigate the complexities of the real estate industry and lay the foundation for a prosperous investment journey. Remember, every millionaire real estate investor started with their first property. Your journey is just beginning.
If the price of higher education is giving you sticker shock, you’re not alone.
The average cost of tuition for 2023-24 was $26,027 for in-state residents at public colleges, and $27,091 for out-of-state students. At private colleges, the average tuition and fees totaled a whopping $38,768!
Most students end up taking out student loans to cover the cost of college. Over 43 million Americans have federal student loan debt, with an average balance of $37,718 each. Combined, Americans now hold $1.766 trillion in student loan debt!
Paying off your loan may become a burden, especially if you opt for a career in public service, art, or another low-paying field. Your debt may also become unmanageable if you run into unexpected economic difficulties due to medical bills, losing your job, caring for a parent or child, or other challenges.
If more traditional student loan repayment plans aren’t working, you may want to think outside the box. One approach could be crowdfunding student loans. Here are some things to know about this creative way to tackle your debt.
What Is Crowdfunding
Crowdfunding is the process of soliciting small contributions from multiple donors to meet a financial goal. Through online platforms like Kickstarter and GoFundMe, people have turned to crowdfunding to raise money for entrepreneurial ventures, medical crises, disaster victims, classroom supplies, and much more.
You can solicit donations from friends, family, and even complete strangers. By splitting the contributions among a large quantity of people, crowdfunding is a way to meet a big financial goal while not having to rely on finding one major source of funding.
Raising money online makes it easy to share your campaign widely and for people to easily contribute. Increasingly, people have been crowdfunding to pay off their debt, including fundraising for college. That can include textbooks, tuition, studying abroad, or living expenses — or, of course, student loans. 💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.
Sites for Crowdfunding Your Student Loan Repayment
There are a number of sites that allow you to set up a crowdfunding campaign so you can pay off your student loans. Before you sign up, you’ll want to make sure that you understand all the rules and fees that you might encounter during the process.
Here are some crowdfunding sites to look into:
GoFundMe: GoFundMe is perhaps the best-known crowdfunding platform out there. Setting up a fundraiser is easy. Once you have a GoFundMe account and set a goal, you’re encouraged to tell your personal story of why you’re raising money and add a photo or video. Then you can share the campaign with your network of family, friends, coworkers, followers on social media, etc. Once your GoFundMe page starts raising money, you can start withdrawing it. While GoFundMe doesn’t charge fees for setting up a page, there are transaction fees (2.9% + $0.30, which includes debit and credit charges).
Rally.org: Rally.org works a lot like GoFundMe. Once you have an account, you can set a goal, tell your story, and then start sharing with friends and family. Like GoFundMe, you can start withdrawing money as soon as people start donating to your fundraiser. There’s one big difference between Rally.org and GoFundMe: the fees. While there’s only transaction fees on GoFundMe fundraisers, Rally.org charges 5% + credit card fees (2.9% + 30 cents) for each donation processed. That 5% can make it harder for you to reach your fundraising goal.
Gift of College: If you’re not looking to launch a full-blown crowdfunding campaign, but you do want to make it easier for friends or family to help you pay off your student loans in the form of gifts at birthdays, holidays, or graduation, you might consider an account with Gift of College. To get started, you set up an account and link your student loan account. Then you can share your profile with friends and family to encourage them to buy you Gift of College gift cards for special occasions. It’s free to set up a Gift of College account, but there is a 5% processing/service fee charged to the gift giver for every gift card they buy (though the fee is capped at $15 per transaction). Gift of College can also be attached to 529 accounts.
Is Crowdfunding for Repaying Student Loans a Good Idea?
There are pros and cons to turning to the crowdfunding model as a way of making a dent in your student loan debt. Let’s start with the positives. If your campaign is successful, it’s an easy way to earn money to pay off your debt, and you don’t have to do much in return. Earning and saving the same amount through a job would likely take much longer, depending on your living expenses.
Similar to a wedding registry, a crowdfunding site also makes it less awkward to ask people in your life for help, compared to just asking for money outright. You probably have lots of loved ones who would like to help you but don’t have an easy way to do it.
Another perk is that obtaining a lump sum and putting it toward your loan principal can greatly reduce the interest that accumulates and the amount you owe over the life of the loan. Finally, crowdfunding often works. There are many examples of successful campaigns out there to inspire you.
There are some downsides to consider. One is that a crowdfunding effort is likely to get you a chunk of money once, rather than a regular stream of funding.
Considering the size of most student loans, and how interest compounds over time, you may not raise enough money to pay off the entire loan. So you’ll still have to figure out a way to consistently make your monthly payments.
Also, how much you may earn is unpredictable — it depends on the strength of your campaign and the size of your network, plus the generosity of donors, so it’s a bit risky to rely on this to stay solvent.
Another con is that depending on the size of the donation, you may need to pay taxes on the money, so you wouldn’t get to keep the entire amount you raise. Finally, even though a specialized crowdfunding site makes it easier, it may still feel uncomfortable to ask people you know for money, especially if they are facing their own debts and financial challenges.
How To Set Up a Crowdfunding Campaign
Pick a crowdfunding platform: First, you need to pick a crowdfunding site to use. Review the terms carefully so you understand how the process works. You’ll want to see if the platform keeps a percentage of funds donated, what processing fees are charged, whether it allows employers or the general public to contribute, and whether the money goes to your lender directly or comes to you in the form of cash.
Set a goal: If your fundraising goal sounds impossibly high, it could prevent some people from donating. Starting with a number that’s ambitious but reasonable may help, even if it means asking for less than your total student loan amount.
Build trust with your funders: You need to spell out what you are going to do with the money. Potential donors likely want to know what, exactly, their gift is supporting. And they probably want to be sure it will actually go toward student loans and not other expenses. Make clear how exactly you will pay off the loan and how you will hold yourself accountable to donors can go a long way toward building trust.
Telling your personal story: People may be more likely to support you if they understand the impact they can have on your life. Telling your unique story can help make their gift about more than just debt. You could describe your past accomplishments and future goals, as well as how the support will help you achieve them. Try putting up photos and a video to help people connect with your goals emotionally.
Leveraging your network: In order to have a successful campaign you’ll need to share with people you know through email and social media. You might want to tie the campaign to a special occasion, such as your birthday or graduation. You can ask your network to share on their channels as well.
Keeping the momentum going: A successful campaign doesn’t end when you launch. Posting updates on your crowdfunding page regularly will keep people interested and remind them to donate could help you reach your goal.
Express gratitude: People are doing you a favor when you donate, so thank them early and often! It will make them feel good about their gifts and perhaps even encourage them to share your campaign or donate more down the line.
Thinking About Student Loan Refinancing
If you can fund your student loan debt in full through crowdfunding, congratulations! But most people can’t depend on this as a long-term strategy and will need to find additional ways to pay off the rest of their balance.
If you’re still struggling with student debt, refinancing your student loans may be another way to make your loans more affordable. You can refinance federal loans, private loans, or a mix of both by taking out a new loan with a private lender like SoFi and using it to pay off your old ones. Note that if you do refinance federal loans with a private lender, you will lose eligibility for federal student loan benefits like deferment and income-driven repayment programs.
You may be able to qualify for a lower interest rate or lower monthly payments, depending on your credit history and income. It could be worth checking what rates you’d qualify for by applying for pre-qualification online. If you refinance with SoFi, membership includes complimentary support from career coaches and protection during periods of unemployment for those who qualify. Plus there are no hidden fees.
The Takeaway
With student debt growing exponentially, it’s worth considering creative solutions. Crowdfunding can be a relatively easy way to make a dent in your student loans without investing a lot of time. But for most people, it won’t be enough to eliminate their debt completely.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
Student Loan Refinancing If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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Are you looking for things to sell on Etsy? If you are looking to start your own business and work from home, then starting your own Etsy store can be a great way to earn extra income from home. Last year, around 7,500,000 sellers from around the world sold items on Etsy, and there were…
Are you looking for things to sell on Etsy?
If you are looking to start your own business and work from home, then starting your own Etsy store can be a great way to earn extra income from home.
Last year, around 7,500,000 sellers from around the world sold items on Etsy, and there were over 96,000,000 active Etsy buyers around the world.*
Many, many people shop on Etsy every single day for both themselves and to find gifts to give to others. I shop on Etsy frequently for gifts, in fact! I like how I can find something a little more personal and fun by shopping on Etsy.
And, many others feel the same way too!
This is where you come in.
If you are interested in starting an Etsy store and selling items online, then this is a great place to start. Today, I want to talk about what to sell on Etsy as well as answer some common questions that you may have.
Whether you want to make a part-time income or a full-time income, Etsy can be a great platform to allow you to start your own business and work from home.
The average income on Etsy is around $40,000 to $50,000 each year, but there are also many, many Etsy sellers who are making well above that.
Of course, this depends on many factors, such as the type of item you are selling, the amount of work you are putting toward your Etsy store, how you’re getting traffic to your Etsy shop, if you have a team of people working for your Etsy store, and more.
Here are 16 things to sell on Etsy.
Below, I am going to list 16 different things you can sell on Etsy. There are links to actual tutorials that will show you how to make items such as a rug, earrings, a hat, soap, and more.
There are many different categories of items that you can sell on Etsy, so the list of things to sell on Etsy definitely does not end here. There are many different kinds of Etsy shop owners all around the world selling millions of items.
Printables
You can make and sell printables to sell on Etsy, and you don’t even have to ship anything. Your customers would be downloading printables, and you can sell them an unlimited amount of times.
You can create and sell printables for all sorts of things and events, such as holidays (Valentine’s Day, Halloween, Christmas, and more), graduation parties, baby showers, educational (teacher) printables, bachelorette parties, birthday celebrations, grocery shopping, digital planners, journals, invitations, banners, wall art, jar labels, gifts, and more.
You can learn more at How I Make Money Selling Printables On Etsy.
Stickers
You can sell both printed and printable stickers online.
Stickers are extremely popular right now and will most likely be for years to come. Stickers are used for so many different reasons, and you don’t need a ton of equipment to start a sticker business.
You can learn more at How To Make $1,000+ A Month Selling Stickers Online.
Canva Templates
You can create Canva templates to sell and make money all from your home – and never have to ship a thing.
Creating Canva templates can be a great way to make extra income because you just need to create the templates once, and you can sell them an unlimited amount of times.
A Canva template is a graphic design template that you sell to people who are looking to make an ebook, presentation, planner, and more.
You can learn more at How I Make $2,000+ Monthly Selling Canva Templates.
Pom Pom Rug
Household items and home decor, such as rugs, are fun items to sell on Etsy. There are many different designs and household items that you can make and sell, as buyers are wanting something unique.
Learn how to make a Pom Pom Rug here.
Fabric Divided Basket
Fabric-divided baskets are a great organization tool, and I have a few that are in constant use! I know many other people who have bought these as well.
For example, I use one as a diaper caddy, and I find it to be much more useful than having a big diaper cart or drawer. There are many other uses as well for a fabric basket!
Learn how to make a Fabric Divided Basket here.
Bath Bombs
Bath bombs are a fun Etsy item to make and sell and are a popular item to buy as well. This is because they make a quick and easy gift, which makes it a great item to sell on Etsy.
Learn how to make bath bombs here.
Quick And Easy Wreath
Learn how to make this modern quick and easy wreath. You can make custom wreaths year-round and take advantage of all of the different seasons like Christmas, Easter, Halloween, Thanksgiving, and more.
Learn how to make a DIY wreath here.
Crochet Hand Towel
Handmade hand towels are popular items on Etsy. These towels are relatively easy to make for beginners and easy to whip up.
Learn how to make a crochet hand towel here.
Oatmeal Honey Soap
Self-care items, such as soap, are great items to sell on Etsy. Other items related to self care may include lip balm, lotion, and massage oils.
Soap looks like such a fun item to make and sell on Etsy, and people love buying bars of soap! Again, this can make a great gift for others, so they sell easily on Etsy.
Learn how to make oatmeal honey soap here.
Sweaters
Clothing items are popular on Etsy, whether they are handmade or vintage.
A sweater is probably one of the more difficult items to make and sell on Etsy, so you will want to make sure that you price it correctly according to your time and the amount you are spending on materials.
Learn how to make a sweater here.
Boho Earrings
There are many different kinds of earrings that you can sell on Etsy, and homemade jewelry is a very popular item to buy on the website.
Jewelry is something I look for all the time on Etsy, and this is because I love how there are so many different and unique items for sale on the Etsy platform.
Plus, they make for great and meaningful gifts. Many people like to shop around on Etsy for jewelry gifts for their loved ones!
Learn how to make boho earrings here.
Fluffy Slime
Slime is a favorite of many, and it is a fun and popular item to sell on Etsy. You can see a bunch of examples of slime for sale on Etsy here.
Slime is a very popular item to buy, especially for kids. It is also fairly easy to create slime and you can easily make it at home.
Learn how to make fluffy slime here.
Clay Earrings
Clay earrings are quite popular on Etsy. You can get really creative with clay earrings and make all different kinds of shapes and colors.
Learn how to make clay earrings here.
Earrings
Here’s another fun pair of earrings that you can make at home to sell on Etsy. There are so many different styles that you can get started making!
Learn how to make earrings here.
Crochet Hat
Crochet items are popular to buy on Etsy, which means that it may be a great item for you to sell on Etsy. This is a hat pattern in sizes from toddler to adult, and there are many other types of hats that you can make and sell on Etsy as well.
Learn how to make a crochet hat here.
Macrame Coasters
Macrame projects are incredibly popular on Etsy and a hot seller. You can even branch out into selling macrame wall hangings, plant holders, dresses, bookmarks, and so many other items.
Learn how to make macrame coasters here.
Common questions about selling on Etsy
I’m sure you have questions about selling on Etsy. Below are the answers to questions such as:
What is Etsy?
What sells easiest on Etsy?
What are the best selling items on Etsy?
Is selling stuff on Etsy profitable?
How do beginners sell on Etsy?
How much does it cost to sell on Etsy? What percentage does Etsy take?
How can I find customers for my Etsy shop?
What is Etsy?
So, what is Etsy? That is a great question! Etsy is an online marketplace that was started in 2005 where you can buy and sell items from handmade items to craft supplies to vintage items.
Etsy has over 120,000,000 items listed on their marketplace and is an online website for buying handmade and vintage goods.
Etsy items are sold directly from the seller – this means that it’s different from Amazon because there is no Etsy warehouse. Instead, you would be delivering the product to the buyer.
What sells easiest on Etsy?
There are many items that you can sell on Etsy such as:
Printables
Stickers
Planners
Clothing
Homemade jewelry
Soap
And so much more. Etsy shoppers buy many different types of items, so you can see what fits you the best.
What are the best selling items on Etsy?
Best selling items are constantly changing, but they are typically items such as knitting patterns, printables, stickers, wedding items, handmade jewelry, and more.
Thanks to websites such as eRank and Marmalead, you can conduct research to see what product keywords that shoppers are searching for on Etsy.
With sites like these, you can even see who your competitors are and their daily sales, view the latest trending items, conduct research on search engine optimization, and more.
Is selling stuff on Etsy profitable?
Yes, selling stuff on Etsy can be profitable. Some items will have a higher profit margin than others, such as digital products that you don’t have to ship.
To be profitable on Etsy, you will want to see what is actually selling on Etsy (after all, you don’t want to make a bunch of things to sell only to find out that no one is buying them), make sure that you are pricing your items correctly (take a look at your competition!), take good photos of the items you are selling, get traffic to your Etsy store (such as with Etsy SEO and social media), and sell a quality product so that you can get good reviews from your customers.
Is it hard to make a living on Etsy?
Just like with any business, selling on Etsy will take hard work. Not everyone will see success, and you will need to make a plan in order to become a successful Etsy small business.
How do beginners sell on Etsy?
Etsy can be a great place to get started as it is very easy to open a shop on Etsy. Plus, Etsy has built-in traffic from customers simply searching their platform for things to buy.
Here’s a quick look at how to get started on Etsy:
Create an Etsy account
Choose a shop name
Create your first listing and build your inventory
Decide how you want to be paid (credit card, debit card, Paypal, etc.)
You can learn more about how to sell on Etsy by clicking here.
How much does it cost to sell on Etsy? What percentage does Etsy take?
Opening a small business on Etsy has a lot of positives, so they do charge a listing fee.
You can list your first item for only $0.20, and you only pay the transaction and payment processing fees (6.5% transaction fee, 3% + $0.25 payment processing fee) when you make a sale. You will want to think about these Etsy fees when determining the price of the product that you will be selling.
There is also a 15% Offsite Ads fee, and this is when Etsy pays to advertise your items across the internet (such as Facebook, Google, Pinterest, and Instagram). You only pay this fee when you make a direct sale from one of these ads, though.
Don’t forget the shipping cost as well. If you have a product that you will be physically shipping, you will want to think about what your shipping fee is.
How can I find customers for my Etsy shop?
There are many ways to get traffic and views to your Etsy shop so that customers will purchase your items.
The ways include getting found by Etsy search (when someone types what they are looking for directly into Etsy), making a visually appealing Etsy shop, sharing on social media (such as Pinterest), and more.
There are Etsy Ads as well, which is a way to advertise your products directly on Etsy. You can set your budget and choose what you want to advertise.
One fun way that I’ve noticed Etsy sellers attracting customers to their shop is by showing the process of creating your product in a short video on Instagram or TikTok. For example, there are people who record themselves making earrings or slime and posting it on their account for their business – people love watching these types of videos.
Here are some examples:
Also, remember that the photos you take of the items you sell on Etsy are so very important. This is what will help you stand apart from your competition, and it is also the only thing that your potential customers get to really look at! If your photos are not good, then they will simply go to the next shop.
What to sell on Etsy
I hope you enjoyed today’s article on what to sell on Etsy.
The list does not end here either.
There are so many other things to sell on Etsy as well, such as paintings, artwork, handmade jewelry (such as necklaces, rings, and bracelets), decorations, invitations, beads, yarn, knitting patterns, clothing, pet supplies, notebooks, furniture, pillows, party decorations, accessories, wedding products, mugs, socks, personalized gifts (such as engraved items), candles, craft kits, toys, and more.
The list is endless.
Etsy shoppers are looking for all different kinds of items to buy.
Bankrupt retail lender AmeriFirst Financial is seeking approval for a private sale of loans from a Delaware bankruptcy judge to pay off two warehouse lenders and fund restructuring costs.
If approved, AmeriFirst’s retail and commercial loans worth more than $5 million will be sold to a non-QM lender Oaktree Funding Corp., Inc., according to a motion filed by AmeriFirst and holding company Phoenix 1040 LLC earlier this month.
Law360 and National Mortgage News first reported on AmeriFirst’s motion seeking approval of loan sales.
The funds will be to be used to pay Centier Bank and Sound Capital — which AmeriFirst used to fund the mortgages it originated.
Oaktree would pay the payoff value of the retail loans worth $4.9 million to Centier Bank. Centier, in return, would release $1.4 million of cash collateral to AmeriFirst.
With the sale, Oaktree would pay $293,000 of two closed and partially drawn commercial loans to Sound Capital to retire AmeriFirst’s obligations to Sound Capital under its warehouse line.
AmeriFirst’s sale of loans will not only pay off its secured obligations to Centier Bank and Sound Capital under their warehouse lines but also resolve disputes with Oaktree, court documents showed.
While AmeriFirst claimed that Oaktree is obligated to pay the lender $425,582 under a previous agreement with Oaktree, the non-QM lender said that the amount should be offset against money owed by AmeriFirst.
With the judge’s approval for a loan sale, Oaktree would apply $425,582 “to satisfy the unpaid 2.43% of the funded amount of the buyer loans,” according to the motion.
Oaktree, AmeriFirst and its legal counsel didn’t respond to requests for comment.
With the approval from the court, the transaction is expected to close within 10 days of the court approving the sale. A hearing on this motion is scheduled on October 26.
AmeriFirst’s request for approval to sell its loans comes less than two months after it filed for Chapter 11 bankruptcy protection in late August.
The lender had listed both estimated assets and liabilities as much as $100 million.
Against the backdrop of rising interest rates, AmeriFirst ceased forward mortgage origination while maintaining its servicing portfolio in December 2022.
Eric Bowlby, former CEO of AmeriFirst Financial, had told HousingWire it relaunched its forward mortgage origination business in June. Getting rid of regional and branch margins, the lender would offer competitive rates to buyers, Bowlby said in an interview.
Bowlby was removed as CEO when the lender filed for bankruptcy while a holding company Phoenix 1040 LLC was added as a shareholder.
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Editorial Disclosure:Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
Snapshot: You can earn 1.5% cash back on all purchases with this card. Since there’s no annual fee, if you keep up with your statement payments to avoid interest, that’s easy money in the bank.
Ready to learn how to apply?
Basic Features
Ongoing APR: reg_apr,reg_apr_type depending on creditworthiness
Annual fee: annual_fees
Credit needed: Scores in the credit_score_needed range
Additional Details
1.5% cash back on every purchase
Up to 6 months of complimentary Uber One membership through 11/14/2024*
Maximize travel benefits with unlimited 5% cash back on hotels and rental cars when booked through Capital One Travel
Rewards never expire as long as the account remains open
You can now choose to redeem your rewards with Amazon purchases
No foreign transaction fees
Full Review of Capital One Quicksilver Cash Rewards for Good Credit
What You’ll Like About It
Drawbacks
Is it Worth It?
FAQ
Full Review of Capital One Quicksilver Cash Rewards for Good Credit
This card is perfect if you’re looking for a no-hassle option. Basically, if you’re looking to earn cash back on purchases, but don’t want to gamify your purchasing to maximize certain cash back categories. The answer is simple: 1.5% cash back on everything.
As far as cash back credit cards go, this card is a solid option. 1.5% cash back isn’t as high as other cards, but it’s decent. The flat rate across all purchases removes some of the complexity from using it. The pleasant exception to this is a hefty 5% cash back on certain travel purchases booked through Capital One Travel. A annual_fees annual fee is a nice bonus.
One thing to consider is that you’re going to need credit_score_needed credit to qualify for this card, which typically means a credit score of 700+.
Rewards cards often do come with fees, so it’s nice to know this one doesn’t. That means all the cash back you earn on purchases is pure profit as long as you pay your credit card statement off every month.
1.5% on All Purchases
You don’t have to figure out confusing category rotations or remember whether this card offers rewards at the pump or in the grocery store. It’s easy to earn cash back because you get 1.5% back every time you swipe.
Ready to start earning cash back on your purchases?
Flexible Cash Back Redemption Options
There are many ways to redeem your rewards. (It also seems to be something that Capital One is constantly expanding, which makes it a great option for cash back cards in general). You can get your cash back (literally) or apply it as a statement credit. You can also apply it directly to a recent purchase, which is a handy personal accounting option that makes it easier to use your cash back as a reward or to cover fun splurges.
At reg_apr,reg_apr_type, the APR on this card may be a bit high for some people. 30% is competitive for rewards cards, but if you are looking for a lower APR there are other options. (Depending on your credit and what you qualify for).
No Intro APR or Balance Transfer Offer
This card doesn’t currently offer any type of introductory APR for balance transfers or purchases, which means you can’t rack up cash back with a large purchase and then break up your payments interest-free over a year or so.
Learn more about applying for the Capital One Quicksilver Cash Rewards Card!
If you plan to use this card only on purchases you have the cash to cover and pay off the balance every billing cycle, it can be a good card to earn cash back with.
Frequently Asked Questions
What Are the Credit Limits for the Capital One Quicksilver Cash Rewards Card?
Capital One doesn’t list a minimum or maximum limit for their card. Your credit limit is determined by your credit history and ability to pay, so it depends on your income and other factors. Individuals with better credit, higher incomes or less existing debt may be more likely to get approved at the higher limits. A good credit history of paying balances over time may also lead to higher credit limit authorization.
How Soon Can I Increase My Credit Limit After Being Approved for a Capital One Quicksilver Cash Rewards Card?
You’ll need time to demonstrate responsible management of your account or improve your credit score and income situation. It’s typically a good idea to wait at least 6 months before asking for a credit increase. Credit card companies are typically unlikely to approve one before that point.
How Good is a Capital One Quicksilver Cash Rewards Card for Building Credit?
This isn’t typically a card that you’d use to build credit if you have bad, poor or fair credit. That’s because you need good credit to get approved for it in the first place. However, responsible management of the card can help you continue to build your credit in the future.
Advertiser Disclosure: Credit.com has partnered with CardRatings for our coverage of credit card products. Credit.com and CardRatings may receive a commission from card issuers.
If you’re like many cardholders, you will likely want to take advantage of any opportunities to streamline your finances. A commonly used credit card feature that can make life more convenient is automated credit card payments, or credit card autopay. It’s a way to have your bill paid seamlessly on time so you don’t have to wonder, “Is my credit card payment due around now? Have I already paid it for this month?”
Understanding what autopay is and how it works can help you decide if enrolling in automatic payments is right for you. There are definite benefits to setting up autopay, but there are downsides to take into account as well. You’ll also need to consider how you’d like to configure credit card autopay, as there are a few different options.
In this guide, you’ll learn about all this topic and gain the insight you need to decide if autopay for your credit card is a good fit for you.
What Is an Automated Credit Card Payment and How Does It Work?
An automated credit card payment, or autopay, is a recurring payment that’s scheduled for the same day each month. The automatic payment is typically made on a date that’s either before or on the statement due date.
Autopay allows cardholders the convenience of making credit card payments on a periodic basis without having to manually set up payments. This also helps with avoiding late or missed payments.
When you enroll in automated credit card payments through your credit card issuer, you’re authorizing the issuer to request a certain payment amount on a specific date from your banking institution. When the autopay date arrives, your card issuer’s bank will send your bank an electronic request for the payment amount you’ve set up.
Your bank then will fulfill the payment request and send it to the merchant’s bank (i.e., your card issuer). 💡 Quick Tip: A credit card provides access to a line of credit. It’s essentially a short-term loan that you repay each month.
Credit Card Autopay Options
There are a few ways to approach automatic bill payments through your card issuer. Each has its benefits and caveats, so assess your own financial situation before choosing an autopay strategy for your credit card.
Paying the Minimum
One option is establishing automated credit card payments for the minimum amount that’s due on your billing statement. The minimum payment is the smaller amount due that’s shown on your statement or online account, and the amount varies based on your total charges at the close of your card’s billing cycle.
Selecting to pay the minimum can be useful if you don’t have enough money to repay the entire statement in one fell swoop. By paying the minimum, you’ll fulfill the issuer’s minimum requested payment and keep your account in good standing — which, in turn, helps keep your credit score in good standing.
However, this means you’ll roll over the remaining statement balance into the next billing period, which will lead to incurring interest charges. That’s one aspect of how credit cards work.
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Paying the Full Balance
You also can choose to pay the full balance as shown on the billing statement for each recurring payment. Paying the full balance is beneficial, because it allows you to avoid rolling a balance into the next billing cycle. This, in turn, means you can avoid interest on a credit card.
However, since your balance will likely vary month to month, you need to be sure you have enough cash in your bank account to cover it. Otherwise, you could wind up overdrafting.
Paying a Fixed Amount
Another option is to set up automated credit card payments for a specific, fixed amount. For example, if you exclusively use your card to pay your fixed monthly cell phone bill of $50, you can establish an autopay for $50 toward your account on a recurring schedule. You can also use this option if you’d like to make extra credit card payments throughout the month.
Benefits of Automatic Credit Card Payments
Choosing a credit card that allows autopay can be helpful for various reasons. These are a few of the major upsides to enrolling in automated credit card payments:
• You won’t risk forgetting about a credit card payment due date.
• You’ll avoid penalty fees and penalty annual percentage rates (APRs) for making a late payment.
• Your positive payment history is maintained.
Drawbacks of Automatic Credit Card Payments
There are also some caveats to consider before you set up autopay. This includes the following:
• You might face other fees if you have insufficient funds when using autopay.
• You might slack on reviewing your monthly credit card statement for red flags.
• You might inadvertently overspend on your card because you feel as if you’ve got the payment covered.
Factors to Consider Before Setting up Automatic Credit Card Payments
Before setting up automated credit card payments, honestly assess your finances and habits. Verify that you have sufficient deposits into your checking or savings account to cover the autopay amount you’ve set up.
And if you do set up automatic credit card payments, make sure you continue to check your monthly billing statements. Confirm that all transactions are yours and are accurate, and that your total spending is still manageable.
Setting up Automatic Credit Card Payments
The exact process for how to set up automatic credit card payments can vary somewhat from issuer to issuer, but in general, it’s pretty easy to do.
• You will need to first log on to your credit card account either online or through the mobile app. It’s also possible to call the number listed on the back of your card to have someone talk you through it.
• Pull up the section labeled payments, and you should then be able to find an option to manage or set up autopay. You’ll need to connect a bank account where the payments will get pulled from and select the date and frequency at which you’d like the payment to occur.
• You should also be able to select which payment option you’d like (minimum due, the full balance, or another amount).
💡 Quick Tip: When using your credit card, make sure you’re spending within your means. Ideally, you won’t charge more to your card in any given month than you can afford to pay off that month.
Tips for Stopping Automatic Payments on Credit Card
What if you have credit card autopay activated on your account but need to halt automated payments moving forward? Federal law protects your right to rescind authorization for automatic payments. Here are a few ways to go about it:
• Turn off autopay through your card issuer. Many credit card issuers give cardholders the ability to turn autopay on or off through the app or via their online account’s payment settings. Just make sure you do so before the next automated payment is processed.
• Revoke authorization from your card issuer. Call your credit card issuer to revoke authorization for autopay. Then follow up the call with a written letter revoking authorization, and requesting a stop to automatic payments on your account.
• Request a stop payment order from your bank. You can also contact your bank to place a stop payment order on any automated payment transactions requested by the card issuer.
Regardless of how you stop automated payments from occurring, continue reviewing your monthly statement and account activity to ensure that the autopay has ceased.
What Happens if You Overpay Your Credit Card Balance?
Let’s say you inadvertently set up autopay to higher than the balance — what could you do then? Typically, credit card overpayments are processed as a negative balance. A credit for the overpaid amount should be reflected on the next billing statement, assuming your new transactions bring your account above a zero balance.
However, you do have the right to request a refund from the card issuer, instead of having it applied as a credit. The Federal Deposit Insurance Corporation (FDIC) has in place regulatory credit card rules for card issuers when it comes to an overpayment on your card account. It states that upon receipt of a consumer’s written refund request for an overpayment, an issuer must provide the refund within seven business days.
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The Takeaway
Automated credit card payments are a convenient option and can mean one less thing to remember. In addition to helping you keep your card account in good standing, autopay can provide peace of mind. By automating payments, you’ll more easily avoid credit card late payments, penalty fees, and penalty APRs for late payments.
Looking for a new credit card? Consider a rewards card that can make your money work for you. With the SoFi Credit Card, you earn cash-back rewards on all eligible purchases. You can then use those rewards for travel or to invest, save, or pay down eligible SoFi debt.
The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1
Take advantage of this offer by applying for a SoFi credit card today.
FAQ
Is it a good idea to automate monthly credit card payments?
Whether enrolling in automated credit card payments is a good idea depends on your current financial situation. You must reliably have the payment amount in your checking or savings account each month and not be at risk of overdrawing or having insufficient funds. Also consider your other financial responsibilities and personal money management habits to decide if automated payments are right for you.
Do automatic payments affect your credit score?
Thirty-five percent of your FICO® credit score calculation is based on your payment history. Automatic payments can help you make on-time payments for at least the minimum balance due so your payment history builds or remains positive. As long as the deposit account that automatic payment is drawn from has adequate funds, the credit card autopay transaction can be advantageous to your credit profile.
Do banks charge for automated credit card payments?
No, banks and credit card issuers don’t typically charge an additional fee to make automated credit card payments. Autopay is intended as a payment convenience for cardholders. But ultimately, it helps card issuers and banks better secure repayment from customers, thereby lessening the risk of a late payment or delinquent account.
Photo credit: iStock/PeopleImages
1Members earn 2 rewards points for every dollar spent on eligible purchases. If you elect to redeem points for cash deposited into your SoFi Checking or Savings account, SoFi Money® account, or fractional shares in your SoFi Active Invest account, or as a payment to your SoFi Personal, Private Student, or Student Loan Refinance, your points will redeem at a rate of 1 cent per every point. If you elect to redeem points as a statement credit to your SoFi Credit Card account, your points will redeem at a rate of 0.5 cents per every point. For more details please visit SoFi.com/card/rewards. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
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.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
A credit card can serve as a fantastic financial tool and offer a number of perks, from the opportunity to build your credit to the chance to rake in lucrative rewards. However, using a credit card responsibly is key to reaping those benefits. Otherwise, a credit card is more likely to harm your financial well-being than help it.
Using a credit card responsibly involves sticking to basic rules like making on-time payments and avoiding practices such as spending more with your card than you can afford to pay off. By learning some tips for how to use a credit card responsibly, you’ll be well on your way toward making the most out of this financial tool.
How Do Credit Cards Work?
A credit card is a payment card that offers access to a revolving line of credit. You can tap into this credit line for a variety of purposes, including making purchases, completing balance transfers, and taking out a cash advance. Cardholders can borrow up to their credit limit, which is largely determined based on their creditworthiness and represents the maximum amount they can borrow.
It’s necessary to make at least a minimum payment by the due date each month in order to avoid a late fee. However, to avoid paying interest entirely, cardholders must pay off their balance in full each month; interest accrues on any balance that rolls over from month to month.
Many credit card companies charge compounding interest, which means that not only will you owe interest on any outstanding balance, you’ll also end up paying interest on the interest. That’s because this interest is calculated continually, then added to your balance, and it may be compounded daily. You may be shocked to see how much credit card interest you’ll pay if you only make the minimum payment each month.
Understanding Your Statement
A crucial component of knowing how credit cards work is understanding your monthly credit card statement. Your statement contains a number of important pieces of information about your credit card account, including:
• Your account information
• Your account summary, including your payment due date
• All purchases made with the card
• Your total credit card balance
• The minimum payment due
• When the credit card payment is due
• Your available credit
• Interest charges
• Rewards summary
Many of these details are key to know in order to ensure you’re using a credit card wisely. For instance, knowing your payment due date will ensure you make your payment on time, avoiding any late fees and a ding to your credit score.
Checking on your available credit can help you ensure you’re not using too much of your credit, which can drive up your credit utilization rate and subsequently drag down your score.
💡 Quick Tip: A SoFi Credit Card provides access to a line of credit. It’s essentially a short-term loan that you repay each month.
10 Tips For Using a Credit Card Responsibly
To make the most of your credit card, here are several credit card rules to keep in mind — as well as some guidance on what credit card behavior to avoid.
1. Avoid Making Too Many Impulse Purchases
To use a credit card responsibly, you want to avoid overspending with it. How many is “too many” purchases depends upon how much your impulse buys cost and how easily they fit into your budget. If you know you can pay off your credit card balances and otherwise meet your monthly expenses and savings and other financial goals, then that’s an entirely different situation from one in which your impulse purchases are too costly to promptly pay off and/or prevent you from meeting other financial responsibilities or goals.
If you enjoy making spontaneous buys, you may consider including this as a line item in your monthly budget and then sticking to it. This could add enjoyment to your life without causing financial problems down the road.
2. Use the Right Credit Card
There are a variety of different types of credit cards, and depending on how you plan to use your credit card, one option may make more sense than another. Some credit cards are there to help you build your credit, while others pay out generous rewards.
Selecting which card is right for you requires a look at your financial habits and current situation. For example, if you know that you often end up needing to carry a balance, then it may make sense to find a card that prioritizes low interest rates. Or, let’s say you’re a frequent vacationer — in that case, you might benefit from a travel rewards card.
3. Take Advantage of Benefits Offered
Interested in another way to use your credit card responsibly? Signing up for eligible rewards programs can help cardholders make the most of their card. Each type of credit card may have slightly different reward programs. See what the full range perks offered by your card are — and if you’re not sure, check the card’s website or ask the credit card company for specifics. For example, you might need help understanding what unlimited cash back really means in terms of how you might benefit.
Once you know what perks are available, you can use them strategically. You may discover that the card(s) you have don’t provide the best benefits for you. For example, maybe your card offers one of its highest rewards rates for gas purchases, but you don’t do much driving. In that case, you might be better served by a rewards card that offers a flat rewards rate or that prioritizes a category in which you’re a frequent spender.
Finally, if you’re earning rewards points, it’s also important to consider the best way to use them. Sometimes it’s possible to get a bigger bang for your buck if, say, you use your rewards points at an approved store rather than opting for cash back.
4. Sign Up for Automatic Payments
To avoid missing payments or making them late, consider signing up for automatic payments or autopay. By enrolling in autopay, you’ll regularly have money transferred from a linked account each month in order to cover the amount due (or at least the minimum payment required).
Another option is to sign up for automatic reminders about payment due dates (by text, for example, or by email). You can do this through the credit card company or via a calendar app.
What’s most important is coming up with a plan that works best for you to ensure you make your payments on time. Otherwise, you could face late fees and adverse effects to your credit score.
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5. Regularly Check Your Statements
Mistakes do happen on credit card statements and, unfortunately, fraudulent activities could impact your account. Check your statement every month to ensure that you made all the charges that appear, and that any payments you’ve made are accurately reflected.
If something is missing, review the statement dates to see if the transaction may have happened right after the statement cut-off date, for instance. If something seems off, contact your credit card company for clarification. In the case of any potentially fraudulent activity, it’s important to report credit card fraud to your credit card company immediately.
6. Pay More Than the Minimum
You’ve just read about how credit card interest works, so you’ll remember that only making the minimum payment doesn’t get you out of paying interest. To avoid credit card interest charges, you’ll need to pay off your monthly statement balance in full.
Understandably, this isn’t always possible, but even then, it still helps to pay as much above the minimum as you can afford to. This will at least cut down on the outstanding balance that accrues interest.
7. Don’t Close Out Old Cards
While it might seem logical to close out an older credit card you’re no longer using, you’ll want to think twice before you cancel a credit card. That’s because doing so can have adverse implications for your credit.
For starters, canceling a credit card will lower your credit utilization rate, which compares your total outstanding balance to your overall available credit limit. Closing out a card will cause you to lose that card’s credit limit, thus lowering the amount of credit you have available.
Closing an old card could also have an impact if the card in question is one of your older accounts. Another factor that contributes to your credit score is the age of your credit. By closing out an old account, you’ll lose that boost in age.
That being said, there are scenarios where it might make sense to close a card, such as if it charges a high annual fee. Just be mindful of the potential effects it will have on your credit before moving forward.
💡 Quick Tip: Aim to keep your credit utilization — the percentage of your total available credit that you’re using at any given time — below 30% (or lower). This could help you to maintain a strong credit score.
8. Maintain a Low Credit Utilization Rate
Another key tip for responsible credit card usage is to avoid maxing out your cards. Instead, aim to keep a lower credit utilization rate — ideally below 30%. The lower you can keep this utilization rate, the better it is for your credit score.
9. Avoid Unnecessary Fees
Another part of using a credit card responsibly is being aware of all of the fees you could face, and then taking steps to steer clear of those costs. Your credit card terms and conditions will spell out all of the fees associated with your card, as well as the card’s APR (or annual percentage rate) and the rules of its rewards program.
Many credit card fees are pretty easy to avoid. For instance, if you’ll incur a fee to send money with a credit card, simply avoid doing that and look for an alternative route. Similarly, you can avoid late payment fees by making on-time payments, and over-the-limit fees by not maxing out your credit card.
10. Avoid Applying for Too Many Cards
As you get into the swing of things with using your credit card, you may feel tempted to keep acquiring new cards, whether to keep on earning rewards or to capitalize on enticing welcome bonuses. But proceed with caution when it comes to applying for credit cards.
Applying for credit cards too frequently can raise a red flag for lenders, as it may suggest that you’re overextending yourself and desperate for funding. Plus, each time you submit an application for a credit card, this will trigger a hard inquiry, which can ding your credit score temporarily. Consider waiting at least six months between credit card applications.
The Takeaway
When used responsibly, credit cards can be helpful for a whole slew of things, from making online purchases to building your credit. The key phrase to keep in mind is “when used responsibly.” To stay on top of your credit cards, tips like signing up for automatic payments, making the most of the rewards programming, and using the right type of credit card for your needs are all important.
Looking for a new credit card? Consider a rewards card that can make your money work for you. With the SoFi Credit Card, you earn cash-back rewards on all eligible purchases. You can then use those rewards for travel or to invest, save, or pay down eligible SoFi debt.
The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1
Take advantage of this offer by applying for a SoFi credit card today.
1Members earn 2 rewards points for every dollar spent on eligible purchases. If you elect to redeem points for cash deposited into your SoFi Checking or Savings account, SoFi Money® account, or fractional shares in your SoFi Active Invest account, or as a payment to your SoFi Personal, Private Student, or Student Loan Refinance, your points will redeem at a rate of 1 cent per every point. If you elect to redeem points as a statement credit to your SoFi Credit Card account, your points will redeem at a rate of 0.5 cents per every point. For more details please visit SoFi.com/card/rewards. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Countrywide announced today that its shareholders approved the merger with Bank of America, set to close on July 1 upon satisfaction of customary closing conditions.
The troubled mortgage lender said the holders of more than 69 percent of outstanding shares of Countrywide stock voted to approve the transaction.
Meanwhile, California Attorney General Edmund G. Brown Jr. announced that he was suing Countrywide, CEO Angelo Mozilo, and President David Sambol for deceptive lending practices.
The suit alleges that Countrywide engaged in deceptive advertising and unfair competition, mass-producing risky loans and quickly dumping them on the secondary mortgage market.
“Countrywide exploited the American dream of homeownership and then sold its mortgages for huge profits on the secondary market,” Attorney General Brown said. “The company sold ever-increasing numbers of complex and risky home loans, as quickly as possible.
“Countrywide was, in essence, a mass-production loan factory, producing ever-increasing streams of debt without regard for borrowers. Today’s lawsuit seeks relief for Californians who were ripped off by Countrywide’s deceptive scheme.”
The Calabasas, CA-based mortgage lender has also been accused of encouraging borrowers to refinance into negative amortization loans without properly disclosing the risks involved, hiding prepayment penalties, rushing loan doc signings, and easing underwriting standards to facilitate a larger number of approved loans.
“Despite receiving numerous complaints from borrowers claiming that they did not understand their loan terms, Countrywide ignored loan officer’s deceptive practices and loose underwriting standards,” the statement said.
“Countrywide also pushed its borrowers to serially refinance, repeatedly urging borrowers to obtain home loans to pay off their current debt.”
Illinois Attorney General Lisa Madigan announced a similar lawsuit against Countrywide today, alleging that the company sold risky loans despite borrowers’ inability to repay them.
Unfortunately, most of this will likely be swept under the rug after Bank of America completes the merger next week.
Shares of Countrywide were up 10 cents, or 2.15%, to $4.76 in early afternoon trading on Wall Street.