Using In-School Deferment as a Student

Undergraduate and graduate students in school at least half-time can put off making federal student loan payments, and possibly private student loan payments, with in-school deferment. The catch? Interest usually accrues.

Loans are a fact of life for many students. In fact, a majority of them — about 70% — graduate with student loan debt.

While some students choose to start paying off their loans while they’re still in college, many take advantage of in-school deferment.

What Is In-School Deferment?

In-school deferment allows an undergraduate or graduate student, or parent borrower, to postpone making payments on:

•   Direct Loans, which include PLUS loans for graduate and professional students, or parents of dependent undergrads; subsidized and unsubsidized loans; and consolidation loans.

•   Perkins Loans

•   Federal Family Education Loan (FFEL) Program loans.

Parents with PLUS loans may qualify for deferment if their student is enrolled at least half-time at an eligible college or career school.

What about private student loans? Many lenders allow students to defer payments while they’re in school and for six months after graduation. Sallie Mae lets you defer payments for 48 months as long as you are enrolled at least half-time.

But each private lender has its own rules.

Recommended: How Does Student Loan Deferment in Grad School Work?

How In-School Deferment Works

Federal student loan borrowers in school at least half-time are to be automatically placed into in-school deferment. You should receive a notice from your loan servicer.

If your loans don’t go into automatic in-school deferment or you don’t receive a notice, get in touch with the financial aid office at your school. You may need to fill out an In-School Deferment Request .

If you have private student loans, it’s a good idea to reach out to your loan servicer to request in-school deferment. If you’re seeking a new private student loan, you can review the lender’s deferment rules.

Most federal student loans also have a six-month grace period after a student graduates, drops below half-time enrollment, or leaves school before payments must begin. This applies to graduate students with PLUS loans as well.

Parent borrowers who took out a PLUS loan can request a six-month deferment after their student graduates, leaves school, or drops below half-time enrollment.

Requirements for In-School Deferment

Students with federal student loans must be enrolled at least half-time in an eligible school, defined by the Federal Student Aid office as one that has been approved by the Department of Education to participate in federal student aid programs, even if the school does not participate in those programs.

That includes most accredited American colleges and universities and some institutions outside the United States.

In-school deferment is primarily for students with existing loans or those who are returning to school after time away.

The definition of “half-time” can be tricky. Make sure you understand the definition your school uses, as not all schools define half-time status the same way. It’s usually based on a certain number of hours and/or credits.

Do I Need to Pay Interest During In-School Deferment?

For federal student loans and many private student loans, no.

If you have a federal Direct Unsubsidized Loan, interest will accrue during the deferment and be added to the principal loan balance.

If you have a Direct Subsidized Loan or a Perkins Loan, the government pays the interest while you’re in school and during grace periods. That’s also true of the subsidized portion of a Direct Consolidation Loan.

Interest will almost always accrue on deferred private student loans.

Although postponement of payments takes the pressure off, the interest that you’re responsible for that accrues on any loan will be capitalized, or added to your balance, after deferments and grace periods. You’ll then be charged interest on the increased principal balance. Capitalization of the unpaid interest may also increase your monthly payment, depending on your repayment plan.

If you’re able to pay the interest before it capitalizes, that can help keep your total loan cost down.

Alternatives to In-School Deferment

There are different types of deferment aside from in-school deferment.

•   Economic Hardship Deferment. You may receive an economic hardship deferment for up to three years if you receive a means-tested benefit, such as welfare, you are serving in the Peace Corps, or you work full time but your earnings are below 150% of the poverty guideline for your state and family size.

•   Graduate Fellowship Deferment. If you are in an approved graduate fellowship program, you could be eligible for this deferment.

•   Military Service and Post-Active Duty Student Deferment. You could qualify for this deferment if you are on active duty military service in connection with a military operation, war, or a national emergency, or you have completed active duty service and any applicable grace period. The deferment will end once you are enrolled in school at least half-time, or 13 months after completion of active duty service and any grace period, whichever comes first.

•   Rehabilitation Training Deferment. This deferment is for students who are in an approved program that offers drug or alcohol, vocational, or mental health rehabilitation.

•   Unemployment Deferment. You can receive this deferment for up to three years if you receive unemployment benefits or you’re unable to find full-time employment.

For most deferments, you’ll need to provide your student loan servicer with documentation to show that you’re eligible.

Then there’s federal student loan forbearance, which temporarily suspends or reduces your principal monthly payments, but interest always continues to accrue.

Some private student loan lenders offer forbearance as well.

If your federal student loan type does not charge interest during deferment, that’s probably the way to go. If you’ve reached the maximum time for a deferment or your situation doesn’t fit the eligibility criteria, applying for forbearance is an option.

If your ability to afford your federal student loan payments is unlikely to change any time soon, you may want to consider an income-based repayment plan or student loan refinancing.

The goal of refinancing with a private lender is to change your rate or term. If you qualify, all loans can be refinanced into one new private loan. Playing with the numbers can be helpful.

Just know that if you refinance federal student loans, they will no longer be eligible for federal deferment or forbearance, loan forgiveness programs, or income-driven repayment.

Recommended: Student Loan Refinancing Calculator

The Takeaway

What is in-school deferment? It allows undergraduates and graduate students to buy time before student loan payments begin, but interest usually accrues and is added to the balance.

If trying to lower your student loan rates is something that’s of interest, look into refinancing with SoFi.

Students are eligible to refinance a parent’s PLUS loan along with their own student loans.

There are absolutely no fees.

It’s easy to check your rate.


We’ve Got You Covered


SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF JANUARY 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

How to Get the Best Price on a Rental Car – 10 Simple Steps

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Dig Deeper

Additional Resources

Do you recognize this scenario? You’re planning to rent a small car for a vacation or business trip. Yet somehow, when you walk away from the car rental counter, you’re holding the keys to a much bigger car with a much bigger price tag. 

If this has happened to you, it was no accident. You were a victim of upselling — one of the many tricks car rental companies use to squeeze more money out of you. They lure you, scare you, or badger you into driving away with a bigger car than you planned. 

To save money on car rentals, you need to beat the agencies at their own game. First, do some research to figure out exactly what car you need. Then, shop around and use discounts to make sure you pay the lowest possible rate for it. 

How to Get the Best Price on a Rental Car

Getting the best rate on your car rental is largely a matter of doing your homework. You have to know what kind of car you need, when to book it, and where to shop for the best prices. You also need to know how to avoid tricky upsells and hidden fees.

1. Know What You Need

If you’ve ever rented a car before, you know rental companies often try to upsell you. When you arrive to pick up your vehicle, they don’t hand over the keys right away. 

Instead, they suggest you upgrade to a larger model than the one you booked. Often, they say it will offer more comfort, more power, or even better gas mileage. 

That last statement is unlikely to be true. In general, bigger cars use more gas than smaller ones. If you let the rental clerk talk you into a bigger model, you’ll end up paying more for gas and the car itself.

As for the extra room and extra power, they probably don’t matter. If you’re driving by yourself or with just one or two other people, a compact car should have enough space. And you’re unlikely to need more power unless you’re planning to drive up steep mountain roads or in deep snow.

If there’s any doubt in your mind about how much car you need, do some research before you book. Look for reviews of the model you’re considering and see what owners say about its comfort, mileage, and power. 

Then, when the clerk starts trying to sell you on a bigger model, you can say with confidence that the one you booked is just fine for your needs.

2. Book Early, Especially During Peak Travel Times

Car rental companies have a limited number of cars in their fleets. During peak travel times, every vehicle is in demand as customers flock to travel destinations. And when demand outstrips supply, prices go up. That’s simple economics.

So if you’re traveling during a busy travel season, reserve your car as far in advance as possible. You’ll avoid paying a premium for booking during the busy season or, worse still, finding the vehicle you want is unavailable.

3. Take Advantage of Discounts

Never pay full price for a rental car without checking for discounts first. There are all kinds of programs that can offer you a better price on a rental, including:

  • Military Discounts. Many car rental companies, including Alamo and Budget, offer discounts for military service members and veterans. Some also have special deals for other government employees or first responders, such as firefighters and police. If you belong to any of these groups, always ask about discounts when booking a rental.
  • USAA Rates. If your spouse or parent is in the military, you could get a discount through USAA. This financial provider serves active military members, veterans, and their spouses and children. Avis, Budget, Enterprise, and Hertz have special USAA rates. 
  • Senior Discounts. Several rental car agencies work with AARP to provide discounts for older adults. AARP members can save up to 30% at Avis, Budget, and Payless. And all travelers over 50 can get lower prices from Hertz through its Fifty Plus program.
  • Corporate Codes. Many businesses have partnerships with car rental companies. Their employees get better rates, and the agencies benefit from the extra business. Check your corporate travel site to see if your company has such a program. 
  • University Codes. Universities also cut deals with rental car agencies. Both students and alumni can get lower daily rates and other perks, such as a free additional driver. Check the student benefits or alumni deals page for rental car discounts.
  • Frequent Flyer Programs. Some frequent flyer programs can get you a reduced rate on a car rental. For instance, United MileagePlus members enjoy discounts and earn bonus miles when they rent through Hertz.
  • AAA. Being a member of AAA gets you discounts on all kinds of services, including rental cars. Currently, members can save between 8% and 20% off the base rate with Thrifty, Dollar, or Hertz. Check your local AAA website for the latest deals.
  • Costco. This warehouse club offers discounts on a lot more than groceries. One of the many benefits of Costco membership is its discounts on car rentals from Alamo, Avis, Budget, and Enterprise. Visit the Costco Travel site to access the latest exclusive deals.

4. Join a Loyalty Program

Many rental car agencies have loyalty programs that offer various discounts and perks. Most loyalty programs are free to join, and it takes only a few minutes to sign up.  

Joining one of these programs could get you benefits like:

  • Free upgrades
  • The ability to skip the line when you pick up your rental
  • A guarantee the car you sign up for will be available
  • An account that stores your rental preferences for future use
  • Rewards points you can cash in for free rentals or upgrades

And there’s nothing to stop you from signing up for multiple programs. You could join one for each rental agency you use. In fact, if you’ve already reached elite status with one company, you can usually carry over that status when you sign up for another agency’s program as well.

Some agencies, such as Avis and Hertz, also have special programs just for small-business owners. If you own a small business, these programs can give you a percentage off the base price every time you rent a car.

5. Compare Prices

Joining a loyalty program doesn’t mean you have to be loyal to one car rental company. It always makes sense to shop around and see if another company can offer a better price.

You could do that by calling several companies for quotes, but you don’t have to. There are several websites you can use to check rental prices across multiple agencies. 

One leading comparison site is AutoSlash. This free site factors in discounts from AAA and Costco and searches for online coupons to cut your rental price. It even notifies you if the rental rate drops after you book your car. That allows you to cancel it and rebook at the lower price.

However, AutoSlash isn’t the only site in the business. Other places to look for deals include CarRentals.com, Kayak, and Priceline.

6. Check Smaller Car Rental Companies

When you’re comparing prices, don’t limit yourself to the major rental car agencies. Small off-brand agencies such as Fox Rent A Car can offer significantly lower rates than the big companies.

These small agencies aren’t available everywhere, and they may not show up in results from sites like AutoSlash. But if there’s one in your area, it’s worth a call to see if they can beat the big companies’ prices. To find small local agencies, search the Internet for “car rental near me.”

7. Look for Coupon Codes

When you’re searching for rental car prices, do an extra search for coupon codes you can tack on at checkout. With the right code, you can save as much as 50% off the regular rental rate. 

On top of that, you can often combine these coupon codes with other discounts. For instance, they sometimes stack with savings from loyalty programs or frequent flyer programs.

If you shop through AutoSlash, it automatically seeks coupon codes for you. Other places to look for deals include Groupon and LivingSocial. Also, money-saving browser extensions like Capital One Shopping search for coupon codes and apply them every time you shop. 

8. Read the Fine Print

It’s not unusual to see online ads promising car rentals as low as $15 per day. These prices sound too good to be true — and they are. The price you pay is usually much higher due to taxes and fees excluded from the advertised rate. 

You can’t avoid all these extra fees. However, you can at least be aware of them to avoid any surprises. And you can always say no to extraneous car rental fees.

When comparing prices, look at the final price with all taxes and fees included. That way, you know you’re comparing apples to apples. 

9. Prepay

Most car rental companies offer two different daily rental rates: one for prepayment and a higher one for paying when you pick up the car (or simply renting on the spot). For instance, Budget charges rates up to 35% less when you pay ahead.

But despite the savings, prepaying isn’t always the smart move. If you prepay for your car and have to change your plans, you could get hit with a hefty cancellation fee. 

For instance, Alamo charges $50 for canceling a prepaid rental or $100 if you cancel with less than 24 hours’ notice. Canceling a regular reservation is only $50 with less than 24 hours’ notice and free if you cancel earlier than that. 

To avoid these fees, don’t prepay for your rental unless your travel schedule is fixed.

10. Use a Rewards Card

Once you’ve decided which car to rent and where, there’s still one more way to save: by choosing the right card to pay with. Many travel rewards credit cards, such as Chase Sapphire Reserve, offer special perks and discounts on car rentals. 

Depending on the card, you could pay a lower daily or weekly rate or earn extra rewards points. You could also get perks like free upgrades, free rental car insurance, a free additional driver, or a grace period on late returns.

Moreover, if you already have rewards points on one of these cards, you can sometimes get a bonus by cashing them in for travel deals, including car rentals. If your card offers a 50% bonus on travel, you could book a $30-per-day car rental with only $20 worth of rewards.


Final Word

There’s one tip that could potentially save you more than anything else. When planning your trip, think carefully about whether you need a rental car at all. 

In some cases, you can get by without a car. Instead, you can rely on a combination of rides from friends, public transportation, and ridesharing. 

That works particularly well if you only need the vehicle to get to and from the airport. In that case, paying by the ride is probably cheaper than renting a car that will spend most of the trip parked.

Another option is to take advantage of the sharing economy. It’s often possible to get a car through a peer-to-peer service like Turo for much less than a traditional rental. 

These services can offer access to vehicles rental agencies don’t have, such as sports cars or electric vehicles. And you don’t have to deal with any high-pressure sales tactics at the rental counter.

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Source: moneycrashers.com

These Healthcare Stocks Should Thrive in 2022

As the COVID-19 pandemic recedes, routine doctor and hospital visits, along with deferred medical procedures such as cataract surgery and heart valve replacements, are returning to normal.

The pandemic has been a global tragedy, but if there is one silver lining it is that the miraculous development of effective COVID-19 vaccines in less than a year is helping to usher in a golden age for the pharmaceutical and health sciences industries.

“We’re seeing a revolution today in vaccine development,” says Andy Acker, manager of Janus Henderson Global Life Sciences.

Before COVID arrived, the fastest vaccine approval had been four years, and the average was 10 years; with COVID, two vaccines were approved in about 10 months. Validation of the mRNA technology used by Pfizer (PFE) and Moderna (MRNA) in their vaccines means that it will now be adopted to treat other medical indications. (The mRNA vaccines teach our cells how to make a protein that triggers an immune response.)

In truth, the COVID-19 medical challenge and the dramatic success of the vaccines have only served to accelerate a powerful trend of innovation in medicine. For instance, the sharply declining cost of gene sequencing is pushing forward the growing field of precision medicine, which aims to tailor treatments to specific diseases, such as cancer.

“The science is exponentially improving for better outcomes,” says Neal Kaufman, manager of Baron Health Care fund.

Of course, the healthcare sector is also riding the (global) demographic wave of aging populations. At CVS Health drugstores, the number of prescription medicines purchased by people age 65 or older is three to four times that of 20- to 40-year-old people, says Jason Kritzer, co­manager of Eaton Vance Worldwide Health Sciences.

In rapidly developing countries with expanding middle classes, such as China, quality healthcare is likely to be one of the first things people rising out of poverty will spend money on.

With innovation and some of these secular trends in mind, we identified six intriguing healthcare stocks that literally span the alphabet, from letter A to letter Z. We particularly like companies that address large and growing end markets, especially global ones. We give extra points to businesses that have less exposure to pricing pressure from insurance com­panies or the government. Returns and other data are through Nov. 5.

healthcare stockshealthcare stocks

1 of 7

Align Technology

Share price: $687

Market cap: $54 billion

Price-earnings ratio: 50

Maker of the Invisalign brand of clear, plastic braces for teeth, Align Technology (symbol ALGN) is a disruptive force in the global teeth-correction market, rapidly gobbling market share from traditional wires and brackets. Jeff Mueller, comanager of Polen Global Growth, credits the “Zoom effect” for accelerating the adoption of the aesthetically pleasing aligners: Workers stuck at home during the pandemic were staring at their own teeth every day on Zoom. “Vanity is increasing around the world,” Mueller says, adding that, due to the rise of smartphones, the internet and social media, “more people are taking pictures of themselves than ever before in the history of mankind.”

A lot of technology is used in the Invisalign process. It employs intra-oral scanners and modeling software, plus mass-customization manufacturing using 3D printing at several plants around the globe (each set of teeth is unique, and individuals change their aligners every two weeks). Because braces are generally for cosmetic purposes, they are not subject to pricing pressure from insurance companies or the government.

Align Technology’s revenues are currently growing by 25% to 30% a year as its market penetration rises, and Mueller expects earnings to continue to compound at double digits for quite a while.

2 of 7

Merck

Share price: $82

Market cap: $206 billion

Price-earnings ratio: 11

Dividend yield: 3.2%

CFRA analyst Sel Hardy thinks that Merck’s (MRK) COVID-19 antiviral pill, molnupiravir, is “a game changer.” The drug maker has applied for emergency-authorization use from the government; approval was expected before the end of 2021. Merck projects that global sales of the oral medication, which has demonstrated strong efficacy against multiple variants of COVID, could be $5 billion to $7 billion by the end of 2022.

Apart from this breakthrough drug, Hardy likes the way Merck is positioned. Sales of Keytruda, its versatile oncology drug, topped $14 billion in 2020 and continue to grow; its animal health division is expanding; and the firm’s $12 billion acquisition of Acceleron Pharma, a biotech firm with strengths in blood and cardiovascular treatments, will augment Merck’s product pipeline.

Hardy thinks Merck, which yields 3.2%, can compound earnings by at least 10% a year for the next three years.

3 of 7

Novo Nordisk

Share price: $113

Market cap: $259 billion

Price-earnings ratio: 31

Dividend yield: 1.3%

Danish pharmaceutical company Novo Nordisk (NVO) focuses on two global pandemics: diabetes and obesity. The World Health Organization projects that the number of diabetics will expand from 460 million to 580 million by 2030, and it estimates that there are nearly 800 million obese people around the world. Novo pioneered insulin injections a century ago and has remained a global leader in diabetes care ever since. Multibillion-dollar drugs include Ozempic, a once-weekly prescription for adults with Type 2 diabetes to lower blood sugar, and NovoRapid, a fast-acting insulin treatment. Novo’s sales are evenly split between North America and the rest of the world.

Investors such as Samantha Pandolfi, comanager of Eaton Vance Worldwide Health Sciences, are also excited about rapid growth in Novo’s newer weight-management business. Wegovy, prescribed for obese people with another disease, such as diabetes, was approved by the FDA in June 2021. Tests show Wegovy typically delivers a weight loss of 15% to 17%, and Pandolfi says sales are off to a blazing start. The century-old firm plows an impressive 12% of sales back into research and development, which helps it stay ahead of the competition and generate earnings growth in the low double digits.

4 of 7

Thermo Fisher Scientific

Share price: $617

Market cap: $243 billion

Price-earnings ratio: 29

Dividend yield: 0.2%

Eddie Yoon, manager of Fidelity Select Health Care Portfolio, calls Thermo Fisher Scientific (TMO) “the Walmart of life sciences.” Whether it’s a big pharma, biotech or university lab, customers come to this health sciences supermarket for analytical tools, lab equipment and services, and diagnostic kits and consumables. “They are the partner of choice for any pharma or biotech company of any size,” says Jeff Jonas, a portfolio manager at Gabelli Funds. Thermo has benefited from increased demand for its products and services due to COVID-19, and now the firm is poised to benefit from the rise in research and development spending among drug companies around the world.

One thing that distinguishes Thermo, according to health care stock analysts, is the quality of its management. The firm has successfully integrated several strategic acquisitions that helped broaden its menu of products and services. Tommy Sternberg, an analyst at William Blair, notes that Thermo is particularly adroit at staying close to customers and understanding what their scientists are working on. “They do a fantastic job of getting to know customers and their needs, and learning from customers to come up with more solutions more quickly,” says Sternberg.

5 of 7

UnitedHealth Group

Share price: $456

Market cap: $429 billion

Price-earnings ratio: 21

Dividend yield: 1.3%

The U.S. spends a staggering $4 trillion a year on health care. UnitedHealth (UNH)—with annual revenues of nearly $300 billion, a market value of $430 billion and 330,000 employees—is the industry’s largest player. As the top private health care insurance provider, it leads in managed care. Its OptumHealth unit offers pharmacy benefits and owns physician’s practices and surgical centers. Eaton Vance’s Kritzer calls Optum, an industry leader in the digitization of services, “a very large health IT company inside an insurance giant.” United helps the federal government manage costs through its Medicare Advantage plan (the most popular private plan). Plus, it enjoys high customer satisfaction, and it is counting a growing number of seniors as customers (about 10,000 Americans turn 65 every day). Despite United’s massive size, William Blair’s Sternberg thinks it can sustain earnings-per-share growth of about 15% annually.

6 of 7

Zoetis

Share price: $217

Market cap: $103 billion

Price-earnings ratio: 42

Dividend yield: 0.5%

Like Align Tech­nology’s Invisalign, Zoetis’s (ZTS) main business—companion-animal health—was already riding a tailwind that picked up force thanks to lifestyle changes during the pandemic. Pet-ownership rates spiked as people grew more isolated and sought the companionship of dogs and cats, according to David Kalis, comanager of The Future Fund Active ETF. Zoetis markets vaccines, prescription drugs and diagnostic equipment directly to veterinarians. The industry is regulated, with FDA approval required for the drugs, but Zoetis benefits from the lack of insurance company price pressures and the fragmented nature of the firm’s customer base, notes Eaton Vance’s Pandolfi.

In fact, companion-animal ownership is growing globally, driven by aging populations and shrinking family sizes. Pet owners are treating their pets better, addressing ailments such as skin irritation and arthritis, and visiting the vet more frequently, says Pandolfi. Zoetis books about half of sales overseas; roughly 60% of revenues come from the companion-animal business and 40% from the less-profitable and slower-growing livestock animal division.

7 of 7

Invest in a Fund

Given the complexity and diversity of the health care sector, investing in a fund makes a lot of sense for many investors. Here are our favorites (returns and other data are through November 5).

Baron Health Care (symbol BHCFX, expense ratio 1.10%) is a young fund off to a sizzling start. Over the past three years, it returned 29.2% annualized, or nearly twice the return of the S&P 1500 Health Care index. Manager Neal Kaufman and assistant manager Joshua Riegelhaupt look for innovative, fast-growing companies. The largest holding is Natera, a clinical genetic-testing outfit.

Fidelity Select Health Care (FSPHX, 0.69%) is a member of the Kiplinger 25, the list of our favorite no-load funds. The fund has a 19.8% three-year annualized return, ahead of the 17.0% average annual gain of its peers. Eddie Yoon, who has piloted the fund since 2008, says he’s light on large pharmaceutical companies in the portfolio, preferring makers of devices used to help manage chronic diseases such as diabetes and heart ailments. The fund’s top three holdings are UnitedHealth, Boston Scientific and Danaher.

Ziad Bakri, a former physician, runs T. Rowe Price Health Sciences (PRHSX, 0.76%), which has returned 21% annualized over the past three years. Nearly one-third of assets are invested in biotechnology, a high-risk, high-return segment of health care. Top positions include Thermo Fisher Scientific and Intuitive Surgical.

If you prefer investing through exchange-traded funds, Simplify Health Care (PINK, $26, 0.50%) is an intriguing, actively managed ETF that launched on October 7. Through November 5, just shy of one month, it returned 5.9%. Manager Michael Taylor, a virologist by training who spent 20 years investing in health care stocks at some prominent hedge funds, expresses his views by increasing or decreasing the fund’s weighting of stocks in relation to the MSCI US Health Care Index.

Source: kiplinger.com

Chase Cards Not Subject To 5/24 Rules?

Update: Seeing some approvals on Southwest Personal & United Explorer cards as well.

Currently there are some datapoints of people being successfully approved for the Chase Amazon credit card despite being over 5/24. That card is currently offering an increased sign up bonus of $200. Earlier this year Chase increased credit limits on existing cardholders Amazon cards by a lot.

Amazon has been considering replacing Chase as a co-branded partner so Chase removing the 5/24 rule could be due to either trying to keep them as a partner or pad the stats if another issuer plans to purchase the backbook from Chase.

If you do apply, share your 5/24 stats and application status in the comments below.

Source: doctorofcredit.com

How to Become a Mortician and Other Jobs in the Funeral Industry

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There are a lot of reasons for thinking about becoming a funeral director, the funeral industry’s preferred term for mortician.

For one, the unemployment rate is low. For another, there’s always a need.

And, it is one of the careers that does not require a bachelor’s degree that still pays well. Funeral directors make an average of $55,000 a year. That’s the average and some directors with more experience bring in more than $70,000. As far as school, most states require an associate’s degree, an apprenticeship/internship, and passing a licensing exam.

If working with bereaved families and preparing bodies for burial or cremation seem like something you would be good at, consider this well-paying career path. The funeral industry is estimated to be worth $16 billion in the United States in 2021.

Read on to find out how to become a mortician.

The Difference Between a Mortician and Funeral Director

First, let’s clarify some terms. What are the differences between mortician, funeral director, embalmer and undertaker? They have similar roles but slightly different duties.

In 1895, an American publication called The Embalmer’s Monthly put out a call for a new term for undertakers. The winner was mortician, a made-up word and thank goodness for Morticia Addams, right? Now, the industry uses funeral director for the person arranging the funeral service.

Most funeral directors are licensed morticians and embalmers. They have studied mortuary science and prepare bodies, but they also arrange the other aspects of funeral services. Funeral directors help the bereaved plan the memorial service (and might conduct it if there is no clergy) and arrange for cremation and burial. Funeral directors deal directly with the clients.

An embalmer can work for a funeral home, but also elsewhere — medical schools, hospitals, and morgues. They mainly prepare bodies, and don’t work with clients. The term undertaker is the British term for funeral director and is seldom used in the U.S. except when referring to the popular professional wrestler, The Undertaker.

What Does a Funeral Director Do?

Funeral directors deal with both the living and the dead. Funeral directors arrange for moving the body to the funeral home. They file the paperwork for death certificates, obituaries, and other legal matters.

Preparing a body for the funeral service may or may not include embalming (cremation doesn’t require embalming), but it needs to be dressed, cosseted (put in the best and most natural appearance), and casketed (placed in the coffin).

Funeral services are difficult times for people. The funeral director needs to have compassion for people navigating their pain and sorrow. While an interest in science is necessary, an important quality for someone who wants to become a mortician or funeral director is empathy.

The funeral director guides the grieving through the decisions that have to be made for the funeral service. This not only includes choosing the coffin, but placing the obituary, arranging the wake and service and creating a program for it, shipping remains, and more.

The Changing Funeral Business

Most funeral homes are independently owned. While often smaller businesses don’t have the deeper pockets of corporations, their size allows them to be more nimble in evolving their business. Funeral services have transformed from somber and sorrowful times to celebrations of life with some funeral homes even providing spaces for outdoor gathering complete with grills.

In recent years, more women are graduating in mortuary science. Some people might become funeral service workers as a second career instead of inheriting the business, which has been a traditional entry into the industry. The National Funeral Directors Association encourages its members to seek out, hire, and train more women and non-binary people.

You can find mortuary science stars on social media, including the popular YouTube channel, Ask a Mortician. There are funeral directors’ TikTok videos, and mortician AMAs (ask me anything) on Reddit.

Get Started in the Funeral Business

Most states require a two-year associate’s degree in mortuary science or related areas, an apprenticeship or internship, and passing the national or state’s license exam. Ohio and Minnesota are the only two states that require a bachelor’s degree to be a funeral home director. Colorado does not have any education requirements, but licenses funeral homes instead. Kentucky doesn’t license funeral directors but does license embalmers.

The National Funeral Directors Association is your go-to source for state-by-state details of working in the funeral industry.

If you were also thinking about joining the military, the Navy is the only service branch with its own morticians. For that you need a high school diploma or GED, and then you would get training through the Navy as a hospital corpsman-mortician.

Licensure

You usually have to be at least 21 years old to take the exams, though you can start an internship or apprenticeship before that age. There may also be a criminal background check. Having a criminal record doesn’t mean you can’t become a mortician. You also have to submit proof of U.S. citizenship or permanent residency.

You can also study for and take the national funeral service education board exam. The pathways to these two types of exams can be different. It is important to note that not all mortuary science programs are accredited by the American Board of Funeral Service Education (ABFSE).

You can only take the National Board Exam if you have a degree from an accredited program. Some states allow you to take the state exam even if your program is not accredited. The exams are the same. It is just more difficult to practice in a different state if you haven’t attended an accredited program.

State Licenses

Most states have information about how to become a mortician through their occupational license, public health, or funeral board sections on their website. It is important that you clarify whether the mortuary science programs are accredited for just the state license exam, or for both state and national exams. Some schools also offer Funeral Arts Certificates, which can be used for other jobs in the funeral service industry.

National License

The American Board of Funeral Service Education is the national academic accreditation agency for college and university programs in Funeral Service and Mortuary Science Education. Most states have easier reciprocity requirements to transfer your practice if you have taken the national board exam. If you have taken the state exam only, you may have to meet all of the requirements again if you move to another state.

Classwork for the License

Coursework can be broken down into roughly three categories: art, business, and science. Art? That is for the restorative arts, or visually preparing the body for a funeral service, which includes hair and makeup. There are courses which cover death traditions from many cultures and the history of funerals.

Science classes may cover embalming theory and labs, anatomy, physiology, public health, and pathology. There are chemistry and biology courses, and also usually psychology courses on grief and bereavement training.

Business classes will cover funeral home administration, accounting, requirements for a funeral service license, and some business law. There are usually classes covering legal and ethical issues that a certified funeral service practitioner will face.

Cost of Getting a License

The cost of getting a two-year mortuary science degree varies by state but your best bet will be an in-state community college. Then there will be costs associated with taking exams and getting a license.

School

There is a huge difference in how much you can pay for a mortuary science associate’s degree. In-state public schools may cost between $5,000-$8,500. Private, out of state tuition might be almost $20,000. There are the normal student loans and grants available, but there are also specific grants for students studying mortuary science (even as a second career). It seems like a great investment, since unemployment for funeral directors is extremely low.

Exam

The National Board Exam has two sections, arts and sciences. Each one costs $285. There are practice exams that you can take, which are free. In Florida, the state funeral service examining boards charge $132 for exams. Maine charges $75 plus $21 for a criminal background check. Texas charges $89. Some states have two separate exams — one for funeral services and the other for embalming.

Licenses

This is another area with variation. Using the same three states as above, Florida’s license for a funeral director costs $430 with all the fees. Maine’s is $230, and Texas costs $175 plus $93 for the application. Apparently not everything is bigger in Texas! Licenses need to be renewed periodically, which also requires continuing education credits.

Funeral Director as Entrepreneur

The funeral industry has been changing rapidly over the last few years. Cremations have increased and burials decreased. Funeral homes make less money on cremations, and have responded to this shift by finding new sources of income and new ways to help people.

Green Funerals

There are more environmentally conscious choices that funeral homes can offer, including rental coffins for services (and a plain one after), biodegradable coffins, and natural burials. Green funeral services include sourcing flowers locally, using funeral invitations and programs made of recycled paper embedded with seeds, and biodegradable water urns, which sink and dissipate for at sea services..

Pet Funerals

An estimated 67% of households in the U.S. own pets, and many of them are using funeral home services for their animals. That includes memorials, services, and burials. Despite pet cremation being infinitely (well, 90 vs.10%) more popular than burial, there are over 200 pet cemeteries in the U.S., with Florida having the most.

Other Jobs in the Funeral Industry

Besides being an intern or apprentice, you can work in the funeral industry in many other ways. Florida lists 16 separate individual and business licenses for funeral home-related activities.

Here are the common jobs in the funeral or mortician industry though keep in mind in a smaller business, the funeral director may do some of them:

  • Administrative assistants handle office work.
  • Burial rights brokers arrange for third parties to sell or transfer burial rights.
  • Cemeterians maintain cemetery grounds (think groundskeeper).
  • Ceremonialists conduct the funeral service.
  • Crematory operators/technicians assist in cremation remains.
  • Direct disposers handle cremation when there is no service or embalming.
  • Embalmers prepare the body after death.
  • Funeral arrangers work with clients to set up the funeral.
  • Funeral home manager is the best paying job in the field, the median salary for this position is more than $74,000. The manager oversees all funeral home operations.
  • Funeral service managers are similar to funeral arrangers.
  • Funeral supply sales personnel work for the funeral home-sourcing supplies.
  • Monument agents sell tombstones and other markers for the cemetery.
  • Mortuary transport drivers prepare and transport human remains.
  • Pathology technicians work in hospitals, morgues, or universities with cadavers.
  • Pre-need sales agents help clients plan their services and burials before they die.

Frequently Asked Questions (FAQs) About Funeral Business Jobs

We’ve rounded up the answers to the most common questions about working in the funeral industry.

What Jobs Can You Do at a Funeral Home?

negotiate supplies, transport bodies, conduct funeral services, and work with clients to place obituaries and arrange the service. They also have sales people working on pre-need arrangements. Some funeral homes feature pet burials and have special jobs related to that.

How Much Do You Make Working at a Funeral Home?

Funeral directors average $55,000 annually. Managing a funeral home pays a median salary of $74,000. Mortuary transport drivers average over $35,000. It is a field with very low unemployment.

How Do I Get a Job in the Funeral Industry?

Most states require two years of school, a (paid) internship, and passing the appropriate license exams to become a funeral director. Other jobs may require less.The mortuary transport driver has to be able to lift 100 pounds or more and have a clean driving record.

What is a Funeral Home Job Called?

There are many. There are funeral directors, embalmers, mortuary transport drivers, and funeral service arrangers. There are also typical office jobs, such as administrative assistant and bookkeepers. There are also related jobs at crematoriums, hospitals, and mortuaries.

The Penny Hoarder contributor JoEllen Schilke writes on lifestyle and culture topics. She is the former owner of a coffee shop in St.Petersburg, Florida, and has hosted an arts show on WMNF community radio for nearly 30 years.

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Source: thepennyhoarder.com

Paying your credit card early: Does it help your score?

Couple looking at finances together.

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Paying your credit card early can raise your credit score. After your statement closes, your credit card issuer reports your balance to the credit bureaus. Paying your bill ahead of time lowers your overall balance, so the bureaus will see you using less credit in total. Since utilization makes up around one-third of your credit score, paying your card early can have a positive overall effect. 

However, paying your credit card bill early may work differently if you carry a balance on your card each month. Instead of paying your next statement early, you’re actually making an extra payment on your previous balance. Therefore, you’ll likely still need to pay the minimum amount on your next statement, or your payment could be considered late.

In most cases, paying your credit card bill early is a good idea—and it can have a positive impact on your score. 

Read on to learn more about how paying your card early affects your score. 

How paying your credit card bill early can help your credit score

Paying your credit card bill early may increase your credit score, since the overall debt that gets reported to the credit bureaus is likely to be lower. 

To understand how paying a bill early could raise your score, you need to understand two things: the factors that make up your score and how your credit issuer reports to the credit bureaus. 

How paying early could raise your score

Your score is calculated based on several factors, and two of them are relevant to paying your bill early: credit utilization and payment history. 

  • Payment history makes up around 35 percent of your score, and simply put, paying your bill early means that you aren’t paying it late. Late payments can have a major negative effect on your score, so paying your bill on time or early will help boost your score.
  • Credit utilization accounts for around 30 percent of your score, and it represents how much of your available credit you’re actually using. As a general rule, you should aim to use one-third of your credit or less. For example, if you have a total credit limit of $9,000, you’d want to keep your balance below $3,000.

The credit bureaus—TransUnion®, Experian® and Equifax®—are responsible for keeping track of your credit history. They receive all of their information from lenders, like the financial institution that issued your credit card. 

After your monthly statement is issued with your balance, you have a grace period before the payment is due—typically around 21 days. During that time, your credit card provider will report your balance to the credit bureaus. If you pay your balance before your statement closes, the total listed balance will be lower, so the credit bureaus will see your overall utilization as lower, which could increase your score.

That said, your particular situation may change how early payments work, so you’ll want to make sure you understand your billing cycle and balance before making early payments.

Is it ever bad to pay your credit card early?

While it is never bad to pay your credit card bill early, the benefits you receive from doing so may vary depending on your circumstances.

For example, if you carry a balance on your credit card every month, you may need to adjust how you handle early payments. While it is a myth that carrying a balance on your card improves your score, there are reasons you may have lingering credit card debt nonetheless.

Early payments work differently if your credit card has a balance.

If you do carry a balance on your card each month, keep the following in mind:

  • Your early payment may not count as your minimum payment. If you have a balance from a previous month, you can’t make an “early” payment toward your next statement. Instead, you’re making an extra payment, so you’ll still need to make a minimum payment after your new statement is issued.
  • You may not save money on interest and fees by making an early payment. Depending on how your credit card issuer calculates finance charges on your previous balance, your early payment may not reduce your interest or fees by much or at all. For example, if you’re charged based on average daily balance, simply paying at the end of the month may not help much.

All that said, it’s still usually a good idea to pay down your credit card debt if you have the funds available to do so. You may not see an immediate score increase if you have a substantial balance, but over time, you’ll build the financial habits that can help you eliminate debt and begin making on-time—or early—payments consistently. 

When is the best time to pay your credit card? 

The best time to pay your credit card bill is before the payment is late. While you may benefit from paying your bill early, you’ll definitely see negative effects if you pay your bill late. 

Paying early keeps your payment history intact and may help lower your overall utilization, while paying your bill more than 30 days late will likely lead to a negative item on your credit report. And if you neglect to pay long enough, your account could get sent to collections. 

If you do start paying your credit card bill early, you’ll want to begin checking your credit report regularly to see how your balance is being reported to the credit bureaus. Over time, you should see your utilization drop and your credit score increase.

While sifting through your credit report, it’s important to keep an eye out for inaccurate information like fraudulent accounts, incorrect negative items or factual mistakes. Any of these inaccurate items could be lowering your credit score. Fortunately, it’s possible to dispute these items on your report and repair your credit score. 


Reviewed by Horacio Celaya, Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Horacio Celaya was born in Tucson, Arizona but eventually moved with his family to Mexicali, Baja California, Mexico. Mr. Celaya went on to graduate with Honors from the Autonomous University of Baja California Law School. Mr. Celaya is a graduate of the University of Arizona where he graduated from James E. Rogers College of Law. During law school, Mr. Celaya received his certificate in International Trade Law, completing his thesis on United States foreign direct investment in Latin America. Since graduating from law school, Mr. Celaya has worked in an immigration firm where he helped foreign investors organize their assets in order to apply for investment-based visas. He also has extensive experience in debt settlement negotiations on behalf of clients looking to achieve debt relief. Mr. Celaya is licensed to practice law in New Mexico. He is located in the Phoenix office. 

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Best Buy Headlines Busy Week of Retail Earnings

This week will be a short but busy one on Wall Street.

U.S. stock markets are closed Thursday for the Thanksgiving holiday and trading will end early on Friday. However, there’s still plenty of action packed into the three days leading up to the holiday, with Best Buy (BBY, $136.81) among several retail companies set to report earnings.

According to the earnings calendar, the big box retailer will unveil its third-quarter report ahead of Tuesday’s open. Shares have been racing higher since early October – up roughly 30% to trade in record-high territory – and a positive reaction to earnings could keep the wind at the consumer stock’s back.

Analysts, on average, are looking for Best Buy to report an 8.3% year-over-year decline in earnings to $1.89 per share. Revenue is also expected to take a step back, with the $11.53 billion expected down 2.3% from what the company reported a year ago.  

Still, UBS analyst Michael Lasser (Neutral) feels Best Buy is “well positioned to report another set of solid results in the third quarter, even as it faces steep compares.”

He also believes Best Buy “continued to execute on a favorable industry backdrop in the third quarter” and that “strong vendor relationships” have been critical to the company navigating global supply chain disruptions.

However, “The key for BBY’s investment case is how will it perform into 2022 when spending is likely to shift away from the consumer electronics category,” Lasser says. “Its strategies can likely cushion the impact.” Among these strategies is the company’s recently launched Totaltech around-the-clock tech support membership program, which he believes “offers good near-term potential.”

Argus Research analyst Chris Graja (Hold) admits the company is facing some major challenges – COVID-19 disruptions, strong competition, and product innovation that is consolidating music, gaming and computing into lower-margin devices like smartphones and tablets, for instance – but it has also positioned itself well for the long term. 

“Best Buy’s online capabilities and curbside service are helping the company through the COVID-19 crisis,” Graja writes in a note. “We see this as a validation of the company’s investments in its e-commerce infrastructure and management’s ability to adapt.”

Oppenheimer analyst Brian Nagel agrees. 

“BBY performed well through the coronavirus crisis and capitalized upon stepped-up demand for consumer electronics and home office-type products, as workers and students adapted quickly to hybrid or fully at-home models,” he says. 

Nagel currently has a Perform (Hold) rating on BBY, but adds that he is “optimistic that as pandemic pressures continue to subside that a more-efficient and potentially more-profitable Best Buy model should emerge.”

Mantle Ridge Stake Grabs Attention Ahead of Dollar Tree Earnings

Dollar Tree (DLTR, $134.24) made headlines recently on reports activist investor Mantle Ridge took a stake in the discount retailer. The news was well-received on Wall Street, with DLTR stock surging more than 14% in reaction.

According to the Wall Street Journal – which first reported the story – Mantle Ridge is planning to push for pricing strategy changes at DLTR’s Family Dollar chain.

“This investor has a history of being deeply involved in situations where companies have been transformed through operational improvements,” says UBS analyst Michael Lasser (Buy). “The bottom line is that this development should mean that DLTR will now be held more accountable for producing consistent results. In this case, the upside potential for the shares is significant.”

Deutsche Bank analyst Krisztina Katai (Buy) agrees. She recently lifted her price target on DLTR to $146 from $96, saying “the added element of a new large shareholder with a clear focus on unlocking meaningful value by closing the profitability gap between Family Dollar and Dollar General (DG) should lead to a more patient investor base with a longer-term focus.” 

She adds that this now creates “one of the most compelling retail stories with an exciting narrative change underway.”

But what about DLTR’s third-quarter earnings report, due out ahead of the Nov. 23 open? Analysts, on average, are expecting earnings to arrive at 96 cents per share, down 30.9% on a year-over-year (YoY) basis. Revenues, meanwhile, are projected to rise 3.7% to $6.41 billion.

Deere Earnings Expectations Lowered After UAW Strike

Deere (DE, $348.84), which is famous for its tractors and riding lawn mowers, will report fiscal fourth-quarter earnings ahead of Wednesday’s open. 

“Similar to peers and consistent with retail trends, we believe DE results will reflect continued strong end-market demand, handicapped by production constraints as supply chain and labor dynamics worsened late in the quarter,” says Oppenheimer analyst Kristen Owen.

One part of the labor dynamics she refers to is month-long strike by thousands of Deere workers that began in mid-October after the company failed to reach an agreement with the United Auto Workers (UAW). The dispute was resolved on Nov. 17, when UAW members approved a new six-year contract that includes a 10% pay increase and $8,500 bonus, according to press reports.

However, the impact of the strike prompted Owen to lower her estimates for fiscal fourth-quarter earnings per share to $3.89 from $4.02 and revenue to $11.1 billion from $11.6 billion.  

Nevertheless, “we remain constructive on DE shares as we see secular tailwinds persisting and unaccounted-for upside in construction” due in part to the recent passage of the infrastructure spending bill in D.C. Owen has an Outperform rating on Deere, which is the equivalent of a Buy.

The pros, on average, are looking for $10.49 billion in revenues (+21.1% YoY) and earnings of $3.95 per share, which is 65.3% higher than the year-ago figure.

Source: kiplinger.com

Stock Market Corrections – What Are They and How to Handle Them

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People look to the stock market as a way to build and protect wealth, but experienced investors know it doesn’t always work out that way. The market moves through a series of peaks and valleys, often leading to overvaluations or undervaluations. 

When a long-term bull market takes place, investors know that a dreaded downturn on Wall Street is likely ahead. 

These drawdowns, or market corrections, are periods when stock valuations fall. They tend to cause some investors to panic, but there’s no need to be alarmed. These occasional declines are perfectly normal, and most consider them necessary in a healthy U.S. stock market. 

Here’s everything you need to know about market corrections. 

What Is a Stock Market Correction?

A correction is a downward market trend characterized by the value of a financial asset falling at least 10% from its most recent peak. 

For example, imagine stock ABC was trading at a peak of $100 per share 45 days ago. Today, the stock is trading at $89 per share, down $11 or 11% from recent highs. Since the decline is greater than 10%, the move would be considered a correction. 

These market declines are often riddled with volatility as investors race to sell, hoping to protect themselves from further financial pain. 

However, as you’ll learn below, a sudden drop in stock prices from recent highs isn’t always a reason to sell. In fact, corrections are often the best time to buy more shares of your favorite stocks, practicing dollar-cost averaging and increasing your overall return potential. 

Here are a few important facts about corrections:

There Are Different Levels of Stock Market Corrections

First and foremost, market corrections take place on varying levels:

Individual Stocks

Like in the example above, corrections often happen on individual stocks. They can be spurred by bad news like missed earnings or revenue expectations, or they can come completely out of the blue as a group of investors decides it’s time to take a profit. These corrections only tend to affect a single stock. 

Sectors

Some corrections wreak havoc on entire sectors, sending nearly every stock in an industry down a slide. For example, sudden shocks to the price of oil might put the oil and gas sector into a correction, or new legislation targeting drug prices might send the pharmaceutical sector into a slump. 

Regional

Some events can lead entire financial markets in a specific region on a spiral downward. For example, when tariffs were placed on Chinese goods entering the United States, Chinese stocks took a dive, resulting in a regional correction.

Market

Finally, corrections can happen across the global market. During a stock market correction, the entire market drops. These events are characterized by simultaneous declines of 10% or more throughout major market indexes around the globe. 

Corrections Are Generally Short-Lived

While some market corrections lead to long-lasting bear markets, the vast majority of corrections are actually short-term sell-offs. In fact, only 10 out of the past 37 corrections from 1980 to 2018 resulted in bear markets, with the rest turning out to be short-term blips. 

In general, corrections last between three and four months. Once the event is over, the market generally rebounds quickly, resulting in tremendous earnings potential. So, it’s important not to panic when these events take place; keeping a level head and paying attention to market conditions will likely open the door to several profitable opportunities.  

A Correction Isn’t the Same as a Bear Market

Both corrections and bear markets are characterized by stock market crashes. However, there are a few important differences between the two:

  • Percentage Declines. Bear markets are generally characterized by declines of 20% or more from recent peak values rather than 10% declines. 
  • Term. When the bears take hold of a sector, region, or the whole market, they tend to maintain control for some time. According to Hartford Funds, the average bear market lasts 9.6 months, which is substantially longer than the three to four months the average correction takes to subside. 
  • Cause. Corrections can take place out of the blue when the investing masses decide it’s time to take profit. However, bear markets are generally more meaningful. These long-standing declines are usually signs of concerning economic conditions, geopolitical conditions, or a mix of the two. 

Corrections Happen Often

As mentioned above, 37 corrections took place from 1980 to 2018, working out to slightly less than one per year on average. That stands as evidence that you shouldn’t panic when it happens. 

While the talking heads on financial media will make a big deal out of any correction that takes place, level heads prevail in the stock market. 


Examples of Corrections

One of the best ways to get an understanding of the nature of stock market corrections is to look at a few examples from history. 

One of the most recent market-wide corrections was caused by the coronavirus pandemic in 2020. As the virus spread, hair salons, movie theaters, amusement parks, and shopping malls were considered nonessential and forced to shut down for months. This led to widespread job loss, corporate bankruptcies, and reduced consumer spending. 

As a result, the market started to tank. 

Soon, the correction caused by the pandemic became an all-out bear market, leading the S&P 500 index, Dow Jones Industrial Average, and the Nasdaq all down by more than 30%. It took 10 months for all three indexes to make a full recovery. 

Another example occurred in February 2018, when the Dow Jones Industrial Average and the S&P 500 index fell by more than 10% each. While the correction was prompted by inflation-related concerns, the profit-taking proved to be overblown in the long run. By mid-March 2018, prices began to rise, eventually making a full recovery.


What Corrections Tell You

Market corrections aren’t always as informative as you might think. They can be a sign of healthy market and economic conditions as valuations balance themselves out, acting as a perfectly normal part of the financial system. 

For example, if a correction happens out of the blue at a time when economic growth is at its peak, corporations are experiencing growth in profitability, and geopolitical conditions are stable, the move is likely nothing more than investors taking profits, and it will soon be over.

On the other hand, when coupled with concerning fundamental data, corrections can be signs of tough times to come.

For example, if recent economic reports show slowing new home sales, increasing unemployment insurance claims, and declining consumer spending, and stocks slide by 10% or more, the move could be a sign that an economic recession and all-out bear market is on the horizon. 


What to Do if a Stock Market Correction Takes Place

Although it may come as a surprise, many long-term investors do nothing at all when market downturns set in. These investors know that the vast majority of corrections won’t last long, and they avoid knee-jerk reactions when it happens. Riding out corrections is the favored approach of buy-and-hold investors, especially those with a long-term outlook. 

On the other hand, some seasoned active investors take steps in order to make the declines work to their advantage. Here’s how:

1. Rebalance

If you’ve been following a solid investment strategy, your asset allocation was thoughtfully chosen to provide diversification. 

Unfortunately, over time, your allocation will fall out of balance as some assets move at faster rates and in different directions than others. When imbalance happens, it can leave you either overexposed to risk or underexposed to opportunity. 

With the market edging down, it’s crucial to make sure your allocation isn’t out of balance and the protections you’ve put in place are able to work to your advantage. Now is the time to rebalance your investment portfolio. 

2. Assess the Correction

Next, you’ll want to determine what type of correction you’re seeing and whether the move is likely to continue into a bear market. Ask yourself the following questions:

  • How Widespread Is the Correction? Are you noticing the move on a single stock or single index? Take time to look around and see if it’s more widespread. Look into what the Dow Jones Industrial Average, Nasdaq composite index, and S&P 500 index are doing. If they’re all falling at a similar rate, the correction is a widespread one. 
  • Is There a Clear Cause? Corrections can come out of nowhere with no rhyme or reason, or they may be the result of deep underlying issues. The only way to find out is to do a bit of research. 
  • How Deep Is the Cause? Did the U.S. Federal Reserve raise interest rates by a quarter of a percent? If so, although the move may slow lending slightly, it’s a sign that the U.S. economy is doing well, and the market will likely recover quickly. On the other hand, if war was just declared or jobs reports have shown months-long declines in hiring, there may be cause for long-term concern.

3. Act On What You’ve Learned

There are several different actions you could take based on your answers to the questions above, but they’ll all boil down to one of the following:

If it’s a Single Stock or Sector Correction With No Apparent Cause

If the move is in a single stock or sector, and there’s no clear rhyme or reason to it, you’re in luck — you’ve found a buying opportunity. 

Traders take profits all the time, and this profit-taking can lead to painful, short-term declines. Although there’s no telling where the bottom will be, now is the time to strategically buy more shares in a company you like. Here are a few tips for doing so:

  • Set the Floor. If the sell-off has no rhyme or reason, it’s likely a technical move in which traders are taking profits. This means that there will likely be a clear point of support. Use technical analysis to find the support level. 
  • Buy Even Blocks of Shares. As the stock continues to fall to support, make consistent, equal purchases of blocks of shares. This process of dollar-cost averaging ensures you don’t lose too much with a large purchase before further declines or miss out on opportunities when the rebound happens. As the stock falls, your average cost per share will fall as well. When the rebound happens, that reduced average cost means larger gains. 
  • Set Stop-Loss Orders. Set stop-loss or stop-limit orders just below the support level. If the stock falls below this point, there may be a significant underlying reason for the declines. It’s time to exit the position and reassess the situation. 

If it’s a Single Stock With a Short-Term Cause

In some cases, there will be good reasons for a single stock taking a dive, but those reasons will only lead to short-term movement. 

For example, a company may miss earnings or revenue expectations in a single quarter, leading to fear among investors. In this case, the company’s stock will likely fall, but if the company is solid, it will make up the losses and then some in the long run. 

If this is the case, consider using the dollar-cost averaging method described above to gain further exposure to the rebound. 

If it’s a Single Stock With a Serious Problem

If the correction takes place in a single stock and the reason is both clear and long term, it’s time to sell and accept your losses. 

For example, imagine a biotech company you’ve invested in has been working to find the cure for a devastating ailment. Things looked great. However, the FDA rejected the drug, and the company decided it’s going to cut its losses and go back to the drawing board. At this point, the stock’s losses are likely to continue for some time. 

In this case, it’s best to cut your losses and look for a more promising opportunity elsewhere. 

If the Entire Market Is Falling

If you’re looking at a market-wide correction, there are a few things to consider. In the majority of cases, if the entire market is falling, there’s a reason, regardless of how clear or unclear that reason may be. 

One of the most common reasons for market-wide corrections is high valuations. Movement in the market takes place through a series of ebbs and flows. However, when the market flows up too fast without enough ebbs in between, overvaluations happen, and investors begin to take profits. 

These are generally short-term moves and nothing to be concerned about. As a result, outside of buying in on undervalued opportunities as prices fall, there’s not much action that needs to be taken. 

On the other hand, corrections can be signs of deep economic or geopolitical concerns. For example, if job growth in the U.S. seems to be plateauing, home sales are slowing, and unemployment lines are growing during a market correction, all these signs together point to a potential economic recession, which could cause the correction to turn into a long-term bear market. 

Even in this case, it’s important not to panic. After all, panicking leads to poor decision making.

Instead, consider making adjustments to your asset allocation to reduce your overall risk. To do so, move a portion of your money out of stocks and into fixed-income securities and other safe-haven assets. 

After doing so, keep a close eye on economic data. When the economy begins to improve, it’s time to go shopping for discounts in the stock market. At this point, long-term declines will have led the valuations of many quality companies into the dumps, which is great news for buyers. Buying in at these lows will often lead to jaw-dropping profits.

4. Consider Speaking to a Financial Advisor

If the market’s experiencing declines, and you’re not sure what to do, one of the best courses of action is to speak to a professional. 

Sure, it may cost a few hundred dollars to get a financial advisor’s ear for an hour, but those few hundred dollars could save you thousands — or, even better, help you turn a profit in a down market. 

When you have a leak, you call a roofer, even though you know that will cost you more money than doing the research and fixing the roof yourself. There’s no reason to be ashamed to call a financial pro when you have questions about your money and activities in the market. 


Pros and Cons of Market Corrections

Although corrections may be concerning at first glance, they’re not all doom and gloom. In fact, there are several benefits to corrections happening as well. Here are the pros and cons of these moves:

Market Correction Pros

1. Discounted Buying Opportunities

The basic concept of making money in the stock market is the act of buying low and selling high. If you’re looking for a strong entry point, there are few better than in the midst of a correction. During these times, stocks are undervalued, offering discounted opportunities to get in on future gains. 

2. Market Health

Financial markets are complex systems with multiple moving parts, and for those systems to work properly, there have to be checks and balances. Corrections help to keep the market balanced, which is necessary for a healthy system overall. An occasional round of profit-taking helps to keep euphoria in check. 

3. Set the Stage for Bull Markets

A far smaller portion of corrections become bear markets than are followed by bull markets. Statistically, these moves are more often than not signs of a bull market on the horizon. 

Market Correction Cons

Unfortunately, market corrections come with some drawbacks, the most important being:

1. Retail Investor Panic

The biggest victims of corrections are often inexperienced retail investors who panic and sell when stocks fall. While the retail crowd sells for a loss, savvy investors — often institutional investors or experienced traders — are picking up their shares and enjoying the gains the average investor would have had if they’d simply kept a level head. 

2. Can Be Signs of Bear Markets

Although a market correction is more likely to be followed by a bull market than a bear market, there are times when bear markets do set in. If economic conditions are troubling, a correction can be a signal of something even worse ahead. It’s important to understand the reason for the correction and determine whether a long-term bear market is likely before deciding how to react. 

3. Short-Term Financial Pain

Finally, stock market corrections aren’t significant points of pain for everyone. Although nobody likes to see short-term losses, for some investors, the moves can come with significant financial concern. 

This is particularly the case for investors with a short time horizon, like retirees. Investors who are dependent on the income generated through their portfolios often have to withdraw money to survive during market corrections. Unfortunately, these investors don’t always have the option of waiting for the correction to end and may be forced to realize significant losses. 


Final Word

All told, corrections aren’t quite as scary as they’re cracked up to be. Sure, losses can and often do happen during these downward moves. However, they’re important cycles that help to keep the overall financial machine healthy. 

Not to mention, savvy investors can make corrections work to their advantage by strategically buying undervalued stocks for a discount to take advantage of the gains that are likely to follow. 

No matter what your plan is during a market correction, it’s important not to panic. Level heads make educated decisions, and educated decisions usually equate to profits in the stock market.

.kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-table-of-content-wrappadding:30px 30px 30px 30px;background-color:#f9fafa;border-color:#cacaca;border-width:1px 1px 1px 1px;.kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-table-of-contents-titlefont-size:14px;line-height:18px;letter-spacing:0.06px;font-family:-apple-system,BlinkMacSystemFont,”Segoe UI”,Roboto,Oxygen-Sans,Ubuntu,Cantarell,”Helvetica Neue”,sans-serif, “Apple Color Emoji”, “Segoe UI Emoji”, “Segoe UI Symbol”;font-weight:inherit;text-transform:uppercase;.kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-table-of-content-wrap .kb-table-of-content-listcolor:#001c29;font-size:14px;line-height:21px;letter-spacing:0.01px;font-family:-apple-system,BlinkMacSystemFont,”Segoe UI”,Roboto,Oxygen-Sans,Ubuntu,Cantarell,”Helvetica Neue”,sans-serif, “Apple Color Emoji”, “Segoe UI Emoji”, “Segoe UI Symbol”;font-weight:inherit;.kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-table-of-content-wrap .kb-table-of-content-list .kb-table-of-contents__entry:hovercolor:#16928d;.kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-table-of-content-list limargin-bottom:7px;.kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-table-of-content-list li .kb-table-of-contents-list-submargin-top:7px;.kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-toggle-icon-style-basiccircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-toggle-icon-style-arrowcircle .kb-table-of-contents-icon-trigger:before, .kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:after, .kb-table-of-content-nav.kb-table-of-content-id_03170d-d1 .kb-toggle-icon-style-xclosecircle .kb-table-of-contents-icon-trigger:beforebackground-color:#f9fafa;

Source: moneycrashers.com

Amazon Prime Review – Is it a Good Value for the Cost?

At a glance

Amazon Prime Logo

Our rating

Amazon Prime

  • Plans: One standard plan for $119 per year or $12.99 per month (about $156 per year); discounted Student Prime plan for eligible members
  • Features: Prime Delivery (multiple expedited and discounted delivery options); Prime Video; Prime Reading; exclusive Prime deals; unlimited music streaming; unlimited photo storage; eligibility for Amazon Prime Rewards Visa Signature Card subject to credit qualification
  • Advantages: Wide range of shipping options, though variable by customer location; potentially valuable media perks; higher cash-back earnings for qualified Amazon Prime Visa Signature Card users; Prime member discounts at Whole Foods; 30-day free trial period; household memberships; discounted student memberships
  • Disadvantages: Relatively high annual (and even higher monthly) fee; no refunds if you fail to use the service; additional fees for expedited food delivery; music library is weaker than some competitors’

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Dig Deeper

Additional Resources

Amazon Prime is one of the most popular retail loyalty programs in U.S. history. Although Amazon itself doesn’t regularly release membership figures, a study by Consumer Intelligence Research Partners estimated that more than 100 million people had access to Prime in 2019.

Why is Amazon Prime so popular? And is it really a good value for the cost? To decide for yourself, take a closer look at Amazon Prime’s core features and member perks. Then, weigh the facts to determine when and whether it’s worth the annual expense.

Key Features

What’s remarkable about Amazon Prime’s subscriber count is the fact that you must pay to join. Regular Prime members pay $119 per year when billed annually or $12.99 per month (about $156 per year) for the more flexible monthly plan. 

Prime Student members pay $59 per year when billed annually and $6.49 per month (about $78 per year) when billed monthly. To qualify, they must have valid dot-edu email addresses and be able to prove they’re actively enrolled in at least one college course in the United States (including Puerto Rico).

Tens of millions of consumers happily pay comparable annual fees for warehouse store memberships. But most other common retail loyalty programs, such as those run by supermarket and department store chains, cost nothing to join.

But when you look at Amazon Prime’s core features, it’s easy to see why it’s so popular despite the cost.

30-Day Free Trial

All new Prime members are eligible for a 30-day free trial to test-drive the service. During the free trial, you have access to all Prime-exclusive perks and benefits.

You must enter a valid credit card to secure your free trial. Your membership automatically rolls over to paid status at the end of the trial period unless you cancel.

Household Prime Membership

Amazon allows multi-person Prime memberships covering the same household. My wife and I pay a single annual fee for our joint Prime membership. Like merging finances in joint accounts, joint Prime memberships are common practice for spouses and committed domestic partners. 

Household Prime memberships also make sense for long-term roommates.

Prime Delivery

Amazon Prime’s most valuable benefit is Prime Delivery, a collection of Prime-exclusive free and discounted delivery options including:

Free 2-Day Delivery 

Prime’s signature benefit is available on more than 100 million Amazon products for customers in the continental U.S. Members don’t have to worry about a minimum order size or limits on delivery frequency to get free two-day shipping. 

By comparison, free shipping takes anywhere from five to eight business days for non-Prime members, depending on their location and what they order.

Free 1-Day Delivery

Free one-day delivery (next-day delivery) is available across the continental U.S. on more than 10 million Amazon products. Just look for the “Prime FREE One-Day” logo. 

One-day deliveries arrive by 9pm local time the day after you order them. And you’ll never run into minimum order sizes or delivery frequency limits.

Free Same-Day Delivery

Free same-day delivery is more like free 10-business-hour delivery. 

Eligible goods — several million in all — ordered before noon local time arrive by 9pm local time on the same day. Products ordered in the afternoon or evening arrive the following day. 

To qualify, orders must have at least $35 in eligible purchases. Same-day delivery is only available in select cities. Roughly speaking, you can get it in the largest 50 to 100 U.S. metro markets, though Amazon adds new cities regularly.

Free Ultrafast Grocery Delivery 

In select U.S. cities, Amazon offers free ultrafast grocery delivery through Amazon Fresh and Whole Foods Market. In some markets, participating third-party retailers may offer ultrafast grocery delivery through Amazon as well. 

These deliveries typically take no more than two hours during the business day, but they may take longer during off-hours. Look for the “Available Today” icon in the upper left corner of the shopping page.

Secure In-Home Delivery

In select U.S. cities, Amazon offers secure in-home delivery through the Key by Amazon app. 

You can use the app to watch deliveries in real time to ensure the delivery person minds their business inside your home. You must install a special lock and camera and register any frequent guests to limit Amazon’s liability for damage or theft before accepting your first in-home delivery.

Amazon Day Delivery

If you typically place multiple orders per week, you can set a standing Amazon Day to receive everything you ordered during the preceding week. 

It’s a nice perk for Prime members who are frequently absent during the week. For example, setting your Amazon Day for Friday or Saturday reduces the risk of package theft when you’re out of the house on weekdays.

Release-Date Delivery

Amazon Prime members are eligible to shop for preorder products at least two days before their scheduled release dates, then receive free guaranteed delivery the day they’re available to the general public.

Other Amazon Delivery Perks

Amazon’s regular shipping benefits get all the glory. But they’re not the only perks for Amazon Prime members.

Additional perks include:

  • Shopping rewards when you select the no-rush delivery option (either points to use as a credit toward future purchases or instant discounts) 
  • Free delivery on special merchandise that doesn’t typically qualify for free delivery, such as bulky, heavy, or fragile goods
  • Discounted expedited delivery on products that don’t qualify for free one- or same-day shipping

Amazon Prime Video

Amazon Prime Video is Amazon’s Prime-exclusive library of free on-demand TV and movie content. 

Amazon Studios’ top original series and movies (known as Amazon Originals) are available through Prime Video at no additional charge. So are hundreds of popular non-Amazon shows, movies, and live out-of-market sporting events. 

Amazon doesn’t make its entire universe of video content available to Prime members for free. Premium TV series and films may carry one-time rental fees. 

You can stream Prime Video to your TV with a compatible smart TV or external device, such as an Amazon Fire Stick or Apple TV. On the go, you can access content through the Amazon Prime Video app, which is compatible with Android and iOS operating systems.

Amazon Prime Video is the most popular Prime service available on an a la carte basis. If you only want access to Prime Video streaming and don’t care about other Amazon Prime perks like free, fast delivery, you can get it for $8.99 per month. That’s less than competitors like Hulu and Netflix.

Prime Reading

Prime Reading is Amazon’s Prime-exclusive collection of fiction and nonfiction books, magazines, and audio recordings. Prime Reading works are available for download on any compatible device, Amazon-made or otherwise.

Music Streaming

Prime subscribers can stream over 2 million songs, including new hits and old favorites, through Prime Music for free. But it’s worth noting that’s a fraction of what’s available from leading streaming services like Spotify and Apple Music, which have more like 40 million songs in their respective libraries.

Prime Deals & Prime Day Deals

Prime Deals are Prime-exclusive shopping discounts and promotions. They’re subject to change but generally include discounts of 10% to 40% on popular Amazon products, with a focus on home goods, electronics, and kids toys and accessories. Prime-exclusive deals are particularly plentiful on Prime Day.

Prime Add-On Subscriptions

Prime members are under no obligation to add anything to their Prime subscriptions. Before you subscribe to an add-on, check its availability. 

As add-ons, all these subscriptions carry an additional cost — anywhere from $2.99 per month for Amazon Kids+ to $29 per month for NBA League Pass. But they make valuable services for anyone who uses them regularly.

Premium Prime Video Channels

Prime members can watch high-quality video content not included in the regular Prime Video. 

Known as Prime Video Channels, this premium content lineup includes subscription movie and TV channels like HBO and Starz. It also includes a decent lineup of live sports channels and memberships, including NBA League Pass and MLB.TV. 

There are no big channel packages full of content you don’t really watch. You pay only for the channels you want, which helps control your total entertainment cost.

Amazon Kids+

For a small additional monthly fee after a one-month free trial, Prime members can add unlimited kid-friendly content — books, TV shows, movies, and apps — through Amazon Kids+. Kids+ includes built-in parental controls.

Amazon Music Unlimited

Amazon Music Unlimited is an expanded song library with over 60 million songs, which is on par with top standalone subscription streaming services. There’s a decent additional monthly fee associated with this service.

Amazon Prime Rewards Visa Signature Card

The Amazon Prime Rewards Visa Signature Card is a premium cash-back credit card that’s ideal for Prime members who spend heavily at Amazon and Whole Foods.

It’s a more powerful version of the Amazon Rewards Visa Signature Card. The Prime Visa earns 5% cash back on Amazon-universe purchases and an unlimited 2% cash back on purchases at eligible restaurants, gas stations, and drugstores. 

Credit qualification applies. This card is designed for Prime members with good to excellent credit. Before you apply, check your credit score.


Advantages

There are many reasons to invest in an Amazon Prime subscription. 

1. Vast Array of Shipping Options

Amazon Prime’s most valuable benefit is a slew of free or discounted shipping options, from two-day free shipping on some 10 million products to ultrafast two-hour shipping in select metro markets. 

If you frequently place last-minute orders, the rush delivery fees could cost as much as or more than many of the products you buy. That makes Prime’s subscription fee seem like a bargain. 

Even if you’re not in a rush, it could still be worth it. Let’s optimistically say you average a delivery fee of $5 per order. Your month-to-month Prime subscription pays for itself if you place just three orders per month. On an annual subscription, it pays for itself with two orders per month.

2. Media Perks Have High Potential Value for Frequent Users

Amazon Prime Video in particular delivers tremendous value for frequent users when compared with competitors like Hulu. 

Unfortunately, it’s not a universal library. For example, Netflix has a trove of original shows and movies, and the newest, choicest flicks carry per-rental fees. But it’s more than enough to keep Prime members occupied on nights in.

3. Free Trial Period

You can cancel your Prime subscription without penalty during the 30-day free trial period. That’s a lifesaver for budget-conscious shoppers looking to dip their toes in without paying anything out of pocket.

4. Household Membership

Joint household memberships are ideal for couples, families, and long-term roommates looking to pool their shopping and media consumption dollars. 

You can only have two adults on a household membership, but its time-saving features give parents peace of mind without paying an extra dime. Teens can shop on their own, pending your approval via text, and you can customize parental controls to limit and monitor kids’ access to media.

5. Membership Discounts for Students

Verified students enjoy 50% off the monthly or annual cost of a Prime membership. That’s excellent news for penny-pinching scholars expecting to rely on Amazon for timely deliveries of textbooks, electronics, school supplies, and basic dorm necessities.

6. Special Discounts at Whole Foods

Prime members enjoy exclusive 10%-off deals on hundreds of products at Whole Foods, subject to change and availability. 

Were it not for this perk, I wouldn’t bother shopping at my local Whole Foods at all, but this discount is deep enough to make Whole Foods’ prices competitive with nearby downscale supermarket chains.

7. Higher Cash-Back Earnings on the Amazon Prime Visa Signature Card

For frequent Amazon and Whole Foods shoppers with above-average credit, the Amazon Prime Visa Signature Card’s 2% cash back bonus subsidizes or entirely offsets Prime’s annual membership fee. 

Earning 2% back on gas and restaurant purchases is nice too, though you don’t need to be a Prime member for that.


Disadvantages

As good as it is for so many, there are downsides to the Amazon Prime subscription.

1. Relatively High Annual Fee

Amazon Prime has a relatively high annual fee: $119 per year when billed annually and $12.99 per month (about $156 per year) when billed monthly. For reference, that’s roughly double the cost of a basic Costco membership. 

If you’re not a frequent Amazon or Whole Foods shopper, don’t regularly take advantage of Prime’s non-shipping perks and features, and don’t mind waiting a few extra days for delivery, Prime probably isn’t for you.

2. No Partial Refunds for Unused Benefits on Annual Subscriptions

If you use your Prime benefits at any point during your subscription period, you’re automatically ineligible for a refund of Prime fees paid during that period. 

For instance, say you opt for the two-day free shipping benefit on one order in January, the first month of your Prime membership year. Then, you don’t use your subscription for months, deciding to cancel your annual subscription in May. You’ll pay the full cost for the entire year, despite canceling five months in. 

That’s an incentive to pay for Prime on a month-to-month basis, despite the higher yearly cost. And it’s a disadvantage over warehouse stores like Costco, whose expansive satisfaction guarantees make it fairly easy to cancel for a retroactive refund.

3. Expedited Food Delivery Costs More

An Amazon Prime membership does not entitle you to expedited grocery deliveries. For most folks, the fastest, cheapest way to get edible essentials using your Amazon discount is to stop by the nearest Whole Foods Market, where Prime members enjoy 10% off select goods. 

Amazon Fresh is particularly expensive. Mercifully, shipping is free on Prime Pantry orders over $35.

4. Free Music Library Isn’t Particularly Impressive

To most people, 2 million songs sounds like a lot. But Prime’s free streaming music library isn’t very extensive compared with top-of-the-line streaming services like Apple Music and Spotify. 

Those seeking deep cuts may want to look elsewhere or spring for a paid Amazon Music Unlimited subscription.


Final Word

Amazon Prime has a lot to offer, but it isn’t for everyone. 

My wife and I get our money’s worth and feel it’s a fair value. But we know plenty of occasional Amazon shoppers who can’t justify spending more than $100 per year for Prime benefits. Other shoppers take issue with Amazon’s growing retail dominance and prefer to support independently owned retailers instead.

Whether Amazon Prime makes sense for you depends on how much value you can extract from it. If you’re already selecting one- or two-day shipping on frequent Amazon purchases, shopping at Whole Foods, and regularly streaming Amazon content, it makes sense to join Prime. 

If you shop Amazon infrequently or not at all, don’t watch much TV, and don’t live near a Whole Foods, Prime likely isn’t worth it for you. If you’re living somewhere between those two poles, your choice might be tougher, but you now have what you need to make an informed decision.

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The Verdict

Amazon Prime Logo

Our rating

Amazon Prime

Verdict: Amazon Prime is a wildly successful retail loyalty subscription that more than justifies its high annual cost and even higher monthly cost (a premium for the freedom to cancel anytime).

The ideal Prime user is an individual or household willing to pay upfront for free, expedited shipping and able to take advantage of value-added perks like Prime Video and member-exclusive deals.

If you qualify for the Amazon Prime Visa Signature Card, you’re much more likely to offset the annual Prime membership fee. And you may neutralize the cost through increased cash-back earnings alone if you spend enough at Amazon and Whole Foods.

Prime is not ideal for occasional Amazon shoppers or those willing to pay more to support local or non-Amazon retailers.

Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Source: moneycrashers.com