Credit Cards, Featured, News

RushCard Fined $13 Million For System Outage That Impacted 45,000+

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RushCard Fined $13 Million For System Outage That Impacted 45,000+

Nearly a year and a half after a system failure left tens of thousands of RushCard customers without access to funds on their prepaid debit cards, the Consumer Financial Protection Bureau has ordered parent company UniRush to pay $10 million in restitution to customers and a $3 million fine. The company will split the fines with MasterCard, which was in charge of processing RushCard customer transactions at the time.

Green Dot, one of the largest issuers of prepaid debit cards in the U.S. announced earlier this week that they will acquire UniRush in a $147 million deal.  In a statement detailing the terms of the acquisition, Green Dot said it would eat any potential regulatory fines that RushCard might face in the wake of the 2015 system failure.

Read More: MagnifyMoney’s RushCard Prepaid Debit Card Review

In its order, the CFPB said the botched MasterCard transition, although it was 13 months in the making, led to “a rash of preventable failures.” UniRush and MasterCard failed to “properly prepare for the change in processors and failed to adequately test the new system.”

“Throughout this frustrating saga, UniRush’s customer service efforts failed to address problems adequately,” Richard Cordray, director of the CFPB, said in a statement Wednesday. “All of this stemmed from a series of failures that should have been anticipated and prevented.”

The CFPB’s investigation has helped color in the details, and the extent of the damage is staggering.

At the time of the system failure, RushCard representatives did not give a clear answer on how many of their prepaid cardholders were impacted by the glitch. A Yahoo Finance investigation found the source of the glitch occurred when UniRush attempted to transition from one payment processor to a new payment processor, MasterCard. According to the CFPB, the problems officially began on October 10, 2015, and lasted until October 12, 2015, but created a ripple effect of errors and miscommunication that lasted weeks in some customers’ cases.

The glitch led to delayed direct deposits for more than 45,000 of the company’s 675,000 customers, leaving them without access to their paychecks or even government benefits. Thousands more customers accidentally overdrafted their accounts because UniRush “erroneously double posted deposits” into some accounts, leaving the balances artificially inflated, the CFPB says.

During MasterCard’s transition, 1,110 consumers’ accounts were incorrectly suspended, the agency found. Some users could not access funds they set aside in Rush Goals funds, which are meant to be used like a savings account.

One of the most surprising claims in the CFPB’s order is that UniRush used funds consumers loaded onto their RushCards to offset negative balances caused by its processing errors. In the midst of the confusion, some consumers were told their cards had been flagged for fraud and their funds frozen as a result.

One of UniRush’s biggest failures throughout the snafu was inadequate customer service support for impacted customers. Customers reported waiting hours on the phone only to be hung up on by customer service representatives.

“UniRush had no contingency plan that could handle the surge in customer complaints,” Cordray said. “Additional customer service agents who were hired were not sufficiently trained, which meant they often were unable to resolve people’s questions and complaints.

Russell Simmons, UniRush-co-founder and the celebrity face of the brand, said in a statement the ordeal had been “one of the most challenging periods in my professional career.” In the wake of the outage, Simmons responded to disgruntled customers personally on Twitter and Facebook to apologize and offer assistance.

“I cannot thank our customers enough for believing in us, remaining loyal and allowing us to continue to serve their needs,” Simmons said in a statement.

A UniRush spokesperson offered this statement in response to an e-mail from MagnifyMoney:

“RushCard welcomes our settlement with the CFPB. We maintain that our company did not engage in any wrongdoing, and do not admit to such in our Consent Order with the CFPB.

Since the event in 2015, we believe we have fully compensated all of our customers for any inconvenience they may have suffered through thousands of courtesy credits, a four-month fee-free holiday and millions of dollars in compensation.

The vast majority of our customers are incredibly loyal and have either remained with us or returned to RushCard. In fact, the last quarter of 2016 marked the largest number of new customer sign-ups in our company’s history.

With this settlement behind us, we are eager to focus all of our energy now on serving our customers and providing them with the best services available in the prepaid industry.”

In the fall of 2016, the CFPB finalized long-awaited regulations that will add federal protections for millions of Americans who use prepaid debit accounts. Those regulations will go into effect October 2017. The new rules will offer similar consumer protections as debit cards.

How RushCard Will Pay Fines to Customers

According to the CFPB, the amount each RushCard customer can expect to receive depends on what kinds of inconveniences they faced once the glitch occurred. They have attached a fine amount to each type of incident consumers faced as a result of the botched transition.

RushCard parent company UniRush will send funds to affected consumers, the agency said.

  • $25 to each consumer who experienced a denied transaction during the extended blackout period on October 12, 2015.
  • $150 to each consumer whose card was placed in a possible fraud status that prevented them from making purchases or withdrawing funds.
  • $100 to each consumer who received balance information in October 2015 incorrectly indicating that there were no funds in their account.
  • $100 to each affected consumer whose ACH deposits were not processed in the week after the payment processor conversion.
  • $250 to each consumer whose ACH deposit was returned to the funding source, improperly loaded onto an expired or inactive card, or was unable to be successfully processed by UniRush in October 2015.
  • $150 to each affected consumer that UniRush offset due to a negative account balance incurred because of rescission of a duplicate ACH deposit or delayed processing of an ACH debit transaction.
  • $150 to each consumer who could not transact or access account funds because the account was not transferred onto the [MasterCard/MPTS] payment-processing platform or improperly transferred to the MPTS payment-processing platform in a status that would not allow the card to function.
  • $150 to each consumer who could not transact or access account funds because a lost or stolen card was not promptly replaced or the replacement card did not function after the payment processor conversion.
  • $150 to each consumer who initiated a cash load that was not promptly posted to the account following the October 12, 2015, payment-processing conversion.
  • $50 to each consumer whose card-to-card transfer(s) were not processed immediately following the October 12, 2015, payment-processing conversion.

 

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Featured, News

3 Lies Your Student Loan Company Might Tell You

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3 Lies Your Student Loan Company Might Tell You

Student loan servicer Navient found itself in hot water with a consumer watchdog on Wednesday, when the Consumer Financial Protection Bureau announced a long-anticipated lawsuit against the company. Navient, formerly known as Sallie Mae, is the nation’s largest servicer of both federal and private student loan debt. For years, the CFPB alleges, Navient loan servicers steered borrowers who were struggling to repay their loan debt in the wrong direction, “providing bad information, processing payments incorrectly, and failing to act when borrowers complained.

One of Navient’s biggest transgressions, the CFPB alleges, is that Navient representatives encouraged borrowers to put their loans in forbearance even when it wasn’t the best option. By doing so, Navient potentially added $4 billion to its own coffers in the form of additional interest charges.

The lawsuit is a major wake-up call for the student loan servicing industry as a whole. It should also trouble the millions of student loan borrowers who may rely on their student loan servicer for advice when they are deciding how to repay their debts. With vast numbers of customers to support and an increasingly complicated menu of federal repayment plan options to sort through, student loan servicers may not be the best sources of guidance.

Here are three lies student loan servicers may tell you:

1. “Can’t pay? You’re better off putting your loans in forbearance.”

When you can’t scrounge up the money to cover your student loan bill, forbearance can sound like a dream option. Forbearance allows borrowers to pause student loan payments for up to 12 months at a time. Your loan servicer may encourage you to put your loans into forbearance because it is a much easier process on their end. But here’s what they may not tell you: Interest will continue to accrue on your loans. So while you enjoy the break from those student loan bills, your loan balance will balloon more and more every day. Over time, you could bring your loans out of forbearance only to find out you now have even higher monthly payments because your balance has increased.

If you know you will be unable to make your federal student loan payments for an extended period of time, a better option may be to enroll in an income-driven repayment plan. IDR plans can reduce your payments to an affordable amount based on your annual income (sometimes as low as $0/month). Interest will still accrue if you enroll in an IDR plan; however, the government may cover your unpaid interest charges if your monthly payment is not enough to cover them. That benefit lasts for up to three consecutive years from the date you enroll in the IDR plan. And it does not apply to borrowers whose loans are forbearance.

Another perk of IDR plans is that your remaining debt is generally forgiven after your plan period is over – from 20 to 25 years, depending on which plan you are enrolled in (see chart below).

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Source: https://studentaid.ed.gov/sa/

It is especially important for people who work in nonprofit or government jobs to understand their income-driven repayment plan options. After making 120 consecutive federal student loan payments (10 years) while working in the public or nonprofit sector, you may be eligible for public student loan forgiveness. But if you are in forbearance, you are not making any payments at all, which means you do not get credit toward your 120 payments goal. If you are in an income-driven repayment plan, however, those payments will count toward your public student loan forgiveness required payments.

2. “Once you enroll in an income-driven repayment plan, you’re set for life.”

Contrary to what your student loan company may tell you, it is absolutely vital to re-apply for income-driven repayment plans each year. That is because the plans are based on your annual household income. If your income changes during the year, you need to update your income on your income-driven plan in order to calculate the proper monthly payment.
If you do not renew your IDR plan, you could wind up with higher student loan payments you cannot afford and you may risk falling into delinquency again. What’s more, you have to be enrolled in an income-driven repayment plan in order to qualify for federal student loan forgiveness. If you let your enrollment lapse, you could derail your eligibility for future loan forgiveness.

Unfortunately, millions of student loan borrowers fail to renew their income-driven repayment plans each year. The CFPB is working to crack down on student loan companies that do not properly inform borrowers about the deadline to renew, but it’s also up to borrowers to stay on top of their enrollment status. In order to renew your plan, contact your student loan company directly and ask them to re-enroll you. Alternatively, you can download the application and fill it out yourself here: Income-Driven Repayment Plan Request.

Before you enroll in an income-driven repayment plan, know the cons as well as the pros. You may reduce your monthly payment but pay more in interest over the long term. Also, if your loans are ultimately forgiven, you may owe federal tax on that forgiven amount. Use this student loan repayment calculator to find out if IDR is the right plan for you.

3. “We’re happy to allocate your payment to whichever loan you want.”

Student loan borrowers often have multiple loans to manage. Let’s say you’ve got five student loans. One month, you realize you have an extra $200 to put toward those loans. Theoretically, you should be able to ask your loan company to take that extra $200 and apply it to the loan with the highest interest rate. It is generally considered wise to allocate extra payments toward whichever loan has the highest interest rate. This way, you are working to reduce the loan that is accruing the most interest each month and avoiding spending more on interest than you have to.

In the case of Navient, the CFPB alleged that the company’s representatives repeatedly misallocated borrowers’ payments. In order to fix the issue, the borrowers themselves had to keep a close eye on their monthly payments and alert the company.

It’s important to review your loan statements carefully each month to be sure your payments are allocated the way you desire. Some student loan servicing websites make it fairly simple to allocate your payments manually, without having to rely on the help of one of their loan specialists. Even so, play it safe and double-check your loan statements to be sure your payments are being applied according to your wishes.

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Featured, News, Pay Down My Debt

Americans with Holiday Debt Added $1,003 on Average This Year

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With the holiday season drawing to a close, some Americans are going to find themselves nursing a pretty serious debt hangover.

In our second annual holiday debt survey, MagnifyMoney found consumers who took on debt this holiday season will kick off the New Year with an average of $1,003 worth of new debt. That is up from $986 in 2015, for a year-over-year increase of 1.7%.

Our survey consisted of a national sample of 552 Americans who reported they added debt during the holidays.

Here are key findings:

Most people who went into debt didn’t plan on it

Racking up credit card debt isn’t exactly a problem in and of itself, so long as you have the cash on hand to pay it off quickly. But in our survey, we found the vast majority — 65.2% — of consumers who took on debt did so unexpectedly this year, and didn’t budget for the extra expenses.

It’s easy to imagine scenarios in which people might spend more than they can afford over the holidays. Last-minute gifts, family emergencies, and, for some, fewer work hours, can all add up to a hefty credit card bill if not planned for in advance.

Most people will be paying off their debt for 4 months or more

Less than one-quarter of those surveyed said they can pay off their debt within one month. Nearly half (46%) predict they’ll need four months or more to pay off their holiday debt, or will only make the minimum monthly payments.

Nearly 12% of respondents said they only plan on making minimum monthly payments, which can extend repayment for years.

Even a seemingly meager amount of debt can quickly balloon over time if it isn’t paid off aggressively. We can illustrate this using the MagnifyMoney Credit Card Payoff Calculator.

A person carrying an average debt load of $1,003 who makes one $25 minimum payment per month would need 58 months (4.8 years) to pay off their debt. That calculation assumes an average APR of 16%.

On top of paying off their principal balance of $1,003, over that time they would pay an additional $442 worth of interest for a grand total of $1,445.

Credit cards were the most common form of debt

For another year, credit cards reign as the most popular source of holiday debt. In fact, even more consumers reported using credit cards for holiday debt this year than in 2015 — 59.9% vs. 52%.

Unfortunately, the number of consumers who turned to payday loans this year increased, from 6% in 2015 to 7.1% in 2016. Payday and title loans are hands down the most costly options for people who find themselves in need of cash.

We did find one bright spot, however. This year, the rate of consumers who said they used store credit cards fell dramatically, from 30% in 2015 to 17.1% in 2016. Store credit cards can often come with painfully high interest rates and other gotchas like dreaded deferred interest policies.

Shoppers are stuck with higher rates this year

This year, half of survey respondents (50%) said their debt carries an APR of 10% and above. Among those, 34.7% have APRs between 10-19% and 16% carry APRs above 20%.

The rate of people who are stuck with 20% or higher APRs rose significantly year over year, from 9% in 2015 to 16% this year.

But most people won’t bother to get a lower rate

Despite the fact that almost half of respondents expect to take 4 months or more to pay off their debt, a mere 13% of respondents said they plan to shop around to find a better rate with a different bank or loan. That’s even worse than last year, when 22% of respondents said they would shop around for a better rate.

The most cited reason for not wanting to shop around is not wanting to deal with another bank, noted by 20.9% of respondents this year.

Using the MagnifyMoney credit card payoff calculator, we found a consumer with $1,003 in debt at a 16% rate making minimum payments would shave over a year off debt repayment and save over $400 in interest payments by finding a 0% balance transfer.

Millennials were most likely to go into debt over the holidays

Among all age groups, people ages 24-35 were most likely to say they went into debt this holiday season with a rate of 14.3%. With the exception of 45-54-year-olds, the likelihood of going into debt decreased with age. Seniors were least likely to say they went into debt, with a rate of 7.6%.

How to free yourself from holiday debt:

In preparation for the new year, MagnifyMoney released the 2nd edition of its free 45 page Debt Free Forever eBook – that you can download to prepare your action plan, tailored to whether your situation calls for a quick switch to a lower rate, or more significant debt payoff advice.

Key tips for beating the debt cycle include:

  1. Understand where your money actually went. The best way to fix your spending problem is to understand where the money has actually gone. And there are great apps, like LevelMoney or Mint, which can help you understand where your money has gone over the last 3 months. We particularly like LevelMoney, because it splits your expenditure into fixed, recurring expenses and variable expenses.
  2. Review your credit report from all three reporting agencies. You need to know what is on your credit report in order to build a good credit score. You can download your report for free at AnnualCreditReport.com for all three bureaus.
  3. Understand your credit score and put together a plan to improve your score during 2017. People with the best scores never charge more than 10% of their available credit and pay their bills on time every month. Not only is that good for your score, but it is good for your wallet. And you can now get your official FICO score for free in a number of places. Otherwise, you can get your VantageScore at sites like CreditKarma.
  4. If you have a good credit score, your debt can probably be refinanced. Mortgages, student loans, auto loans and credit cards (with a balance transfer or personal loan) can all be refinanced. Find ways to lock in much lower interest rates now before rates go up to help you pay off your debt faster. But avoid extending the term to get a lower payment. The biggest trap people fall into with refinancing is that they lower their rate and extend their term, like taking a 30 year refinance on a mortgage that’s set to be paid off in 15 years. By doing this, you might end up paying more money in the long run. Second, be careful before you refinance federal student loans, because you give up valuable protection.
  5. Paying off the debt with the highest interest rate first will save you the most money (the debt ‘avalanche’ method), but a recent study shows you’re more likely to stick to paying off your debt if you pay the debt with the smallest balance in full first (the debt ‘snowball’ method), even if it doesn’t have the highest interest rate. That’s because small ‘wins’ help build momentum to keep you motivated.
  6. Automate all of your payments. Data has consistently shown that automating decisions greatly increases the likelihood of achieving your goals. To build that emergency fund, set up automatic transfers from your checking to your savings account. (Even better, get a higher interest rate online account and keep it completely separate from your checking account). To build your retirement savings, automate your 401(k) or IRA contributions. And to pay your credit card bill, automate your monthly payments.
  7. ‘Net worth’ is not just a concept for the rich, and you need to focus on your net worth now. Net worth is a simple concept: it is what you own minus what you owe. Building wealth and being financially responsible means you are building your net worth. A good salary doesn’t help your net worth if you’re spending it all on your car and clothes and not saving each year. Focus on the right number: building your net worth.

Before you consider a balance transfer:

If you need to buy yourself more time while you trim expenses and work on paying down your debt, a balance transfer can be a useful tool, but one that can backfire if you’re not disciplined. A balance transfer is simply a process where you transfer the balance from one or more credit cards onto a single new credit card with a different rate.

You can use our balance transfer calculator to estimate whether getting a balance transfer credit card will help you save money and pay off your debt faster.

If it will help, you’ll first need to check your credit score to see where you stand since you’ll be applying for another credit card. Balance transfer offers typically require a credit score of 680 or higher to be approved.

You can check your FICO score for free using Discover’s free FICO Score Card which is even available to non-customers who don’t use Discover products, or use another free source.

It’s also important to do the math before signing up for a new credit card. Be honest about how much you can afford to pay each month to determine how much a balance transfer will save you in the long run.

And keep these tips in mind:

  • Many balance transfer offers have fees of 3% or more. While that can be worth it for large balances, make sure you compare the fee versus what you will save in interest and when you think you’ll pay off the debt.
  • On most cards, balance transfer offers are only valid if you complete the transfer within the first 60 days.
  • One month before your rate expires, look for another offer because when the 0% period expires, the interest rate will rise significantly.
  • Don’t spend on the new card. Unless the 0% offer extends to purchases, you will be charged interest on your spending and rack up more debt.

2016 Post-Holiday Debt Survey Questions

Methodology: MagnifyMoney surveyed 552 U.S. adults who reported they added debt over the holidays via Google Consumer Surveys from December 26 – 27.

Average Debt Among Shoppers Who Said They Went into Debt Over the Holidays

2016: $1,003

2015: $986

Did you go into debt this holiday season?

Age 25-34: 14.3%
Age 35-44: 10.9%
Age 45-54: 12.5%
Age 55-64: 8.5%
Age 65+: 7.6%


If you went into debt, did you plan to go into debt this holiday season?

Yes: 34.8%

No: 65.2%

How much debt did you take on over the holidays?

$0-999: 62.1%

$1,000-1,999: 19.7%

$2,000-2,999: 6.6%

$3,000-3,999: 2.8%

$4,000-4,999: 0.7%

$5,000-5,999: 1.5%

$6,000+: 6.3%

Where did your holiday debt come from?

Credit cards: 59.9%

Store cards: 17.1%

Personal loan: 8.9%

Payday / title loan: 7.1%

Home equity loan: 5.3%

When will you pay the debt off?

I’m only making minimum payments: 11.8%
1 month: 23.9%
2 months: 13.8%
3 months: 16.2%
4 months: 7.4%
5 months+: 27.0%

Will you try to consolidate your debt or shop around for a good balance transfer rate?

Yes: 13.1%
No – Don’t want to deal with another bank: 20.9%
No – Too many traps: 16.0%
No – Rate is already low: 26.3%
No: – Don’t know enough about it: 11.0%
No – Wouldn’t qualify: 12.6%


How stressed are you about your holiday debt?

Stressed: 29.7%

Not Stressed: 70.3%

What interest rate are you paying on your debt?

Less than 9%: 41.7%

10-19%: 34.7%

20-29%: 16.0%

 

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Featured

Judge Deals Major Blow to Obama Administration’s New Overtime Rule

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Judge Deals Major Blow to Obama Administration's New Overtime Rule

In a major blow to one of the last major regulations proposed by the Obama administration, a Texas federal judge has temporarily blocked the implementation of a rule that would have made 4.2 million workers eligible to receive time-and-a-half pay for overtime work.

The judge ruled on Tuesday in favor of a joint lawsuit filed by 21 states challenging the rule, which was set to take effect Dec. 1, arguing that the rule was imposed “without statutory authority”.

The rule would have required companies to pay overtime wages to non-exempt employees who earn less than $47,476 per year — double the current threshold of $23,660. The rules were first proposed in May and the Obama administration gave business owners six months to comply.

Over that time, many companies decided to bump salaried workers pay above the $47,476 threshold to avoid paying overtime hours. Other employers considered hiring more part-time workers and capping existing workers hours at 40 hours per week to avoid the increased cost of paying overtime.

The fate of the overtime laws is uncertain. The judge’s injunction precedes a final ruling on the law, but it suggests he will rule against it. President-Elect Donald Trump has been vociferously against heightened federal regulations and has vowed to impose new limits on how many new regulations can be implemented — for each regulation approved, at least two must be removed, he’s proposed.

So, about those pay raises…

MagnifyMoney spoke with several workers who received raises over the last six months. Christa Hoskins, a 25-year-old graphic designer in Fort Meyers, Fla., received a whopping $10,000 salary increase. Caroline Powell of Athens, Ga. not only received a 10% pay raise but was also promoted to director of customer service at the startup she’s worked for since 2015.

Is it possible that employers will try to walk back raises if the rule is ultimately blocked? Unfortunately,  that may be the case, says Suzanne Boy, an employment law attorney with Henderson, Franklin, Starnes & Holt, in Fort Myers, Fla.

“I do think some employers may decide to walk back pay raises and other changes that were made in anticipation of the rule change,” Boy says. “For the most part, employers will not face legal consequences for rolling the changes back, particularly if the changes were not due to be implemented until next week.”

However, if employees who received raises were granted new contracts, it will be much more difficult for their employers to walk back on those promises. Since each state can have different wage laws, she suggests business owners consult with an employment law attorney in their state before moving forward with any changes.

“If the [compensation] changes have already been implemented and the employee is working at the new rate, employers must be more cautious,” she says.

If the regulation is ultimately implemented, it will increase the number of workers eligible for overtime pay by 3.5% and give business owners the unquestionable challenge of coping with increased labor costs. There hasn’t been an increase to the salary threshold for overtime pay since 2004, when it was raised to $23,660.

Read next: 5 Ways the New Overtime Rules Could Impact Your Paycheck >

Additional reporting by Lori Johnston

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1 in 4 Americans Plan on Racking Up Holiday Debt in 2016, Survey Shows

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1 in 4 Americans Plan on Racking Up Holiday Debt in 2016, Survey Shows

In a new survey of 1,147 American adults conducted by MagnifyMoney, more than one in four (26%) Americans said they plan to rack up holiday debt during the 2016 holiday season that will linger more than a month. Among the 26% who will rack up debt, 66% expect they will take three months or more to pay off the debt.

Holiday debt can quickly spiral out of control. MagnifyMoney found the average shopper surveyed who added debt during the 2015 holiday season racked up $1,073.

Using a credit card with average APR of 16% and making monthly minimum payments of around $25, it would take that person more than five years (61 months) to get out of debt, according to MagnifyMoney’s Credit Card Payoff Calculator. Over that time, he or she would pay an additional $496 worth of interest charges.

Nearly one-third (32%) of this year’s survey respondents said they incurred holiday debt during the 2015 shopping season. People who took on holiday debt in the past are much more likely to take on debt this year because they can’t afford to pay cash, our survey found, with 74% saying they will incur debt this year. They are also more likely to feel financially stressed.

Among those respondents who incurred credit debt during the holidays in 2015 , the average shopper added $1,073 of holiday debt. And a staggering 74% said they will likely take on more credit debt again this year.

More debt = more financial stress

More than half (59%) of respondents who took on debt over the holidays in 2015 said they accumulated $500 or more of debt. Among people who said they racked up $500 or more in holiday debt in 2015, MagnifyMoney found greater trends of financial stress and a greater likelihood of incurring additional debt in 2016.

 

Check out our full survey findings below or download a fact sheet here.

Magnifymoney Holiday Debt Survey

Contact:

Kellie Pelletier, Public Relations
kpelletier@magnifymoney.com

Mandi Woodruff, Executive Editor
mandi@magnifymoney.com

MagnifyMoney’s Tips on How to Avoid the Holiday Debt Trap:

1. Steer clear of store credit cards

The holidays are prime time for retailers selling store credit cards to customers. Customers are often wooed by promises of upfront discounts on purchases, helping them save on their holiday shopping in the short term. But store credit cards notoriously have some of the highest interest rates on the market — an average APR of 23.84% versus 16.28% for regular credit cards. People with poor credit may be saddled with store cards with interest rates as high as 27%.

Store credit cards can also come with onerous deferred interest fees — they may offer no-interest promotions for a certain amount of time. But if you fail to pay off the entire balance by that date, you can be slapped with the entire interest balance in one lump sum.

If you want to get a discount on your purchases and signing up for a store credit card is the only way to get there, just be sure you have enough cash on hand to pay your bill right away. With most discounts only 10% to 20% off, you’ll actually wind up losing whatever you saved if you get slapped with a 20% or higher interest rate later.

2. Make a budget and stick to it

The downfall of most holiday shoppers is that it is incredibly easy to get swept up into the excitement of shopping. Before you know it, your budget is blown, and it isn’t until after the giddiness of the holidays winds down that you realize the extent of the damage. Avoid the holiday debt hangover by creating a budget early and sticking to it no matter what.

3. Exchange ‘Secret Santa’ gifts with family and friends

Secret Santa is a fun and smart way to drastically reduce your holiday gift-giving budget. Ask your siblings or friends to draw names from a hat rather than buying gifts for everyone individually. You can all agree on a price limit so no one feels like they over- or underspent.

Can’t draw names in person? Try a Secret Santa online tool like Secret Santa Generator or DrawNames.com.

4. Get rid of last year’s holiday debt first

The average shopper racked up $1,073 worth of credit card debt last year, our survey found. If you have credit debt left over from last year’s shopping, don’t pile on more debt and continue to let interest accrue. Consider signing up for a 0% APR credit card and making a balance transfer (check out the best ones of the year right here). You’ll buy yourself additional time to pay off last year’s debt, and you’ll improve your credit score in the process.

5. Start saving for next year’s holiday shopping today

If you felt unprepared for holiday shopping this year, it might be because you didn’t have enough time to save up. Going into next year, open a savings account and label it “Holiday Shopping.” Then estimate how much you’ll need to save — $500? $1,000? Divide that number by 10 and set up a direct deposit from your paycheck into that savings account for that amount. For example, if your goal is to save $1,000, you’d need to contribute at least $100 per month for 10 months to reach that goal.

Why only 10 months? That way you can start shopping a bit earlier than December, giving you plenty of time to find the perfect gifts for your loved ones.

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College Students and Recent Grads, Featured

Where Students Can Cover College Tuition with a Part-Time Job: Study

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Students Studying Learning Education

Affordability was a major factor when 19-year-old Bintou Kabba was considering colleges to attend after high school.  She enrolled at CUNY Lehman, a four-year public university in her native Bronx, N.Y. The 10-minute commute from her home, where she lives with her parents and six siblings, was part of the allure. But the low cost of tuition was essential for Kabba, an ambitious student with dreams of becoming a neonatal gynecologist but without the financial means to afford a pricey university. Most CUNY Lehman students pay just $2,374 out of pocket for a year of schooling.

But before she began classes, Kabba needed a job. “I was broke and I needed money so badly,” she told MagnifyMoney. So, she joined the ranks of so-called “working learners” attempting to counter the costs of college with part-time jobs. About 40 percent of undergraduates and 76 percent of graduate students work at least 30 hours a week throughout the school year, according to the Georgetown Center on Education and the Workforce.

As college costs have skyrocketed in recent years, the old adage “Work your way through college” has become increasingly out of touch with reality. Students who work rarely earn enough to truly cover the costs of their education.

MagnifyMoney sought to find out which colleges are still affordable enough for working students to afford on part-time wages. In a new study released Nov. 9, we found a student earning the federal minimum wage ($7.25/hr) would have to work full-time — nearly 44 hours per week — to afford the average annual net tuition at a four-year public institution today.

We then wanted to see how far a student working 20 hours per week at their state’s minimum wage could get toward covering their net tuition. Their post-tax annual earnings were compared with the net tuition price at more than 2,500 public and private non-profit institutions.

Key findings:

  • We found it is impossible to cover the tuition gap at most four-year schools, both private and public.
  • Students can afford to cover their net tuition costs with a part-time job at only 50 out of 645 (7.75%) of four-year public institutions. Students can feasibly cover net tuition costs with a part-time job at just 24 out of 1,208 private nonprofit four-year institutions (2%).
  • Two-year public institutions were significantly more affordable — it was feasible for part-time working students to cover net tuition at 287 out of 656  two-year public schools (43.75%). On average, a student earning the federal minimum wage would only need to work roughly 25 hours per week to cover net tuition costs at a two-year public institution.
  • Less than 5% of private two-year and private four-year institutions are affordable enough for a part-time working student, MagnifyMoney found.

The cost of going to college has outpaced the rise in wages by a staggering amount over the last decade. When faced with a gap in college costs and earnings, families typically have just one place to turn – student loan debt.

Kabba wanted to avoid student debt at all costs. That drove her decision to enroll at CUNY Lehman. The school is the fourth most affordable four-year public college on our list. Earning the New York state minimum wage of $9/hour, a part-time working student could pocket more than enough to cover their expenses.

Still, working long hours to cover college expenses is far from the ideal college experience.

Research has shown demanding work schedules can all too easily conflict with student’s academic performance. Georgetown’s Center on Education and the Workforce warns against any job that demands more than 30 hours per week from a full-time student.

On a tip from her high school counselor, Kabba landed a $10/hour gig soliciting telephone donations at a midtown-New York charity. During her freshman year, she worked 20 hours most weeks. With a full course load to juggle as well, it wasn’t long before Kabba started to feel the pressure of conflicting responsibilities.

“It was just too much,” she said. To get to work each day, she took a 45-minute train ride from the Bronx to midtown. Rather than working around her class schedule, she had to work her class schedule around her job, because the charity had strict guidelines on when workers could call donors. By the end of her freshman year, her grades started to reflect her strain.

“I decided I’d rather be unemployed and actually do well in school,” says Kabba. She quit before her sophomore year.

Not long after leaving her inflexible charity job, Kabba found another solution. Through a special program offered at CUNY Lehman, she landed a job on campus that paid $9/hour and only required 10 hours of work per week. Reducing her hours and pay meant smaller paychecks, but a better chance she’ll earn the grades she needs to achieve her goal of going to medical school. “It’s on campus and it’s convenient,” she said.

Behind the data

To make our findings more exact, we used the minimum wage of the state in which each school resides to determine the annual earnings of working students. Next, we analyzed data from the National Center for Education Statistics to determine the net tuition costs of each school. The net price is more accurate than a college’s sticker price because it factors in financial aid, scholarships and grants. The net price is what students and families actually pay out of pocket.

We stuck to a 20-hour part-time work schedule because we thought it was unrealistic to assume students could juggle a full-time course schedule and a full-time job. In fact, Georgetown recommends students work no more than 30 hours per week in order to maintain good grades in college.

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Tips for working college students

It is virtually impossible to “work your way through school” anymore. The old adage just doesn’t apply to today’s college students, who are paying more than ever for college tuition and can’t feasibly cover their expenses with part-time income alone.

However, there are still benefits to working while in college. Here are some tips on how to maximize savings as a working student.

How to save on college costs with a part-time job

  1. Start small. Try going to a lower cost community college and transferring your credits to a larger institution later. As our study shows, it’s possible for students working part-time to cover net tuition at the majority of two-year public institutions 43.75%). By covering tuition and fees with a part-time job at a two-year school, you can reduce your need for financial aid by half and still graduate from a four-year institution.
  2. Work part-time at a campus job or through a work-study program. Jobs tied to campus are more likely to work around your course schedule and be flexible during unusually demanding times of year, such as quarterly exams and finals.
  3. Stay close to home. Not only will you save on tuition by enrolling at an in-state school, but if you are close enough to continue to live with your family while you’re studying, you could save big on housing expenses. If living at home means commuting by car or public transit for classes, factor in those additional costs.
  4. Don’t rely on student loan debt for expenses you can cover with part-time work. Save the student debt for tuition and other fees that are usually required in one lump-sum payment at the beginning of the semester. When it comes to extra expenses, like your trip to Key West for spring break, or moving to an off-campus apartment, lean on income earned from a part-time job. If you move off campus, you might find it is possible to afford rent (with support from roommates) with income from a part-time job.
  5. Choose your job wisely. If possible, find work in your area of study, which can give you an early jump start in the job market before you even graduate. If you have several years of job experience under your belt at graduation, you’ll be light years ahead of your peers graduating with a comparatively thin resume. Another study by Georgetown’s Center on Education and the Workforce found college students who worked or took internships while in college were more upwardly mobile after graduation and more likely to move into managerial positions.
  6. Take advantage of in-state tuition rates even if you are not a permanent state resident. Each state has its own residency requirements for students looking to qualify for in-state tuition rates, which can be significantly lower than out-of-state rates. Some states will allow students to qualify for in-state tuition if at least one of their parents has been a resident for at least one full year before the student enrolls. If the student is independent — meaning they do not receive financial assistance from a parent to attend college — most states require at least one year of residency in the state. There are other documentation requirements, which can be found at FinAid.org.
  7. Don’t sacrifice your studies for a paycheck. At a certain point, the financial benefits of working part-time might not be worth the additional stress and attention a job might demand. The majority of working students ages 16-29 work 20 hours or less per week. However, research has shown both working and non-working college students graduate with similar levels of student loan debt — 34% of working college students graduate with $25,000 or more in student loan debt, compared to 37% college students who don’t work while in school.
  8. Graduate early (or on time). Dragging out your time in college is a quick way to add thousands of dollars to your student debt load. And it happens more often than you might think. Only 40% of students graduate within four years of enrollment across all types of institutions, according to the Department of Education. Less than one-third of college students graduate on time at public institutions. Save additional tuition expenses by completing your degree in four years or less.

 

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Featured, Health

Here’s How Much More Your Obamacare Plan Will Cost in 2017

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obamacare Affordable Care Act paper family

As widely expected, millions of Americans who rely on Obamacare for health insurance will face higher premium costs going into 2017. Premiums will rise 25% on average, according to a new report released by the U.S. Dept. of Health and Human Services (HHS). That’s one of the largest year over year spikes premiums have seen since the marketplace opened in 2013.

A 27-year-old woman who paid $242 for a benchmark silver plan in 2016 will now face a premium of $302 before tax credits. The silver lining here is those three words: before tax credits. Roughly 85% of Obamacare customers currently qualify for tax credits that can offset the cost of their premiums. The average subsidy in 2016 was $290/month. Tax credits can help offset rising premium costs, but they depend largely on household size and income. Beginning in November, consumers can calculate their tax credit for 2017 here.

How much premiums will rise depends largely on the state where consumers are shopping. In states where major insurers have exited the federal marketplace, premiums will see much higher gains. Further contributing to rising premiums, insurers are now raising prices in order to recoup losses they’ve incurred since entering the Marketplace in 2013. For example, BlueCross BlueShield reversed its decision to exit the marketplace in parts of Arizona in September. But as a condition of its decision to stay in the marketplace, the company said it would raise premiums by more than 50%. The company will have very little competition this year. Arizona lost a total of six major insurers this year, bringing the total number of insurers offering plans on the marketplace from eight to only two.

Arizona customers will feel those price hikes now. A 27-year-old in Arizona will pay a whopping 116% more for a benchmark silver plan in 2017, according to HHS.

Minnesota consumers relying on Blue Cross Blue Shield for coverage were also unlucky this year. Citing losses of $500 million over its three year run on the state’s exchange, BCBS decided in June to pull all but one plan from Minnesota’s state-run healthcare marketplace, leaving more than 100,000 Minnesotans without plans. The benchmark silver plan will rise an average of 59% for a 27-year-old in Minnesota going into 2017.

The silver lining

The government report focused largely on positive news for Obamacare consumers going into 2017.

Three-quarters of Marketplace customers in states using the federal health care exchange (Healthcare.gov) will be able to find plans with a monthly premium under $100 after factoring in tax credits. On average, these consumers will have 30 different insurance plans to choose from.

But the number of individual insurers offering plans in states has decreased in many states. Pennsylvania and Ohio each lost five insurers. Arizona lost six, the largest loss of any state. In several states, including Alaska, Arkansas, Wyoming, and South Carolina, only one major insurer offers plans on the marketplace. When there are fewer insurers operating in a given state, there is less competition and, as a result, potentially higher rates for consumers.

The Bottom Line:

This all means one thing for Obamacare consumers facing open enrollment Nov. 1: It is more important than ever to shop around and compare plans. If customers don’t shop around, they will simply be re-enrolled in their 2016 coverage. And if their 2016 plan is no longer available, the marketplace will stick them in a similar plan that could cost much more.

“In 2017, more than 7 in 10 (76 percent) current Marketplace enrollees can find a lower premium plan in the same level by returning to the Marketplace to shop for coverage rather than re-enrolling in their current plan,” according to the report.

MagnifyMoney has several tips for people who found out that their Obamacare plan has been dropped.

The open enrollment period of marketplace health plans is a crucial time to save and select the right coverage for your family’s needs. Open enrollment for Obamacare consumers begins November 1 and ends January 31. You can shop for plans in advance right now by visiting Healthcare.gov or your state insurance marketplace.

Source: HHS
Source: HHS

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Featured

Republicans Beat Democrats on This Easy Personal Finance Quiz

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When it comes time to vote Nov. 8, many voters will head to the polls with their own pocketbooks in mind. From taxes to health care, some of the candidates’ most divisive policy initiatives, if implemented, could have a dramatic impact on the purse strings of millions of American households.

But exactly how savvy are Republicans and Democrats when it comes to matters of personal finance? MagnifyMoney decided to put the major U.S. political parties (including Independents) to the test.

We gave over 1,000 potential voters ages 18 and up a six-question quiz to test their knowledge of basic financial principles, from interest rates to inflation. The quiz itself was borrowed from the official financial literacy test created by the Financial Industry Regulatory Authority (FINRA) in 2009.

financial quiz by political parties

On average, Republicans were more likely to pass the quiz (answering at least 4 out of 6 questions correctly) than Democrats — 60.9% vs. 56.4%. Independents fell right in the middle, with a pass rate of 55.4%.

Not surprisingly, Republicans boasted the highest average score of all with 59.3%. Independent voters weren’t far behind, with an average score of 57.7%. Democrats came in third place, with an average score of 56%.

financial quiz passed test

On the bright side for Democrats, a larger share of respondents from this party were more likely to get every answer correct — 10.3% vs. 9.3% of Republicans. But in the end, Democrats were dragged down by a higher complete fail rate (answering 6 out 6 questions incorrectly). Nearly 13% of Democrats answered every question wrong, compared to 8.7% of Republicans and 7.4% of Independents.

financial quiz perfect score

A possible explanation for Republicans’ higher scores could be the demographic makeup of the party itself. Republicans as a whole tend to skew older and male, according to the Pew Research Center. It appears the party benefited from that base in our quiz. We found that both men and older respondents scored higher overall. Democrats, on the other hand, tend to skew younger and more female, according to the same Pew study. Both of these groups earned lower average scores on our quiz.

financial quiz financial quiz

financial quiz by-gender

Check out the full results below and don’t forget to vote!

Methodology: Survey results are based on a MagnifyMoney survey conducted by Google Consumer Surveys on Sept. 28, 2016. There were 1,044 respondents — 351 identified as Democrats, 343 identified as Republicans, and 350 identified as Independents. The survey questions were based on the official FINRA Financial Literacy Quiz.

Full Survey Results:

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Featured

MagnifyMoney: 2016 Housing Affordability Study

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Housing Affordability Study

As the cost of housing soars ever higher and household earnings remain stubbornly stagnant, how realistic is homeownership for young people today?

Saving up for a new home can feel like an endless slog for young working Americans. The upfront costs alone — the down payment, closing costs, property taxes, etc. — are enough to scare off prospective buyers who are struggling to make ends meet.

Just over one-third of Americans under age 35 owned homes as of mid-2016, down 12% from 2010, according to U.S. Census data. While homeownership rates fell across all age groups during that same period, none experienced a steeper drop-off than the under-35s.

MagnifyMoney wanted to figure out how realistic homeownership is for young Americans today — that is, how long it would take them to save up for a new home in their area if they started saving now.

Calculating Home Affordability

Our analysis revealed two different sets of buyers — those who can afford the cost of a new home in their area and those who cannot. Affordability was largely driven by a worker’s ability to qualify for a mortgage loan large enough to cover the cost of a median-priced home in their metro area. Given these two different cases, we used two methods to determine how long it would take these groups to save for a home.

For buyers who can’t afford a large enough mortgage:

We assumed that the borrower can spare 35% of their monthly income toward mortgage-related payments. Based on this amount and the current interest rates for a 30-year fixed-rate mortgage, we calculated the total mortgage that the borrower can afford to take.

We then took the mortgage amount they would qualify for and subtracted it from the cost of a median-priced home in their area to find the mortgage gap they need to fill. Then, we added other necessary upfront costs: 4.5% closing costs and a standard emergency cash reserve equal to one month’s mortgage payment.

We determined, based on the median income for their age, how long it would take to save that amount, assuming a 20% savings rate.

Example:

We estimate a 25 to 44 year-old homebuyer in Salinas, Calif., would reasonably qualify for a $275,385 mortgage. A median-priced home in Salinas, Calif., costs $750,000. So, she would have to save at least $474,615 to fill the mortgage gap. On top of that, she would pay another $33,750 in closing costs (assuming an estimate of 4.5%) and need to set aside a $1,274 emergency cash reserve.

In total, she would need to come up with $509,612 to be able to buy a home in her area. If she saved 20% of her income toward that goal, it would take her 46.75 years.

For buyers who can afford a large enough mortgage:

Once again, we assumed that the borrower can spare 35% of their monthly income toward mortgage-related payments. Based on this amount and the current interest rates for a 30-year fixed-rate mortgage, we calculated the total mortgage the borrower can afford to take.

We then determined how much they’d need to save for a 20% down payment. We added to that the cost of closing costs and a one-month mortgage reserve.

For example:

A median-priced home in Johnstown, Penn., costs $74,900. So this buyer would have to save at least $14,980 to cover a 20% down payment. On top of that, he would pay another $3,370 in closing costs (assuming an estimate of 4.5%) and set aside $1,370 in an emergency cash reserve.

In total, he’d need to save $19,720. Saving 20% of his income toward this goal, it would take him 1.85 years.

Key Findings

  • Get ready for the long haul: Of the 380 metro areas we analyzed, we found no place in America where a worker of any age group could realistically save up for a new home in less than a year.Across all 380 metro areas analyzed…
    • 45 to 65 year-olds would need an average of 4.69 years to save for a home.
    • 25 to 44 year-olds would need an average of 5.63 years to save for a home.
    • 15 to 24 year-olds would an average of 27.2 years to save for a home.
  • Where homeownership is completely out of reach:
    • In 20.79% of metros (79 out of 380), workers of all age groups wouldn’t be able to qualify for a mortgage loan large enough to cover the cost of a median-priced home.
    • 15 to 24 year-olds wouldn’t qualify for a mortgage loan large enough to cover the cost of a median priced home in 357 out of 380 metros analyzed (93.95%).
    • 25 to 44 year-olds wouldn’t qualify for a mortgage loan large enough to cover the cost of a median-priced home in 68 out of 380 metros analyzed (17.89%).
    • 45 to 65 year-olds wouldn’t qualify for a mortgage loan large enough to cover the cost of a median-priced home in 29 out of 380 metros analyzed (7.63%).

The least and most affordable metros for 25 to 44-year-olds

25-44-The-Most-Easiest-Places
25-44-The-Most-Difficult-Places

A closer look at the housing market for 25 to 44-year-olds:

  • The most affordable metro area: Johnstown, Penn., is the easiest place for 25 to 44 year-olds to save for a home. The key: Affordable housing is in abundance. A median-priced home in Johnstown is $74,900. With a goal of saving enough to cover a 20% down payment, closing costs, and a one-month mortgage payment reserve, the total amount workers would need to save is $19,720. Earning the median annual income for that area of $53,164, they would need just 1.85 years to save.
  • The least affordable metro area: Salinas, Calif., is the most difficult metro area for 25 to 44 year-olds dreaming of homeownership. Earning the median annual salary of $54,499 and looking at a median-priced home listed at $750,000, they would need a staggering 46.75 years to save up enough. The reason? On an annual household income of $54,499, a homebuyer would only realistically be able to qualify for a $271,000 30-year fixed-rate mortgage loan, leaving a half-million-dollar gap to fill.
  • Midwest is best: 9 out of the 10 most affordable metro areas are located in the Midwest, where housing prices are significantly lower compared to other regions. On average, it would take just 2.28 years for a 25 to 44 year-old to save for a home in the 10 most affordable metros.
  • California is where homeownership dreams go to die: 9 out of the top 10 most expensive metro areas for 25 to 44 year-old homebuyers are in California.
    • The average time needed to save for a home in the top 10 most expensive metro areas is a whopping 29.15 years.
    • It would take 25 to 44 year-olds at least three years to save for a home in 7.37% of metro areas.
    • It would take 25 to 44 year-olds between three and five years to save for a home in 53.16% of metro areas.
    • It would take 25 to 44 year-olds between five and 10 years to save for a home in 34.47% of metro areas.
    • It would take 25 to 44 year-olds more than 10 years to save for a home in 5.00% of metro areas.

The least and most affordable metros for 45 to 65-year-olds

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45-65-The-Most-Difficult-Places

A closer look at the housing market for 45 to 65-year-olds:

  • The most affordable metro area: Danville, Ill., is the easiest place for 45 to 65 year-olds to save for a home today. A median-priced home in Danville is $68,200. With goal of saving enough to cover a 20% down payment, closing costs, and a one-month mortgage payment reserve, the total amount workers would need to save is $18,012. Earning the median annual income for their age group in that area ($51,975), they would need just 1.73 years to save.
  • The least affordable metro area: Homeownership dreams don’t get any more realistic with age in Salinas, Calif. It is also the most difficult metro area for 45 to 65 year-olds dreaming of homeownership. Even though this age group earns a median income 22% higher than 25 to 44 year-olds in this area, it would still take them nearly three decades (28.98 years) to save up for a median-priced home of $750,000. On an annual household income of $70,368, a 45 to 65 year-old homebuyer would only realistically be able to qualify for a $377,567 30-year fixed-rate loan, leaving a massive gap to fill — even without including closing costs and a one-month mortgage reserve.
    • It would take 45 to 65 year-olds at least three years to save for a home in 16.32% of metro areas.
    • It would take 45 to 65 year-olds between three and five years to save for a home in 57.37% of metro areas.
    • It would take 45 to 65 year-olds between five and 10 years to save for a home in 23.16% of metro areas.
    • It would take 45 to 65 year-olds more than 10 years to save for a home in 3.16% of metro areas.
  • Midwest is best: 9 out of the 10 most affordable metro areas for 45 to 65 year-olds are also located in the Midwest, where housing prices are significantly lower compared to other regions.
    • On average, it would take just under three years (2.08) to save for a home in the 10 most affordable metros.
  • The California struggle: 9 out of the top 10 most expensive metro areas for 45 to 65 year-old homebuyers also are in California.
    • The average time needed to save for a home in the top 10 most expensive metro areas for this age group is a whopping 19.72 years.

The least and most affordable metros for 15 to 24-year-olds

15-24-The-Easiest-Places
15-24-The-Most-Difficult-Places

A closer look at the housing market for 15 to 24-year olds:

Of course, we don’t know many 15-year-olds who are shopping around for a single-family home these days, but U.S. Census Bureau data limited us to this age range. However, our findings still shine a light into the challenges facing the youngest homebuyers.

  • It would take 15 to 24 year-olds at least three years to save for a home in 0% of metro areas.
  • It would take 15 to 24 year-olds between three and five years to save for a home in 1.58% of metro areas.
  • It would take 15 to 24 year-olds between five and 10 years to save for a home in 23.42% of metro areas.
  • It would take 15 to 24 year-olds more than 10 years to save for a home in 75.00% of metro areas.
  • The most affordable metro area: Sheboygan, Wisc., is the easiest place for 15 to 24 year-olds to save for a home today. Although median-priced homes are relatively more expensive in Sheboygan ($134,900) than other inexpensive metro areas on this list, young workers there earn relatively higher salaries, which enables them to save more toward future home costs. With a goal of saving enough to cover a 20% down payment, closing costs, and a one-month mortgage payment reserve, the total amount workers would need to save is $33,877. Earning the median annual income for their age group in that area ($38,510), they would need just 4.40 years to save.
  • The least affordable metro area: Santa Cruz-Watsonville, Calif., isn’t simply a difficult place for young workers to save for a home — it’s pretty much impossible. On an annual household income of $21,178, a 15 to 24 year-old homebuyer would only realistically be able to qualify for a $36,506 30-year fixed-rate mortgage loan. With a median-priced home listed at $769,500, their mortgage loan would hardly make a dent. They would need 181.27 years to save enough to fill in that gap.
    • In the 10 most expensive metros, it would take 15 to 24 year-olds an average of 129.53 years to save for a home.
  • Things look much better in the South and Midwest: The 10 most affordable metro areas for 15 to 24 year-olds are also located in the Midwest and the South, where housing prices are significantly lower compared to other regions.
    • On average, it would take just under five years (4.79) to save for a home in the 10 most affordable metros.
  • Surprisingly expensive metros for 15 to 24 year-olds:
    • While 6 out of the 10 most expensive metro areas are located in California, there were some surprising findings in other states.
      • The 4th most expensive metro is Corvallis, Ore. Home prices are half as high as the most expensive metros on this list, but median incomes for this age group are among the lowest: $12,369.
      • Morgantown, W.Va., is the 6th most unaffordable metro for the youngest workers. 15 to 24 year-old workers in Morgantown earn among the lowest median incomes in the 380 metros we analyzed: $8,805.

Housing Affordability Calculator

Find out how long it would take you to save up for a home in your area.

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Download the data behind this report:

Data analysis was conducted by Naveen Agarwal, MagnifyMoney Senior Data Analyst.

Metro Rankings for Ages 15 to 25

Metro Rankings for Ages 25 to 44

Metro Rankings for Ages 45 to 65

Metro Rankings for Ages 65 and Up

Metros by State: Searchable Database

Full Study Data

Appendix/Data Sources

Home prices: June 2016 median listing prices data provided by Zillow

Median income: Annual household income by age group and metropolitan area for 2014: U.S. Census Bureau.

Real Estate/Property Taxes: Real estate taxes for owner occupied units for metropolitan areas: U.S. Census Bureau

Mortgage interest rate: Bankrate.com National average on a 30-year fixed rate mortgage is 3.57% as of Sept. 1, 2016.

Downpayment: We assume a downpayment of 20%.

Savings rate: We assume homebuyers would save 20% of their annual take-home pay.

Closing costs: We assume closing costs of 4.5%.

Home Insurance rates by metro area: National Association of Insurance Commissioners (NAIC)

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MagnifyMoney is Hiring!

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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About the MagnifyMoney News Team:

MagnifyMoney’s editorial team creates original content that helps shine a light on some of the murkier aspects of finance today. From helping our readers tackle medical debt to offering first-person stories of people encountering financial struggles, we strive to deliver content that people find relatable and that will encourage them to take more control of their finances. The editorial content we create is never provided by any financial institution and is never reviewed, approved or otherwise endorsed by any of these entities.

About MagnifyMoney:

MagnifyMoney is a consumer financial education website that evaluates thousands of products from banks, credit unions and new entrants, offering detailed, impartial product comparisons. MagnifyMoney’s signature offering is its Magnify Transparency Score, which gives products an A,B,C or F grade, based on transparency and simplicity. MagnifyMoney’s listings and rankings let math and transparency rule. The products we feature are in no way driven by commissions or revenue we receive.

Our founders

MagnifyMoney was founded in 2014 by Nick Clements and Brian Karimzad. Nick has nearly 15 years of experience working at top banking institutions, including Citigroup and Barclaycard, where he ran the UK credit card business. MagnifyMoney.com offers consumers a powerful resource with its personalized, side-by-side comparisons of banking and credit union products in a free, unbiased and easy-to-navigate interface. MagnifyMoney is headquartered in New York, NY.

CURRENT LISTINGS: 

Personal Finance Reporter (NY, NY)

Full-time, salaried

Responsibilities:

  • Write 3 articles per week for MagnifyMoney, a leading consumer financial education website.
  • Generate ideas for headlines, graphics and visuals to accompany stories
  • Keep track of buzzy finance news online and social media
  • Create a mix of stories that cover recent news, features that follow real people facing financial struggles and service-driven stories that help people better manage their finances and get out of debt

Requirements:

  • 1-3 years of online and/or print reporting experience is a MUST
  • Must be able to generate good story ideas and find sources for stories independently
  • Must have a decent understanding of general personal finance topics, like consumer debt, credit cards, student loans, mortgage loans, and other issues that impact our wallet.
  • Must be a thoughtful communicator and eager to contribute to the team
  • Must have great attention to detail and rigorously fact-check every story

The fun stuff

  • MagnifyMoney offers competitive salaries, 100% employer-paid health benefits, a 401(k) with 4% match, and flexible vacation days.
  • You’ll get to work from our lovely Flat Iron office, however, we do allow employees to work remotely when necessary.

Interested candidates should include the following to apply:

  • Send your resume and 3 recent writing samples to mandi@magnifymoney.com.
  • E-mail addresses for at least 2 references (previous editors or managers)
  • Links to your Twitter and Facebook professional account (if applicable)

Investigative Reporter (NY, NY)

Full-time or freelance

We’re looking for an ambitious investigative journalist to join our news team in New York City. We are looking for reporters with a proven track record of sniffing out unique stories in the world of finance.  We don’t just want to produce content that is entertaining to read. We want to produce investigative features that better educate people about their finances and help expose any businesses or industries that are working against everyday people.

We are seeking a reporter who has a deep understanding of the personal finance beat, and a keen ability to find stories that haven’t been told yet. People with experience in a variety of storytelling formats (graphics, audio, video, print) will have a major advantage.

Requirements:

  • 3-5 years of online and/or print reporting experience is a MUST
  • Must be able to generate good story ideas and find sources for stories independently
  • Must be a thoughtful communicator and eager to contribute to the team
  • Must have great attention to detail and rigorously fact-check every story

The fun stuff

  • MagnifyMoney offers competitive salaries, 100% employer-paid health benefits, a 401(k) with 4% match, and flexible vacation days.
  • You’ll get to work from our lovely Flat Iron office, however, we do allow employees to work remotely when necessary.

Interested candidates should include the following to apply:

  • Send your resume and your three best investigative writing samples to mandi@magnifymoney.com.
  • E-mail addresses for at least 2 references (previous editors or managers)

Copy Editor (U.S.)

Freelance, remote 

We are hiring a part-time copy editor with a keen eye for grammar and catching typos.

Requirements: 

  • 1-3 years experience copy editing in publishing, print or online media

Interested candidates should include the following to apply:

Contributors Editor (NY, NY)

MagnifyMoney is looking for a Contributor Editor to oversee and manage our contributor network. You’ll be responsible for day-to-day operations of the MagnifyMoney blog, with a specific focus on product reviews and how-to guides for readers. MagnifyMoney focuses on a wide-range of products including, but certainly not limited to: credit cards, student loan refinancing, auto loans, personal loans, checking accounts, savings accounts and we’re continuing to expand.

Responsibilities:

  • Oversee existing contributor network, while also continuing to find new talent
  • Create a monthly editorial calendar by generating story ideas, collecting pitches from contributors and keeping a list of team brainstormed topics
  • Assign stories to contributors
  • Edit stories and upload new pieces at least 5 times a week
  • Stories will primarily focus on reviews and round ups of financial products as well as in-depth “how to” pieces.
  • Handle invoices and ensuring payments are delivered promptly

Applicant Requirements:

  • Minimum one-year experience working with an online publication
  • Previous managerial experience
  • Must be a thoughtful communicator and eager to contribute to the team
  • Must have great attention to detail and rigorously fact-check every story
  • Must have a decent understanding of general personal finance topics, like consumer debt, credit card, student loans, mortgage loans, and other issues that impact our wallet

The fun stuff

  • MagnifyMoney offers competitive salaries, 100% employer-paid health benefits, a 401(k) with 4% match, and flexible vacation days.
  • You’ll get to work from our lovely Flatiron office, however, we do allow employees to work remotely when necessary.

Interested candidates should include the following to apply:

  • Send your resume to mandi@magnifymoney.com.
  • E-mail addresses for at least 2 references (previous editors or managers)

Links to your Twitter and Facebook professional account (if applicable)

Freelance reporters and video producers (U.S.)

If you are a freelance reporter or video producer eager to create stories in the world of personal finance, send your resume and samples of your work to mandi@magnifymoney.com. Must have journalism experience.

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