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Map Out a Year’s Worth of Shopping Right Now

We’ve probably all regretted buying something too hastily, but the opposite can also happen — you pass up a sale, and then see the item for a much higher price later.

To save your wallet the dings of mistimed shopping trips, we studied trends and asked experts when the products you’ll be shopping for will go on sale throughout 2017.

Appliances big and small

If you’re in the market for a stove or dryer this year, holiday weekends will mean discounts. Mark your calendar for Memorial Day (May 29), Labor Day (Sept. 4) and Black Friday (Nov. 24).

Over Labor Day 2016, Best Buy, Lowe’s and H.H. Gregg all took up to 35% off select major appliances. During Memorial Day 2016, Sears marked vacuums and floor care down by 30% online and in store and offered discounts on major kitchen appliances.

There are other ways to save, too. When manufacturers release a new, top-end appliance, they often discount their old top-end, says Mark E. Bergen, chair in marketing at the University of Minnesota’s Carlson School of Management. You’ll just have to do without the latest features.

“As you’re purchasing, you want to think about what a good deal means,” Bergen says. For some, it’s trendiness. For others, discounts.

Clothing

Department stores always seem to have clothing on sale, but deals improve at the end of each season. Retailers “want to charge the most to consumers who want to have it early,” says Rebecca Hamilton, a marketing professor at Georgetown’s McDonough School of Business.

Stores clear out inventory seasonally, so winter clothing goes on sale just before spring, spring clothing before summer and so forth. If you’re content without the latest trends, shop the clearance rack for end-of-season savings.

Electronics

The day after Thanksgiving produces a wealth of deals on tablets, smartphones and gaming consoles. A NerdWallet analysis of 2016 Black Friday deals found that some products cost hundreds of dollars less on Black Friday than just weeks prior. If you’re gunning for a specific popular item, reserve your purchase until then.

Bear in mind that Apple keeps to its own sale timetable. The company hosts a keynote event each September, and discounts on previous models of its devices usually follow.

After the Sept. 2016 iPhone 7 unveiling, Best Buy offered $100 off the iPhone 6S or $200 off the iPhone 6S Plus with a two-year contract with Verizon Wireless or Sprint. Bergen recommends you begin monitoring prices of old models as soon as a new phone is announced.

Holiday decorations

With seasonal items, procrastination is key. The longer you wait to decorate, the better. And for the absolute best deal, wait until after the holiday to capitalize on excess inventory. It won’t do you much good for 2017 holidays, but you’ll be ready for 2018.

Target’s 2016 after-Easter closeout featured discounts of up to 70%. Similar deals happen after Christmas, Halloween and Fourth of July.

Home goods

Like appliances, home goods go on sale during holidays. And the prices of some major purchases, such as furniture, are negotiable. Browse online, then buy in store. Try to knock some money off the price or ask the salesperson for free delivery.

Bergen says negotiating works especially well if the retailer thinks it might lose your business. “Don’t be afraid to go into a furniture store and say, ‘I’m going to go see a competitor; is there anything you can do to make it worthwhile?’” he says.

Travel

The best time to book a flight in the U.S. is on Tuesdays at 3 p.m. Eastern time, according to travel meta-search engine FareCompare. At this point each week, the site says, airlines have released their sales and competitors have matched prices. It recommends buying U.S. domestic tickets three months to 30 days before departure.

If you’re looking to go abroad, Rick Seaney, CEO and co-founder of FareCompare, says 2017 is the year to visit Europe. Terrorism jitters, Brexit and the strong dollar have dropped prices to seven- or eight-year lows, he says.

… And everything else

January is an ideal time to budget for the household spending a new year brings. As a general rule, purchase products off-season for the best shot at a discount. If you can’t plan a purchase, compare prices and look for coupons.

One last tip? Bergen recommends learning sales cycles. Retailers such as Nordstrom and Victoria’s Secret host regular annual or semiannual sale events at the same time year after year.

Courtney Jespersen is a staff writer at NerdWallet, a personal finance website. Email: courtney@nerdwallet.com. Twitter: @courtneynerd.

This article was written by NerdWallet and was originally published by USA Today.

How Stuck-in-the-Middle Parents Can Afford College

All parents want to pay for their kids’ college, but many families find themselves too wealthy to qualify for financial aid but too strapped to pay out of pocket.

If that’s the case for you, financial advisors agree you should prioritize retirement savings over paying for college. After all, your kid can take out federal student loans, but your nest egg won’t grow itself.

Still, if you’re set on covering your child’s tuition, you have two options: Get a student loan for parents or tap your home’s equity, if you have any.

Which is best? There’s no easy answer when your kids’ education, your own financial future and your home are at stake. Think through the factors below to help you decide what to do.

Take out a federal student loan for parents

You can borrow money for your kid’s college with a federal direct PLUS loan. To apply, submit the Free Application for Federal Student Aid, or FAFSA. The form will also make your child eligible for grants, scholarships, work study and federal student loans.

Pros of PLUS loans Cons of PLUS loans Option to defer payments while the student is in school. 6.31% fixed interest rate. Flexible repayment plans. 4.28% loan fee. Loans are discharged upon death of the parent or child. $2,500 annual tax deduction limit for student loans.

Private lenders also offer parent loans. Going the private route may be best if you have excellent credit. A high credit score may qualify you for a lower interest rate than you’d get with a federal parent loan.

However, private loans don’t offer all of the benefits that federal loans do. Families should turn to private loans only if they’re in a strong financial position and have a large emergency fund, says Betsy Mayotte, director of consumer outreach and compliance at American Student Assistance, a Boston-based nonprofit.

Consider tapping your home equity

With home values high and mortgage rates low, it’s a great time to use your home equity, says Kevin McKinley, a financial planner and principal/owner of McKinley Money LLC in Eau Claire, Wisconsin.

There are three ways to unlock your equity:

  • A home equity line of credit, or HELOC.
  • A home equity loan, often referred to as a “second mortgage.”
  • A cash-out mortgage refinance.

Depending on how you tap your equity, there are pros and cons to consider. For instance, you’ll have to pay closing costs if you refinance your mortgage.

Pros of tapping home equity Cons of tapping home equity Low interest rates. Increased risk of foreclosure if home values drop or you can’t make payments. Get a tax deduction for all the interest you pay, in most cases. Could count against future financial aid eligibility.

Tapping your home equity is risky because you’re putting one of your most valuable assets on the line. If you can’t make the payments or your home’s value declines, you could lose it.

“You don’t want to take out equity to the point where if the housing market drops, all of the sudden you’re underwater,” Mayotte says.

Despite the risks, tapping your equity may be a better deal than a student loan “when it comes to just straight dollars and cents,” McKinley says. But he also acknowledges an emotional component involved with using home equity.

“Some people are uncomfortable with the notion of mortgaging their home,” he says. “If that’s the case, they should just get student loans.”

Next steps

This decision is weighty enough that it’s worth consulting a financial advisor. Feeling confident about the way your family pays for tuition will help you keep calm as you face one of the biggest transitions as a parent: sending your kid off to college.

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel.

This article was written by NerdWallet and was originally published by USA Today.

New Card: 5% Back at Amazon, Rewards Everywhere Else

Online superstore Amazon is rolling out a new credit card that combines the best features of the Amazon Prime Store Card and the existing Amazon Credit Card. Available only to Amazon Prime members, the new Amazon Prime Rewards Visa Signature Card offers:

  • 5% back on Amazon purchases.
  • 2% back at restaurants, gas stations and drugstores.
  • 1% back everywhere else.

Rewards never expire and are redeemable at Amazon. Your rewards balance appears on the checkout screen when you make a purchase, and you can apply rewards to a purchase in any amount, with no minimum redemption. The new card has no annual fee, but it requires membership in Amazon Prime, which costs $99 a year and provides such perks as free two-day shipping and unlimited access to streaming media. The card has no foreign transaction fees.

Amazon Prime customers who already have the existing Amazon Credit Card, also known as the “Amazon Rewards Visa Signature Card,” will be upgraded to the new Prime product automatically. Their existing accounts will start earning the new benefits immediately, and their new card should arrive soon, Amazon said. The new card will be made of metal rather than plastic, latching on to the craze that surrounded the 2016 release of the metal Chase Sapphire Reserve℠.

How does the new card stack up against other Amazon cards? Take a look:

 Amazon Prime Rewards Visa SignatureAmazon Credit Card Amazon Prime Store Card Where can you use it?Anywhere that accepts VisaAnywhere that accepts VisaOnly at Amazon Rewards on Amazon purchases 5%3% 5% Rewards at restaurants, drugstores, gas stations2% 2% N/A Rewards on all other purchases1%1%N/A Annual fee for card $0 (but requires $99 Prime membership)$0$0 (but requires $99 Prime membership)

» MORE: Amazon Prime Store Card: Is it right for you?

“The upgraded Amazon Prime card took the best of both worlds and is really a fantastic product for regular Amazon shoppers,” NerdWallet credit cards expert Sean McQuay says.

For Prime members who already have the existing Amazon Credit Card, upgrading to the new card will mean higher rewards at no additional cost. For cardholders who might have been on the fence about ponying up the $99 for Prime membership, the new rewards rate for Amazon purchases — a 67% increase — might be just the push they’re looking for. And for holders of the Amazon Prime Store Card, the fact that they can get the same 5% back at Amazon plus additional rewards elsewhere makes the new card an enticing upgrade.

The biggest drawback, as with any store credit card, is that the rewards can be used at only one place. But in this case, that one place is Amazon, which carries so many different kinds of products that you won’t lack for opportunities to redeem rewards, whether on Cartier watches, Angel Soft toilet paper or anything in between.

“Think of the card as a 5% discount on every Amazon purchase, no coupons needed,” McQuay says.

Information related to the Amazon Credit Card and the Amazon Prime Rewards Visa Signature Card has been collected by NerdWallet and has not been reviewed or provided by the issuer of this card.

Paul Soucy is an editor at NerdWallet, a personal finance website. Email: paul@nerdwallet.com. Twitter: @paulsoucy.

New Fannie, Freddie Refinance Options: What to Know

The Federal Housing Finance Agency created the Home Affordable Refinance Program, or HARP, in 2009 to give refinance options to homeowners whose mortgage balances are higher than their property values and who are often turned away by traditional lenders. So far, HARP has helped more than 3.4 million homeowners refinance their loans.

HARP expires Sept. 30, 2017, but two refinance options will fill the void:

Both refinance options have the same requirements and are meant for borrowers with high loan-to-value ratios.

As of October 2016, more than 251,000 mortgages were eligible for a HARP loan. However, fewer than 139,000 would actually benefit from one, according to the Urban Institute’s Housing Finance Policy Center, because the closing costs to refinance those mortgages would outweigh any long-term savings.

Here’s a closer look at these two programs:

Why you should consider the new refinance options

Like HARP, the new refinance options can reduce the term or interest rate on your existing loan, as well as lower your overall monthly principal or interest payments. That frees up space in your monthly budget to meet other financial obligations.

“Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for [Fannie Mae and Freddie Mac],” said FHFA Director Melvin L. Watt in a release. “This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac.”

Refinance program eligibility

If you already have a HARP loan, you won’t be able to refinance through these programs, because you’ve already received federal mortgage relief. To be eligible, you must also:

  • Have made 12 consecutive monthly mortgage payments on the loan since it became part of Fannie Mae’s or Freddie Mac’s portfolio.
  • Not have made a late payment within the past six months.
  • Not have missed more than one payment within the previous 12 months.
  • Have a verifiable source of income.
  • Receive at least one of the following benefits from the refinance: a reduction in your monthly principal and interest payment; a lower interest rate; a shorter amortization term; or a more stable loan product (switching from an adjustable-rate mortgage to a fixed loan, for example).
Advantages of applying

These new loans have several advantages over a traditional refinance. They don’t:

  • Require a minimum credit score.
  • Mandate a maximum debt-to-income or loan-to-value ratio limit.
  • Usually require an appraisal.
  • Limit the number of times you can refinance with these programs.
  • Set a loan origination cutoff requirement. HARP, by contrast, is applicable to loans originated on or before May 31, 2009.

They also have a streamlined application and documentation process.

How to get help

If you want to refinance but traditional lenders have turned you away, ask Fannie Mae or Freddie Mac if you qualify once the new programs go live in October. And contact your current lender as soon as possible to explore relief options.

» MORE: Your one-stop-shop for managing your home

Deborah Kearns is a staff writer at NerdWallet, a personal finance website. Email: dkearns@nerdwallet.com. Twitter: @debbie_kearns.

Mortgage Rates Today, Jan. 11: Down a Notch; Reactions to FHA Insurance Premium Reduction

Thirty- and 15-year fixed mortgage rates dipped noticeably today, while 5/1 ARM rates rose a hair, according to a NerdWallet survey of mortgage rates published by national lenders on Tuesday.

Fixed mortgage rates tend to follow Treasury yields, which are a bit lower today as a result of investors’ waiting on President-elect Donald Trump’s first press conference this morning.

Mortgage Rates Today, Wednesday, Jan. 11 (Change from 1/10) 30-year fixed: 4.27% APR (-0.04) 15-year fixed: 3.69% APR (-0.02) 5/1 ARM: 3.83% APR (+0.01) Mostly positive reactions after FHA reduces insurance premiums

Reactions from housing industry professionals were mostly positive after Monday’s announcement that the Federal Housing Administration will reduce annual insurance premiums on most FHA loans from 0.85% to 0.60%. According to the announcement, which was made by U.S. Housing and Urban Development Secretary Julián Castro, the reduction will save new FHA-insured homeowners about $500 this year.

“FHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders,” said National Association of Realtors president William E. Brown in a release on Monday. “The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time and lower-income borrowers. Now, we have a real opportunity to get back on track.”

» MORE: How the Trump presidency will impact housing in 2017

David H. Stevens, president & CEO of the Mortgage Bankers Association, said in a release Monday that “The reduction in the premium is a result of our industry’s and FHA’s shared commitment to quality underwriting, and consumers will benefit as a result. Reducing the cost of FHA loans benefits borrowers, but other changes to reduce uncertainty for lenders would be required to truly invigorate the FHA program. MBA looks forward to continuing to work with all stakeholders, including the new administration, to ensure the safety and soundness of the FHA program.”

But not everyone supports the premium reduction. Rep. Jeb Hensarling, a Republican from Texas and Chairman of the House Financial Services Committee, released the following statement after Monday’s announcement:

“It seems the Obama administration’s parting gift to hardworking taxpayers is to put them at greater risk of footing the bill for yet another bailout. Just three years ago, the taxpayers had to spend $1.7 billion to bail out the FHA. Lowering premiums to below-market rates now only puts the FHA in a more precarious financial condition. Playing politics with the FHA through cynical, surprise eleventh-hour rule changes is irresponsible and endangers the integrity and success of the FHA. To be successful, the FHA must be fiscally sound, with a clearly defined mission, to ensure homeownership opportunities for creditworthy first-time homebuyers and low-income families. Lowering FHA premiums now is counterproductive to achieving these goals and puts the U.S. taxpayer at greater risk.”

Homeowners looking to lower their mortgage rate can shop for refinance lenders here.

NerdWallet daily mortgage rates are an average of the published APR with the lowest points for each loan term offered by a sampling of major national lenders. Annual percentage rate quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

Michael Burge is a staff writer at NerdWallet, a personal finance website. Email: mburge@nerdwallet.com.

2017 Chevrolet Bolt Review: Game-Changer for Electric Cars

Step aside, Tesla. The Chevy Bolt has made a move to steal headlines in the electric-car market with the first affordable EV to break the 200-mile range barrier.

NerdWallet is a free tool to find you the best credit cards, cd rates, savings, checking accounts, scholarships, healthcare and airlines. Start here to maximize your rewards or minimize your interest rates. Philip Reed Nerd’s Eye View What you’ll like: 238-mile-plus range, instant torque, cool graphic interface, paddle shifter for extra regeneration, tax breaks.What you won’t like: Tight driving position, long recharge times, limited cargo storage, some hard interior plastics.MSRP as tested: $37,495 (minus credits and rebates)

 

Gallery (click to expand) The skinny

Favorite feature: Zooms from zero to 60 mph in under seven seconds.

Service and maintenance costs: Low, compared with gas-driven cars.

Warranty: 3 years/36,000 miles.

Battery warranty: 8 years/100,000 miles.

Competing vehicles: When it comes to cost and range, nothing (until the Tesla Model 3 comes out in late 2017 — maybe).

Fuel economy: 119 mpg equivalent (FuelEconomy.gov).

The second wave of plug-in electric cars has landed, and the Bolt is leading the charge with a best-in-class range of 238 miles. Combine that with its $37,495 price tag ($29,995 after a $7,500 federal tax credit) and carpool lane access in many states, and the Bolt will likely appeal to more mainstream buyers.

General Motors “was said to have killed the electric car — now I hope they give us credit for bringing it back to life,” says Michael Bradley, fleet internet manager for Selman Chevrolet in Orange, California, referring to the popular 2006 documentary “Who Killed the Electric Car?” The first Bolts were delivered to Selman and other dealerships in Oregon and California in December, and most if not all are spoken for; the vehicle will roll out more broadly as 2017 progresses.

That gives it a jump on Tesla. That company has long been flogging promises of the Model 3, which will start at $35,000. Per the company’s website, production is slated to begin in mid-2017 — though Tesla is already taking deposits. It will offer only 215 miles of range. Base prices on current Tesla models (which all top 200 miles in range) are at the luxury end of the scale, starting at around $68,000.

Until now, most affordable electric vehicles offered only 100 miles of range and, as such, were considered errand runners and commuter cars. But breaking the 200-mile barrier opens new horizons for the EV owner who wants to make round-trip drives from Los Angeles to San Diego or Santa Barbara.

The Chevy Bolt has raised the bar for electric cars. When other soon-to-be-redesigned EVs are launched — such as the Nissan Leaf, Kia Soul EV and Volkswagen e-Golf — they’ll have to match that number if they want to stay in the game. Put another way, 200 is the new 100.

Recharging methods and times

The Bolt can be recharged on household current (110 to 120 volts). But for faster recharges, owners may want to install a 240-volt home charger, costing between $500 and $1,000 and providing an estimated 25 miles of range for every hour of charging. With the optional DC Fast Charging connection, the Bolt would add about 90 miles of range in 30 minutes.

Although recharge times are important, most EV owners plug in when they arrive home and leave them charging overnight to take advantage of reduced electricity rates. Furthermore, recharging never begins on empty because most EV drivers arrive home with a partial charge.

Driving the Bolt

Chevrolet says the Bolt accelerates from 0 to 60 mph in less than 6.5 seconds and, on a short test drive provided by Selman Chevrolet, the power delivery feels instantly responsive — and very different from driving a gas car. The Bolt packs a 200-horsepower, 150-kilowatt motor and is nearly silent, with none of the whining or buzzing noises heard while driving other EVs. Because the lithium-ion battery pack is mounted under the car, the Bolt hugs the road on tight corners. Drivers find the combination of a silent motor and instant torque to be a pleasurable mix.

Trim levels, interior and tech

The Bolt comes in two trim levels, the LT and the more upscale Premier edition with leather seating. The Bolt offers the latest safety equipment as an option in the LT trim, including blind spot monitoring, rear cross-traffic alert and rear park assist. The Premier trim includes “surround vision” as standard equipment, using four cameras, and an option package that includes forward collision avoidance, lane centering and front pedestrian braking.

Although the car’s footprint is small, the fold-flat seats increase the versatile cargo area. The Bolt’s interior is a radical departure from most cars, with an iPad-sized screen in the center of the dash that will display navigation from your smartphone. Cup holders and storage spaces are cleverly carved into the doors and center console, but some of the plastics are hard to the touch. The graphics on the digital speedometer are designed with a pleasing sense of simplicity, conveying information without overwhelming the driver. The heating and air conditioning controls are logically laid out and easy to use.

The driver’s seat was agreeable, except the center armrest was positioned uncomfortably, which might be a problem for larger people. The back-seat legroom was limited, and the rear cargo space was deep but narrow.

Credits, rebates and perks

Shoppers are often scared away from buying an electric car because of high price tags, but the final cost to the buyer is a combination of many factors. Buyers can use a $7,500 federal tax credit. If the car is leased, the manufacturer takes the credit and often passes the savings along in the form of reduced monthly payments. Furthermore, while incentives vary, California plans to offer a $2,500 cash rebate for some all-electric vehicles, depending on the buyer’s income level

Another perk for electric-car drivers is entry into the carpool lane, a time saver and frustration reducer. Several states allow EV drivers to enter the high occupancy vehicle lanes, according to the U.S. Department of Energy. For those who see time as money, this is an attractive benefit.

EV owners also will discover that the cost of charging a battery is much less than filling a gas tank. The EPA rates the fuel efficiency of the Bolt at the equivalent of 128 mpg city and 110 highway.

Shopping advice

Nissan, VW and Tesla will soon launch redesigned or upgraded electric cars, so keep an eye on the market for news of upcoming models and release dates. Add in the cost of buying a charging station, or make sure you can get by on slower charging at available household current. And remember that pricing an EV is a matter of researching all tax credits, deductions and rebates.

Because EV technology is rapidly evolving, leasing is advisable for the Bolt. If you’re interested in getting a Bolt early in the game, contact your local Chevrolet dealers and get the names of salespeople who will be handling the Bolt. Find out how you can reserve one and ask about pricing, which can vary widely from one dealership to the next. Early arrivals will be sold for full sticker price. Waiting even a few months could cut the price.

Philip Reed is a staff writer at NerdWallet, a personal finance website. Email: preed@nerdwallet.com.

Updated Jan. 11, 2017.

3 Ways Divorce Can Affect Your Credit Score

By Shawn Leamon

Learn more at NerdWallet’s Ask an Advisor

Going through a divorce is stressful enough without having to worry about how it could affect your credit. Unfortunately, there are many ways a divorce can have a negative impact on your credit, which could lead to difficulty getting approved for a line of credit, a new mortgage or an apartment rental. By understanding three of the most common risks and how to protect yourself, you’ll be in a better financial position once your divorce is finalized.

1. Divorce-related costs

Going through a divorce doesn’t just wreak havoc on the emotions, but on the pocketbook as well. Hiring a divorce lawyer, going through a long and complex custody dispute, and other common aspects of divorce can easily cost you thousands or even tens of thousands of dollars. Charging certain expenses (such as your attorney fees) to a credit card can increase your credit utilization, which can result in a hit to your credit.

2. Failure to make payments

As a result of those costs, you may find it difficult to keep up to date on your financial obligations, such as a mortgage, utilities and car payments. Failure to pay on these on time can harm your credit score. Furthermore, you and your spouse likely combined several accounts when you got married. You may share a mortgage, credit cards and other forms of debt. Throughout the divorce, you will still be responsible for paying off debt on a joint account, but there may be confusion as to who is responsible for what. Or, if your former partner is feeling vindictive, he or she may intentionally fail to make necessary payments, which could affect both of your credit scores.

3. Running up debt

In the event of a divorce that is not amicable, it’s not uncommon for a soon-to-be ex to take advantage of the fact that he or she has authorization to use your credit card or access your bank accounts. This can be extremely dangerous, especially if your spouse decides to start taking out money or amassing credit card debt without your knowledge. If you’re not careful to monitor your bank activity, you could end up with hundreds or thousands of dollars of debt that you will be responsible for paying off. Failure to do so puts your credit score at risk.

Fortunately, there are ways to protect yourself from these common occurrences. For starters, once it’s established that you’ll be getting a divorce, separate all joint accounts as soon as possible. Remove authorization for your spouse on any accounts that belong solely to you, and work out an agreement (in writing) to handle any joint debt payments. If needed, sell off some assets of your own or reach an agreement to sell joint assets to help pay for the legal costs associated with the divorce.

By taking these steps, you may be able to keep your credit score from becoming a casualty of your divorce.

Shawn Leamon is the host of the “Divorce and Your Money” podcast and managing partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

This article also appears on Nasdaq.

Trump’s Student Loan Repayment Plan vs. Obama’s REPAYE

Americans with federal student loan debt stand to pay more each month with President-elect Donald Trump’s proposal than by enrolling in the Obama administration’s most widely available income-driven repayment plan, Revised Pay As You Earn, according to an analysis by NerdWallet. However, Trump’s proposal could forgive loans sooner, which would help borrowers with lower incomes.

Borrowers with federal student loans are set up with a standard 10-year plan of equal payments each month. It’s the fastest way to repay the debt while keeping interest costs down. But for those struggling with their debt, income-driven plans are an option that caps monthly payments at a percentage of a borrower’s income while also extending the loan term to 20 or 25 years.

Cap on payments

In an October speech, Trump outlined his higher education reform proposals, including an income-driven student loan repayment plan, which would cap payments at 12.5% of a borrower’s income. Trump’s plan resembles REPAYE, the most widely available income-driven repayment plan, which caps payments at 10% of a borrower’s discretionary income, as calculated by the federal government. It isn’t clear if Trump’s plan would apply to discretionary or all income.

Trump also introduced a loan forgiveness proposal that would dismiss a borrower’s remaining debt after 15 years. Currently, borrowers who make regular payments on undergraduate loans taken out on or after July 1, 2014, would see that debt forgiven after 20 years. Those who borrowed before that time would wait 25 years for loan forgiveness.

To compare Trump’s proposal and REPAYE, NerdWallet calculated repayment scenarios for three categories of borrowers with different incomes. Our calculations assumed student loan debt for borrowers at $30,100, the 2015 class average.

Key findings
  • In each income scenario, borrowers would pay more each month under Trump’s proposal than they would if they enrolled in the current REPAYE plan.
  • Borrowers with incomes of $40,000 would pay the most each month with Trump’s proposal: a difference of $43 a month compared with REPAYE.
  • Only borrowers with an income of $20,000 would see part of their debt forgiven under REPAYE or Trump’s proposal. Borrowers with higher incomes would have paid off their loans before the forgiveness timeline kicks in for either repayment plan.

 

 

 

Read more about the results and full methodology of the study here.

Another way to save on payments

Another repayment option to consider is student loan refinancing, under which a borrower combines multiple federal loans into a new private loan, ideally with a lower interest rate and thus saving money each month. Refinancing is best suited for borrowers with high incomes and strong credit scores.

However, by refinancing your federal loans, borrowers lose out on certain federal loan protections, including forgiveness. Be sure to weigh your options before making changes to any loans.

Anna Helhoski is a staff writer at NerdWallet, a personal finance website. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski. Victoria Simons is a data associate at NerdWallet. Email: vsimons@nerdwallet.com.

Can’t Get a Checking Account? Don’t Give Up, Get Moving

Being denied a checking account isn’t a permanent roadblock to financial stability.

After overcoming homelessness, Lavonna McKoy, 47, was trying to put her finances in order when she found out she didn’t qualify for an account at a major U.S. bank. United Way’s Making Wages Work program provided her with financial coaching — one of many free services the nonprofit offers to help extend opportunities for education, income and health.

“I had people in my corner who made me feel motivated to not give up,” says McKoy, who now works with a United Way partner that helps homeless people find housing in Atlanta. “The coach gave me pointers on what to do,” including applying for an account at a credit union, an option that worked for McKoy.

After you’ve been denied a checking account, you still have options. Clear away your financial obstacles by identifying the problem, taking steps to repair your banking history, and seeking help to kick old habits.

Find out why you got turned down

A bank or credit union often denies a checking account when a negative report exists in your name at a checking account reporting agency such as ChexSystems or Early Warning. These agencies share their reports with banks and credit unions, which use the information in deciding whether to approve accounts.

According to the Consumer Financial Protection Bureau, situations that could cause you to be denied a checking account include:

  • Involuntary closure of a checking account by a bank or credit union due to unpaid negative balances from overdrafts.
  • Suspicion of fraud.
  • Having shared a joint account with someone who had these problems.

For McKoy, unpaid balances from bounced checks made her an unlikely candidate for a checking account, but she was able to repair her banking history, and you likely can, too.

» MORE: 5 steps to remove your ChexSystems record

Repair your banking history

A comeback will require some effort on your part. Do some digging to identify what’s lurking in your banking history.

ask for YOUR REPORT

Identify the checking account reporting agency that flagged you. The bank or credit union that turned you down can provide that information. Then contact that agency to request a free copy of its report.

DISPUTE ANY ERRORS

Review your report and identify any mistakes. Dispute these errors with the checking account reporting agency and the bank or credit union that rejected you.

CHECK YOUR CREDIT REPORT

If you find any errors, follow up by looking at your credit report — especially if you suspect identity theft. A credit report can also alert you to other problems that might disqualify you for a bank account. According to the CFPB, some banks and credit unions may look into your credit report when evaluating whether to approve you for a checking account.

As you get your finances on track, you’ll be working on building your credit score. Get your score for free, and watch your number climb as you meet your goals.

EXPLORE YOUR OPTIONS

Once you know why you were denied an account, decide whether traditional banking is the next immediate step.

“Not everyone is bank-ready,” says Lark Kesterke, director of impact and investments at United Way. “When people are locked out of traditional checking accounts and switching gears to being in a banking relationship, it takes a little bit of time.”

You may need to make an interim move, such as:

  • Paying off charges and making good with the bank: Some banks or credit unions will require you to pay off negative balances before opening a checking account.
  • Getting a second chance checking account: Patch up your banking history by keeping this account in good standing. In a few months, you could transition to a regular checking account. Second chance accounts usually require you to pay monthly fees, set up direct deposit or enroll in money management programs.
  • Waiting it out with a low-fee prepaid debit card: It can take up to seven years for black marks in your banking history to disappear. A low-fee prepaid debit card is an alternative to a bank account, but you’re likely to pay more in fees. A recent NerdWallet study found that the average annual cost of not having a bank account is $196.50 for people with a prepaid debit card that offers direct deposit and $497.33 for those who have a prepaid debit card without direct deposit.

» MORE: NerdWallet’s best low-fee prepaid debit cards

Seek help

In much of the country, you can dial 211, a free number to connect people with community resources in their area, some of which include financial literacy programs. Organizations such as United Way and Bank On — which is made up of coalitions of local public officials, government agencies, financial institutions and community nonprofits — also offer programs throughout the country.

When a Bank On client is denied an account, “we ask the financial institution to let them know what the reason was,” says Regina Stark, director of external affairs at Bank On Washington. Then the group refers the individual to “a nonprofit that can help them fix whatever issues they may have.”

Nonprofits that partner with Bank On offer financial coaching and money management classes for free to help people meet their individual goals.

“It was a six-month-long process, but right now I feel that it was worth every single Thursday that I sacrificed,” McKoy says about the Making Wages Work Program.

After taking her coach’s advice, McKoy was able to get a second-chance checking account at a credit union. Since then, she has transitioned into a regular checking account and is a volunteer financial coach at United Way. She is now saving up to buy a house.

Melissa Lambarena is a staff writer at NerdWallet, a personal finance website. Email: mlambarena@nerdwallet.com. Twitter: @LissaLambarena.

 

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