Financial Topics Archives | Page 691 of 784

May

2022

10 Advantages of Credit Card: Perks of Using It

10 Advantages of Credit Cards

By Jackie Lam | Credit, Family Finances, money | Comments Off

You may already know that credit cards offer an easy and convenient way to make purchases, but that’s just one of many potential credit card benefits. From rewards offerings like cash back, travel points, and one-time bonuses, to financial benefits like payment security, the opportunity to build credit, and a grace period, there are a number of reasons to keep a credit card in your wallet.

Read on to learn 10 advantages of using a credit card, as well as some tips to ensure you use your card responsibly.

1. Cash Back

Many credit cards allow you to earn cash back on everyday purchases, such as gas or groceries, a reward introduced long ago in the history of credit cards. Essentially, with cash back, you get a small amount back in cash that’s a percentage of how much you spent.

With cash-back cards, you can usually put any cash you receive towards your credit card balance, or you can opt to receive the money through a direct deposit to your bank account, as a check or gift card, or put it towards other purchases.

2. One-Time Bonuses

Credit cards sometimes will offer a one-time, introductory bonus that allows you to earn enhanced rewards as long as you spend a certain amount on your card within the first months your account is open. For instance, you might be able to earn a bonus of 100,000 reward points if you spend $6,000 within the first six months of opening your card. These rewards can be a great way to get something extra out of opening a new credit card.

3. Reward Points

Reward points are similar to cash-back rewards in that they offer an incentive for you to use your card. You’ll earn points for every dollar you spend on your card, such as 1 cent for every dollar spent. You can then redeem those points to put towards travel, gift cards, merchandise, charitable donations, or statement credits.

4. Safety

Another one of the many perks of how credit cards work is the built-in security and safety features they offer. Many major credit card issuers offer a zero-liability policy for fraud, meaning you won’t be responsible if any fraudulent purchases are charged to your account. Other credit card safety features include encryption and chip-and-pin technology, which keeps your account information safe when using your card for in-store transactions. Plus, many credit cards offer fraud and credit monitoring services to allow you to easily keep tabs on your account.

Compared to debit cards, credit card security tends to be much more robust and the protections against fraud are more consumer-friendly.

Recommended: What is a Charge Card

5. Grace Period

This usually isn’t the first advantage of a credit card that comes to mind, but it’s a major one and a key part of what a credit card is. A credit card’s grace period between when your billing period ends and when your payment is due. During this grace period, no interest accrues. So if you are able to pay your balance in full during the grace period, you won’t owe any interest.

6. Insurance

Many credit cards come with insurance. For instance, travel credit cards might come with travel insurance, trip cancellation insurance, trip delay insurance, or rental car collision insurance. Cards may also offer price protection, extended warranties, purchase protection, or phone protection.

7. Universal Acceptance

Credit cards are pretty much accepted anywhere, and you can use one whether you’re paying a bill via snail mail or making a purchase in store, online, or over the phone. A credit card can be used to pay for most things, including paying taxes with a credit card.

Breaking it down by credit card network, Visa and Mastercard are accepted in over 200 countries, American Express cards are accepted in over 160 countries, and Discover cards are accepted in over 185 countries. This comes in handy when you’re traveling and don’t want to fret about converting your U.S. dollars into foreign currency.

If you’re running a business, accepting credit card payments can help prevent fraudulent activity, such as someone trying to pay with counterfeit bills. It can also make it easier to keep track of transactions and purchases related to your business.

Recommended: When Are Credit Card Payments Due

8. Building Credit

Another major perk of using a credit card is that it can help you build credit. Credit card issuers report your activity to the three main credit card bureaus — Transunion, Equifax, and Experian — which is then used to calculate your credit score.

If you maintain a continuous streak of on-time payments, it will help with your payment history, which makes up 35% of your credit score. Plus, the longer you keep a credit card open, the more it helps with your length of credit, which is 15% of your score. A credit card can also help you build credit because it helps with your credit mix, which makes up 10% of your score.

9. Increased Purchasing Power

Having a credit card can increase your purchasing power, as you’ll have access to a line of credit that can make it easier to buy big-ticket items. For instance, if you’re down to $1,000 in the bank, you won’t be able to purchase that $2,000 laptop. But if you have a credit line of $3,000 (and know you have a big paycheck en route), you can purchase that laptop you’ve been wanting when it’s on sale and then pay it off when the funds hit your bank account.

Take this credit card advantage with a grain of salt though — using your credit card to cover more than you can immediately afford to pay off can lead you to get into credit card debt.

10. Keeping Vendors Honest

Unscrupulous behavior from vendors does happen, unfortunately. If you pay a vendor through another means, such as cash, Venmo, or by writing a check, the vendor will have an easier time getting away with not providing the goods or services they promised.

But if you pay a vendor using a credit card, the credit card issuer has an incentive to get to the bottom of the issue and prevent fraud. And if you dispute a credit card charge, the issuer will withhold funds from the vendor. In turn, the transaction won’t go through, and you may be able to get your money back.

What to Look for in a Credit Card

Before applying for a credit card, do some comparison shopping first. Think about what kind of credit card you might need. Depending on your needs, preferences, and lifestyle, a travel credit card or cash-back card might be the best fit for you. Or, if you’re after a card with a low APR and minimal fees, a solid everyday card might be a better fit. If you’re working to rebuild your credit, you might consider a secured card.

Besides any credit card perks, look at the card’s interest rate. Your annual percentage rate (APR) will vary depending on your creditworthiness and the type of card you’re applying for (top rewards cards tend to have higher APRs than more basic cards). In general, however, a good APR for a credit card is one that’s below the current average credit card interest rate, which is 14.56% as of May 2022.

Additionally, it’s important to check whether a card has an annual fee. If it does, look at its perks and how much you anticipate putting on the card in a given year to see if that fee is worth it. Also take into consideration any other fees a credit card may charge, such as late payment fees, foreign transaction fees, and balance transfer fees.

Using a Credit Card Responsibly

To use a credit card responsibly, it’s crucial to make on-time payments of at least the minimum payment due each billing cycle. This ties in with not spending more than you can afford to pay back, or running up a high balance on multiple cards, both of which could lead you into credit card debt.

Another rule of thumb to use your credit card responsibly is to keep your credit utilization ratio — the total amount you owe divided by your total available credit — under 30%. The average credit card limit in the U.S. in 2020 was $30,365, according to data published by the credit bureau Experian. So, to maintain a 30% credit utilization ratio, you’d need to keep your balances below $9,109.50.

When Not to Use a Credit Card

If you’re spending more than you can afford to pay back, or can pay back within a reasonable amount of time, then it’s best to avoid using a credit card. The advantages of a credit card aren’t worth it if using credit cards is causing you to get into debt.

You’ll rack up interest charges on any remaining balances each month, and those costs can start to add up fast. While there are options like credit card debt forgiveness, they aren’t necessarily easy to get, and you can damage your credit score in the process.

Apply for a Sofi Credit Card Online and Earn 2% Cash Back

As you can see, there are a number of potential advantages of credit cards, from rewards to payment security to an interest-free grace period. Enjoying credit card benefits requires using your credit card responsibly though. If you’re racking up more charges than you can afford to pay back, the interest and other implications could quickly outweigh the credit card advantages.

If you are in the market for a new credit card, the SoFi credit card is worth considering given the perks it offers. SoFi cardholders earn 2% unlimited cash back when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back when redeemed for a statement credit.1

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.¹

Take advantage of this offer by applying for a SoFi credit card today.

FAQ

How secure are credit cards?

Credit cards come with many security features, such as pin-and-chip technology, fraud and credit monitoring, and zero-liability fraud protection. Plus, there are usually features like two-factor authentication or biometrics at login, and you can temporarily freeze your credit card if you suspect fraudulent activity.

How can I protect myself from credit card fraud?

You can protect yourself from credit card fraud by reviewing your credit card statement each billing, storing your cards safely in your wallet or purse, keeping your passwords protected, and being vigilant when using your credit card. You can also set security alerts whenever there’s a transaction that’s over a certain dollar amount, or for in-person, online, or over-the-phone purchases. If you suspect fraudulent activity, block your card from further usage and report the suspicious activity immediately.

Do credit cards allow you to save more?

Credit cards usually enable you to spend more. However, if used smartly and responsibly, they can help you save through credit card rewards and other advantages, such as insurance and discounts. For a credit card to help you save, however, you’ll want to stay on top of payments and ideally pay your balance in full. Otherwise, the interest charges might outweigh any perks of credit cards.

Should I use a credit card if I have a poor credit score?

If you have a poor credit score, it could be a good idea to use a credit card to rebuild your score — as long as you can use it responsibly and manage on-time payments. Keep in mind that those with poor scores likely won’t get approved for the cards with the most competitive rewards, and they may face a higher APR and fees.

Photo credit: iStock/Suphansa Subruayying

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

¹See Rewards Details at SoFi.com/card/rewards.

¹Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

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May

2022

Secured vs. Unsecured Credit Card: What’s the Difference?

Secured vs. Unsecured Credit Cards: What You Need to Know

By Jackie Lam | Building Your Career, Credit, money | Comments Off

If you have a thin credit profile or want to rebuild your credit , you may come across secured credit cards when searching for a card you can qualify for. But what’s the difference between a secured vs. unsecured credit card? And how can you gauge which one is right for you?

Let’s take a look at how both types of credit cards work and the differences between secured cards and unsecured credit cards, so you can decide which to choose.

What Is a Secured Credit Card?

Like a traditional, or unsecured, credit card, an unsecured credit card is a type of revolving loan. This means that it offers a line of credit that you can borrow from as needed and then repay. However, with a secured credit card, you’ll need to put down a deposit, which “secures” the credit card.

The bank holds onto that money as a form of collateral if you default on payments, but it’s refundable if you close your account or upgrade to an unsecured credit card. Your secured credit card’s credit limit, an essential part of what a credit card is, usually is the same amount as your deposit. The deposit is typically at least $200 to $500, though it can range as high as $25,000 depending on the specific card and how much you can afford to put down.

A secured credit card is designed for building credit. So, if you’re working on rebuilding your credit or don’t have much in the way of a credit history because you’re young or new to the country, it could be a good option. The age requirement to get a credit card that’s secured is the same as for an unsecured credit card.

How Secured Credit Cards Work

As mentioned before, you’ll need to put in a deposit to open a secured credit card. Your available line of credit is usually the same amount as your deposit. Just like how credit cards work when it’s an unsecured card, you’ll need to repay the balance, and your credit limit will get replenished as you make payments.

Like with an unsecured credit card, there’s a minimum monthly payment you’re responsible for. If you carry a balance from month to month, you’ll incur interest charges. Your credit card activity, including your payment history, is generally reported to the three major credit bureaus, Experian, Equifax, and TransUnion.

Your deposit on a secured credit card isn’t used to make payments should you fall behind or miss payments altogether. If you’re unable to make payments and your account goes to default, you’ll lose your deposit. Plus, it can hurt your credit. If the balance you owe is larger than the deposit, you might be on the hook for the difference owed.

Secured credit cards may offer a “graduation” option. In other words, if you make on-time payments and show a track record of responsible financial behavior, the credit card issuer might offer you an unsecured credit card.

Pros and Cons of a Secured Credit Card

Let’s look at some of the advantages and downsides of a secured credit card:

Pros of a Secured Credit Card	Cons of a Secured Credit Card
May qualify with a low credit score or limited credit history	Need to provide a deposit
Could be easier to get approved for than an unsecured credit card	Credit limit is usually low
Can be a way to build or rebuild credit as activity is reported to credit bureaus	Can have higher interest rates and more fees than secured credit cards
Offers a revolving line of credit you can use as long as you make payments	Could lose your deposit if you’re late or miss payments

What Is an Unsecured Credit Card?

Also known as a traditional credit card, an unsecured credit card doesn’t require a deposit or collateral of any sort. Instead, you’re offered a credit limit based on your creditworthiness and other factors, such as your income and existing debt. The lender simply has your word that you’ll pay back what you borrow, which is why you’ll also generally need a higher credit score and a more robust credit history to qualify.

Just like with a secured credit card, the credit remaining on an unsecured credit card dwindles as you rack up a balance. Once you make a payment, your limit replenishes. For example, let’s say your credit limit is $5,000. If your balance is $500, your credit limit goes down to $4,500. Once you pay off your balance, your credit limit goes back up to $5,000.

The annual percentage rate (APR) and terms associated with an unsecured credit card are usually better than they are for a secured credit card. Typically, the better your credit score, the better your rates and terms are for an unsecured credit card. The average credit card APR as of May 2022 was 14.56%; meanwhile, many of the top secured credit cards have APRs well over 20%.

How Unsecured Credit Cards Work

Because an unsecured credit card is a form of revolving credit, you have access to that credit line as long as you remain in good standing and your account stays open. Unsecured credit cards also require you to make minimum monthly payments to avoid incurring late payment fees and harming your credit score. You’ll owe interest on any balance that carries over from month to month.

Sometimes, unsecured credit cards might offer perks, such as cash-back rewards and travel insurance.

Pros and Cons of an Unsecured Credit Card

Here are some of the pros and cons of traditional, or unsecured, credit cards:

Pros of an Unsecured Credit Card	Cons of an Unsecured Credit Card
Higher credit limits compared to secured credit cards	Can be harder to get approved for
Need at least a fair credit score to qualify (580+)	Can still incur interest and fees
Can help you build your credit	May entice you to spend more than you can afford due to higher credit limits
Opportunity to earn rewards and enjoy other benefits	Could damage your credit if not used responsibly

Similarities Between a Secured Credit Card and an Unsecured Credit Card

When it comes to a secured credit card vs. an unsecured credit, there are a number of similarities:

• Both are revolving lines of credit, so you’ll have access to those lines of credit as long as you keep the card open and your account in good standing.

• Your payments are reported to credit bureaus. If you make on-time payments, your credit score will improve. Conversely, it can drop if you don’t use your credit card responsibly.

• The process of how to apply for a credit card is usually similar with a secured vs. unsecured credit card. You can usually fill out an application online, in person, over the phone, or through the mail.

• Both secured and unsecured credit cards come with interest rates and fees. Depending on the card, there might be an annual fee.

• Both types of credit cards usually offer a grace period, which is the period between when your billing cycle ends and your payment due date. During this time, you may not be charged interest as long as you pay off your balance in full by the payment due date.

• While it’s less common among unsecured credit cards, both types of credit cards might feature perks, such as cash-back rewards, car rental insurance, trip and travelers insurance, extended warranties, and price protection.

Recommended: What is a Charge Card

Differences Between a Secured Credit Card and an Unsecured Credit Card

So what’s the difference between a secured and unsecured credit card? There are a handful of items that set these types of credit cards apart:

• For starters, secured credit cards require a security deposit, whereas unsecured credit cards do not.

• The credit limit for a secured credit card usually matches the deposit amount. With unsecured credit cards, the credit limit usually depends on a handful of factors, such as your creditworthiness.

• Secured credit cards generally carry higher interest rates and fees, whereas unsecured credit cards typically have lower interest rates and fees.

• Unsecured credit cards usually have one variable interest rate, meaning the card’s interest rate fluctuates over time based on an index. Secured credit cards can have a fixed or variable rate.

Secured vs. Unsecured Credit Card: Which Is Right for You?

Now that you know the similarities and differences between a secured and unsecured credit card, you can start to assess which one might be right for you. Here’s a high-level overview to help you better compare what sets secured vs. unsecured credit cards apart:

Secured Credit Card	Unsecured Credit Card
Requires a deposit to open	Does not require a deposit
Usually available for those with thin credit histories or lower credit scores	Usually need at least fair to good credit to qualify
Lower credit limits, which are based on the amount of the deposit	Higher credit limits, which are based on creditworthiness
Fewer card options available	Variety of card options, such as cash-back cards, travel cards, business cards, and retail cards

Staying on Top of Your Credit After Choosing a Card

No matter if you decide on a secured credit card or an unsecured credit card, it’s important to stay on top of your payments. Ideally, you’ll pay the balance in full each billing cycle. Otherwise, you’ll owe interest.

At the very least, make sure to make the minimum payment each month. That way, your credit will stay intact and you’ll avoid late fees. If you’re struggling to make payments, reach out to the lender and see what they can do. They might be able to change the payment due date so it’s more in line with what’s feasible for you, or let you temporarily skip a payment to catch back up.

Recommended: When Are Credit Card Payments Due

The Takeaway

Whether you should apply for a secured credit card and an unsecured one may depend largely on your credit history and score. A secured card may be best if you have yet to establish credit or have a low credit score, while an unsecured card can be beneficial if your credit is more established and you want to earn rewards.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Is an unsecured or secured credit card better?

Whether a secured vs. unsecured credit card is better depends on your situation. An unsecured credit card might be better for you if you’re having trouble getting approved for a secured card and can afford to make the deposit. On the other hand, a secured credit card may be better if you have at least an average credit score, are looking for a higher credit limit, and would like more card options.

Should your first credit card be secured or unsecured?

It really depends. If you have a thin credit history, are looking to build credit, and can afford the security deposit, a secured credit card might be the best route to take as they’re generally easier to qualify for. Note that you’ll probably need to stomach a higher interest rate and a lower credit limit though. While an unsecured credit card doesn’t require a deposit, it might be harder to get approved for one if your credit is less-than-stellar or you don’t have much of a credit history yet.

Photo credit: iStock/cesar fernandez dominguez

May

2022

What Are the Average Retirement Savings By State?

By Kaitlyn Farley | Growing Wealth, invest, Investing, Preparing for Retirement | Comments Off

For many Americans, not having enough saved up for retirement is a real fear. Which state you live in can have a major effect on how much you need, too. Research from Personal Capital, a digital wealth manager, shows just how much your state really impacts that savings number: The state with the highest retirement savings has an average of $545,754, while the lowest had just $315,160.

And that number can vary even more when you consider factors like age, too. Currently, the average retirement age in the U.S. is 64, but you may find yourself retiring much later or earlier depending on which state you live in and when you start saving for retirement.

The Average Retirement Savings by State

Looking at the retirement savings average 401(k) balance by state for your state can help you get a better idea of how much money you need to retire. To help answer that question, Personal Capital looked at the retirement accounts of its users and took the average by state as of September 29, 2021. You can find out more about their methodology here .

Alaska

• Average Retirement Balance: $503,822

• Rank (as of 9/29/21): 4 out of 51

Alabama

• Average Retirement Balance: $395,563

• Rank (as of 9/29/21): 36 out of 51

Arkansas

• Average Retirement Balance: $364,395

• Rank (as of 9/29/21): 46 out of 51

Arizona

• Average Retirement Balance: $427,418

• Rank (as of 9/29/21): 31 out of 51

California

• Average Retirement Balance: $452,135

• Rank (as of 9/29/21): 17 out of 51

Colorado

• Average Retirement Balance: $449,719

• Rank (as of 9/29/21): 19 out of 51

Connecticut

• Average Retirement Balance: $545,754

• Rank (as of 9/29/21): 1 out of 51 (BEST)

D.C., Washington

• Average Retirement Balance: $347,582

• Rank (as of 9/29/21): 49 out of 51

Delaware

• Average Retirement Balance: $454,679

• Rank (as of 9/29/21): 14 out of 51

Florida

• Average Retirement Balance: $428,997

• Rank (as of 9/29/21): 28 out of 51

Georgia

• Average Retirement Balance: $435,254

• Rank (as of 9/29/21): 26 out of 51

Hawaii

• Average Retirement Balance: $366,776

• Rank (as of 9/29/21): 45 out of 51

Iowa

• Average Retirement Balance: $465,127

• Rank (as of 9/29/21): 11 out of 51

Idaho

• Average Retirement Balance: $437,396

• Rank (as of 9/29/21): 25 out of 51

Illinois

• Average Retirement Balance: $449,983

• Rank (as of 9/29/21): 18 out of 51

Indiana

• Average Retirement Balance: $405,732

• Rank (as of 9/29/21): 33 out of 51

Kansas

• Average Retirement Balance: $452,703

• Rank (as of 9/29/21): 15 out of 51

Kentucky

• Average Retirement Balance: $441,757

• Rank (as of 9/29/21): 23 out of 51

Louisiana

• Average Retirement Balance: $386,908

• Rank (as of 9/29/21): 39 out of 51

Massachusetts

• Average Retirement Balance: $478,947

• Rank (as of 9/29/21): 8 out of 51

Maryland

• Average Retirement Balance: $485,501

• Rank (as of 9/29/21): 7 out of 51

Maine

• Average Retirement Balance: $403,751

• Rank (as of 9/29/21): 35 out of 51

Michigan

• Average Retirement Balance: $439,568

• Rank (as of 9/29/21): 24 out of 51

Minnesota

• Average Retirement Balance: $470,549

• Rank (as of 9/29/21): 9 out of 51

Missouri

• Average Retirement Balance: $410,656

• Rank (as of 9/29/21): 32 out of 51

Mississippi

• Average Retirement Balance: $347,884

• Rank (as of 9/29/21): 48 out of 51

Montana

• Average Retirement Balance: $390,768

• Rank (as of 9/29/21): 38 out of 51

North Carolina

• Average Retirement Balance: $464,104

• Rank (as of 9/29/21): 12 out of 51

North Dakota

• Average Retirement Balance: $319,609

• Rank (as of 9/29/21): 50 out of 51

Nebraska

• Average Retirement Balance: $404,650

• Rank (as of 9/29/21): 34 out of 51

New Hampshire

• Average Retirement Balance: $512,781

• Rank (as of 9/29/21): 3 out of 51

New Jersey

• Average Retirement Balance: $514,245

• Rank (as of 9/29/21): 2 out of 51

New Mexico

• Average Retirement Balance: $428,041

• Rank (as of 9/29/21): 29 out of 51

Nevada

• Average Retirement Balance: $379,728

• Rank (as of 9/29/21): 42 out of 51

New York

• Average Retirement Balance: $382,027

• Rank (as of 9/29/21): 40 out of 51

Ohio

• Average Retirement Balance: $427,462

• Rank (as of 9/29/21): 30 out of 51

Oklahoma

• Average Retirement Balance: $361,366

• Rank (as of 9/29/21): 47 out of 51

Oregon

• Average Retirement Balance: $452,558

• Rank (as of 9/29/21): 16 out of 51

Pennsylvania

• Average Retirement Balance: $462,075

• Rank (as of 9/29/21): 13 out of 51

Rhode Island

• Average Retirement Balance: $392,622

• Rank (as of 9/29/21): 37 out of 51

South Carolina

• Average Retirement Balance: $449,486

• Rank (as of 9/29/21): 21 out of 51

South Dakota

• Average Retirement Balance: $449,628

• Rank (as of 9/29/21): 20 out of 51

Tennessee

• Average Retirement Balance: $376,476

• Rank (as of 9/29/21): 43 out of 51

Texas

• Average Retirement Balance: $434,328

• Rank (as of 9/29/21): 27 out of 51

Utah

• Average Retirement Balance: $315,160

• Rank (as of 9/29/21): 51 out of 51 (WORST)

Virginia

• Average Retirement Balance: $492,965

• Rank (as of 9/29/21): 6 out of 51

Vermont

• Average Retirement Balance: $494,569

• Rank (as of 9/29/21): 5 out of 51

Washington

• Average Retirement Balance: $469,987

• Rank (as of 9/29/21): 10 out of 51

Wisconsin

• Average Retirement Balance: $448,975

• Rank (as of 9/29/21): 22 out of 51

West Virginia

• Average Retirement Balance: $370,532

• Rank (as of 9/29/21): 44 out of 51

Wyoming

• Average Retirement Balance: $381,133

• Rank (as of 9/29/21): 41 out of 51

Why Some States Rank Higher

Many factors come into play when determining why some states have far higher rankings than others. For the sake of simplifying the data, different tax burdens and cost of living metrics weren’t considered in the analysis, which can make the difference between the highest and lowest ranking state retirement accounts look far wider than they may actually be.

Likewise, not considering the average cost of living by state could explain why states like Hawaii, D.C. and New York aren’t in the top five states for retirement even though they have some of the highest costs of living.

So, when determining where your retirement savings may stretch the furthest, you may also want to consider tax burdens and cost of living metrics by state instead of just considering the average retirement savings by state.

How Much Do You Need to Retire Comfortably in Each State?

How much you need to retire comfortably is largely determined by a state’s cost of living, but it will vary even more based on your own personal financial situation and the retirement lifestyle you’re aiming to pursue.

As such, you may want to use a retirement calculator or even talk with a financial advisor to help you determine just how much you should be saving for retirement based on your lifestyle, anticipated retirement expenses, where you want to live, your current and projected financial situation, and a slew of other factors.

💡 Recommended: How to Choose a Financial Advisor

By Generation Breakdown

Unsurprisingly, the amount Americans have saved for retirement varies a lot by generation. Personal Capital’s report reveals that generally, younger generations have less saved up for retirement than older ones.

Gen Z

• Total Surveyed: 121,489

• Average Retirement Balance: $38,633

• Median Retirement Balance: $12,016

Millennials

• Total Surveyed: 742,108

• Average Retirement Balance: $178,741

• Median Retirement Balance: $75,745

Gen X

• Total Surveyed: 375,718

• Average Retirement Balance: $605,526

• Median Retirement Balance: $303,663

Baby Boomers

• Total Surveyed: 191,648

• Average Retirement Balance: $1,076,208

• Median Retirement Balance: $587,943

The Takeaway

The average 401(k) balance by state varies quite a bit, and myriad factors can affect how much you’ll personally need to retire comfortably. Your state’s costs of living, the age you start saving for retirement, and your state’s tax burdens.

If you’re looking to boost your retirement savings, one option you could consider is SoFi Invest. SoFi offers all-inclusive investing in one app, with opportunities to trade stocks and ETFs online, invest in IPOs, automate your investment, and more.

Check out SoFi Invest to learn how investments could help increase your retirement savings.

FAQ

Have more questions about retirement? Check out these common concerns about retirement and retirement savings.

How much do Americans have saved up for retirement?

How much the average American has saved for retirement varies greatly by state and age. Connecticut has the highest average retirement savings, $545,754, and Utah has the lowest, $315,160. In general, younger generations have far less saved up than older generations, with Gen Zers averaging $38,633 and Boomers averaging $1,076,208.

What’s the average retirement age in the US?

The average retirement age in the U.S. is 64, with Alaska and West Virginia having the lowest average retirement age, 61, and D.C. having the highest, 67.

💡 Recommended: Average Retirement Savings by Age

What can I do now to boost my retirement savings?

You can increase your retirement savings using a number of methods, such as taking advantage of employer 401(k) matches or diversifying your investments. SoFi Invest can help you learn how to use investments as a way to boost your retirement savings account.

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May

2022

How to Pay for College With No Money Saved

Paying for College With No Money in Your Savings

By Jennifer Calonia | Budgeting & Goals, Going to College, Student Loans, student_loan | Comments Off

With the high cost of a college education, affording college with no money set aside might feel impossible. However, there are many forms of financial aid — whether from federal, state, school, or private organizations — that can help you pay for your college degree.

Learning how to pay for college with no money might require approaching your higher education costs from different angles. This includes cutting your college expenses, finding alternate financial aid sources, or both.

Average Cost of College

How much you can expect to pay for college varies, depending on the school you choose, your degree level, whether you’re a state resident, and other factors.

According to the CollegeBoard’s 2021 Trends in College Pricing and Student Aid report, the average tuition and fees for a full-time, in-state undergraduate student attending a public four-year school in 2021-22 is $10,780. Out-of-state students can expect to pay an average of $27,560 in tuition and fees for the same academic year. And students attending a nonprofit four-year private institution are charged an average $38,070 in tuition and fees.

Institution Type	Average Annual Tuition and Fees
Public Four-Year College, In-State Student	$10,740
Public Four-Year College, Out-of-State Student	$27,560
Private Four-Year College, Nonprofit	$38,070

Keep in mind that these figures are exclusively for tuition and fees. This cost doesn’t account for additional expenses that college students often face, like textbooks, school supplies, housing, and transportation.

Ways to Pay for College

The cost of being a college student can seem overwhelming when you don’t have savings or out-of-pocket funds available to directly pay for school.

If you want to go to college but have no money or are a parent who’s helping your child pay for college, here are a few ideas on how to go to college with no money saved.

Fill Out FAFSA® to See if You Qualify for Financial Aid

The best way to pay for college with no money — and really, the first step you should always take — is submitting a Free Application for Federal Student Aid, also known as the FAFSA.

The FAFSA is the first step in finding out if you qualify for a federal financial aid program. For example, you can see if you’re eligible for the Pell Grant, Federal Work-Study, and Direct Loans. The information on your FAFSA is also commonly used to determine your eligibility for state, school, and other privately sponsored aid.

Grants

In addition to federal grants, search for grants from your state and school for additional funding. Grant funds generally don’t need to be repaid as long as you meet the grant program’s requirements.

Some organizations — nonprofit and for-profit — also host their own need- or merit-based grant programs for college students.

Scholarships

Scholarships are considered gift aid, meaning they typically don’t need to be repaid. There are a plethora of scholarship opportunities that are awarded due to financial need or merit.

You can search for scholarships online from various companies, organizations, community groups, and more. Ask your school’s financial aid office for help finding these advantageous sources of aid.

Negotiate With the College for More Aid

If your financial circumstances have changed since you submitted your FAFSA, request a professional judgment to have your school reevaluate your financial aid package.
Not all schools accept this request, but if yours does, this process gives you a chance to provide additional documentation that’s used to recalculate your financial need.

Start With Community College and Transfer

If you want to go to college but have no money, one option is to attend a community college for the first two years of your college education. According to the same CollegeBoard report, the average 2020-21 cost for tuition and fees at a local two-year college is $3,800 for a full-time undergraduate student.

After completing your general education courses at a junior college, you can then transfer to a four-year school.

Choose a Less Expensive University

The type of school you choose can also help you afford college if you don’t have money saved. As mentioned earlier, the cost of college varies widely between a public versus private institution.

Additionally, choosing a public school in your home state generally costs less than attending an out-of-state school. When reviewing cost, be sure to factor in the scholarships and grants you may qualify for.

Live at Home

Room and board is one of the largest expenses facing students. Instead of having to account for costs toward a dorm room or off-campus housing, living at home and commuting to school can help you keep expenses lower.

Talk with your parents about whether living at home while you earn your degree is an option.

Study Abroad

Some students may explore pursuing their degree abroad, as one solution to cut expenses. Thanks to government subsidies in some countries, attending university abroad can be less expensive than staying in the U.S. In some cases, American students may even qualify for free tuition.

Work-Study

The Federal Work-Study program allows you to earn financial aid with part-time work through an employer partner.

Federal Student Loans

If you need to borrow money for college, a federal student loan is the first choice for students. The Department of Education offers subsidized and unsubsidized federal loans to students. These loans need to be repaid.

Undergraduate students might be eligible for subsidized federal loans in which the government pays for accrued interest while you’re enrolled in school, during your grace period and while in deferment. These are awarded based on financial need.

Private Student Loans

After exhausting all of your federal student aid opportunities, students may apply for a private student loan if they need additional cash to pay for college.

Private student loan rates and terms differ from federal loans. Generally, private student loans don’t offer borrowers income-driven repayment plans, or flexible deferment or forbearance terms when you’re having trouble repaying your loan.

Also, loan details often differ between lenders. To find a competitive private student loan, compare rates from a handful of lenders before choosing one.

Working Part-Time

To supplement the financial aid you’ve received, consider working part-time while you’re enrolled in school. Funds from a part-time job can help you pay for day-to-day costs as a student, like groceries, transportation, or general living expenses while you’re studying for your degree.

Borrowing From Family Members

If you have a money gap between the financial aid you’ve received and your college expenses, an option is to ask a close family member if they’re willing to offer you a loan.

Depending on your family’s financial resources and your relationship with your parents or relatives, you might have access to this alternative low-interest financing option. When borrowing money from family, be clear about how much you need, how the funds will be used, and expectations regarding repayment after you leave school.

Is College Right for You?

Attending a degree-granting, four-year college isn’t the only choice you have for furthering your education and career prospects. Enrolling in a trade school or seeking vocational training can help you advance your skills for more job-focused opportunities.

Trade School

A trade school offers programs that teach students the hands-on skills for a technical or labor-based profession.

Vocational Training

Vocational schools provide students with the education to earn a certification or formal training quickly for service-oriented professions.

SoFi Private Student Loans

If you’ve decided that a traditional college education is for you, you might still need additional funds, despite exploring alternatives to afford college with no money. A SoFi private student loan can help by offering easy financing through a fast online process.

It provides competitive rates and flexible terms to suit your repayment needs. Plus, checking your rates can be done in just three minutes.

Interested in seeing how a private student loan from SoFi can help you pay for college? Learn more and find out if you pre-qualify in a few minutes.^*

FAQ

Is there any way to go to college entirely for free?

Yes, but financial aid is highly variable and is determined based on your unique situation. Students might be eligible to enroll in college at no cost, depending on their financial need. Similarly, some students might be able to attend college for free based on merit, like with a full academic or athletic scholarship.

Is relying completely on student loans for college a good idea?

No, relying completely on student loans for college isn’t a good idea. To keep your student loan debt out of college as low as possible, it’s generally wise to seek out a mix of financial aid options. Prioritize aid that you don’t have to repay, like grants and scholarships, and use student loans as a last option when funding your college education.

Why is the cost of college so high in the US?

The high cost of college in the U.S. can be attributed to various factors. An increased demand for higher education, and unrestrained administrative and facility costs have been cited as reasons for the ongoing rise of college costs.

^*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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May

2022

How to Pay for Physical Therapist (PT) School

How Much PT School Costs and Ways of Paying for It

By LeeMarie Kennedy | Going to College, Student Loans, student_loan | Comments Off

PT school costs in the U.S. can range between around $10,000 and $30,000 per year, depending on whether you live in the same state as the program you attend.

And when it comes to how to pay for PT school, there are several funding options for prospective students — from grants and scholarships to federal financial aid, work study programs, private student loans and more.

Keep reading to find out how much PT school costs and how to pay for physical therapy school.

Cost of Physical Therapy School

The cost of physical therapy school can vary vastly depending on the program you attend, your location, among other factors.

With that said, the average tuition and fees for PT programs in the U.S are $9,629 for in-state residents and $29,730 for out-of-state students for the academic year 2021-2022.

7 Ways to Pay for PT School

Now that you have an idea of how much PT school might cost, your next priority is likely figuring out how to pay for PT school once you’ve been accepted.

Below are seven different options you can look into to help cover the costs of attending PT school.

1. Grants

Physical therapists are in high demand these days, and there’s been a corresponding increase in the number of grants available to students who are pursuing a career in PT.

Grant funding that helps students with PT school costs is sponsored by a variety of sources, from the federal government to public and private colleges and universities, professional organizations and corporations.

It’s wise to kick off your search for grant funding with federally-backed programs that target PT majors. If you’re enrolled in a PT program from an accredited college or university, you may be eligible for the following federal grants.

The Federal Pell Grant

The Federal Pell Grant is available to undergraduate students with demonstrated financial need. The amount of awarded funding maxes out at $6,895 for the 2022-23 school year. The amount awarded can change yearly and is based on the student’s level of financial need, attendance status (full time or part time), and the cost of the program itself.

The Federal Supplemental Educational Opportunity Grant

The Federal Supplemental Educational Opportunity Grant (FSEOG) is available to eligible undergraduate students who have already qualified for a Pell Grant, still demonstrate financial need, and are enrolled in a participating college or university.

To apply for an FSEOG, you can work with your college’s financial aid office and learn if you’re eligible to receive anywhere from $100 – $4,000.

U.S. Department of Health and Human Services Aid

The U.S Department of Health and Human Services offers a variety of financial aid opportunities that are designed to assist students entering into the healthcare profession. One example is the The HRSA Scholarship for Disadvantaged Students , which is a campus-based grant program that provides financial assistance to students from disadvantaged backgrounds. Eligible recipients must be pursuing a degree in an approved healthcare field (PT being one of them) and the college or university the student is attending determines the eligibility and award amount.

Colleges and Universities

There are several campus-based grants and payment programs available to PT students to help cover PT school costs. Once you’ve whittled down a list of preferred PT programs, you can search for these grants and scholarships on the schools’ websites or speak to someone in their financial aid departments to get started.

Private Organizations

Private and professional organizations can be solid sources for grants, scholarships and fellowships that help aspiring physical therapists with how to pay for PT school.

In many cases, the funding is extended on a regional basis, so searching for state or local organizations is a great way to seek financial aid that’s relevant to PT in your particular area.

Here are a couple of examples of private and professional organizations that offer financial aid opportunities to physical therapy students. The American Physical Therapy Association (APTA) sponsors several grants and scholarships for PT students, including the Outstanding PT Student and PTA Student Awards or Orthopedic Section Outstanding PT/PTA Student Award, among others.

The Foundation for Physical Therapy (FTP) administers research grants for graduate level PT students in a variety of rehabilitation techniques, including pediatric and geriatric physical therapy. In addition, the FTP offers $5,000 in award funds from their Florence P. Kendall Doctoral Scholarship for high performing PTs and PT assistants pursuing doctoral studies at an accredited college or university.

2. Scholarships

When considering how to pay for physical therapy school with a scholarship, consider searching scholarship databases for “physical therapy” scholarships. Websites such as CollegeScholarships, Scholarships 360 or Scholarships.com all offer comprehensive lists of scholarships available specifically to students studying physical therapy.

In addition to course of study, factor in other talents or qualities that may help you qualify for a scholarship, such as where you grew up, your ethnicity, or gender.

Review the scholarships available at your specific school as well.

3. Federal Student Loans

To help physical therapy students offset their PT school costs, federal student loans are another prime way to secure financial aid.

Federal financial aid for physical therapy students can come in the form of various federal student loans . They cover the cost of attendance, living expenses, fees and more to help you pay for your physical therapy education.

On top of that, federal student loans offer specific perks and protections such as:

• Deferment

• Forbearance

• Student Loan Forgiveness options

• A six-month grace period for new grads

Most federal student loans (aside from PLUS loans), don’t require a credit check, so borrowers won’t need to add a cosigner to the loan. Undergraduate students may also qualify for Direct Subsidized Loans, which are awarded based on financial need. Students are not responsible for paying the interest that accrues on subsidized loans while they are actively enrolled or during qualifying periods of deferment, such as the grace period.

4. Private Student Loans

Private student loans can be obtained from private lenders like banks, credit unions or other financial institutions and can help bridge the gap when federal student loans aren’t enough to pay for physical therapy school. That said, it may be tricky for physical therapy students to qualify for private student loans without a cosigner, especially if they have a lower credit score or no credit at all.

In some cases, aspiring PT students may need to ask someone to cosign for a private student loan to help them obtain a lower interest rate and more favorable loan terms.

While private student loan borrowers aren’t afforded the same perks and protections as they are with federal student loans, there are still benefits to using private student loans to pay for PT school.

Here’s a guide to private student loans that can help you learn more about the available options.

5. Part-Time Work

Whether it’s a side-hustle or a sanctioned work-study program, there are other ways to pay for PT school that don’t involve a loan, grant or scholarship.

On Campus

An on-campus work-study program is typically offered by the college or university where a student is attending PT school.

In the case of the Federal Work-Study Program , students are eligible for part-time employment while enrolled in PT school if their college is a participating member of the program and the student meets the program’s eligibility requirements. Checking with the school’s financial aid office is the best way to determine whether or not they offer a Federal Work-Study Program.

Off Campus

The Federal Work-Study Program also offers off-campus employment for a private nonprofit organization or a public agency, typically for work that’s performed in the public interest.

That said, finding your own job on or off campus (that’s not tied to federal aid) is also a possibility. Whether it’s a part-time job at a local cafe, waiting tables at a restaurant, or becoming a nanny for a nearby family — there are other options for figuring out how to pay for physical therapy school.

6. FAFSA

If you’re thinking about using federal student aid to pay for PT school, the first step is filling out the Free Application for Federal Student Aid (FAFSA®) .

The FAFSA is a free form that’s completed by current and prospective PT students to determine their eligibility for federal financial aid like some of the loans, scholarships and programs mentioned above.

Take a look at this FAFSA guide for more information about what the FAFSA is, which types of financial aid you may be eligible for, the criteria that can be expected in order to receive funds, and important dates to know.

7. PSLF

Public Student Loan Forgiveness (PSLF) is a federally-backed program that forgives the remaining balance on a borrower’s Direct Loans after:

• They’ve made 120 qualifying monthly payments

• Under a qualifying repayment plan

• While working full-time for a qualifying employer

The requirements for receiving PSLF are strict, so if you are pursuing this option be sure to read all the program instructions and paperwork closely.

When deciding how to pay for PT school, this is one reason many prospective students turn first to federal financial aid.

It’s Student Loan Forgiveness programs like these that are among the many perks and protections of federal student loans that can’t be accessed through private student loans.

How Much Can Physical Therapists Make?

While PT school costs can seem a bit steep, the compensation for recent PT grads can potentially justify the price tag for today’s typical physical therapy program.

Data from PayScale, Inc. indicates that an entry-level physical therapist can expect to bring in $68,025 a year on average.

And, in 2020, physical therapists made a median salary of $91,010, with the best-paid 25% bringing in $106,060 and the lowest-paid 25% making $75,360.

The Takeaway

When it comes to how to pay for physical therapy school, there are several ways aspiring students can receive financial aid — including grants, scholarships, work study programs, federal student loans through FAFSA and private student loans.

If you’re looking for PT school funding that’s flexible and free from fees, SoFi’s private student loans may be a solution for you. You can easily check your rate online, find a payment plan that fits your budget, and even get exclusive benefits that can help you with your classwork — so you can focus on the PT program that works for you.

Find out more about SoFi’s private student loans.

FAQ

What is the average student debt for a physical therapist after graduating?

According to a 2020 survey from APTA, the average debt for physical therapists is $116,183.

How much can PTs expect to make after graduating?

An entry-level physical therapist can expect to make nearly $67,000 per year on average and the median salary among all physical therapists was around $91,000 in 2020.

Will the military pay for physical therapy school?

Each branch of the U.S. Armed Forces has different programs and requirements for receiving financial assistance for physical therapy school. Visiting their individual websites is the best way to determine eligibility.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Photo credit: iStock/marinesea
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