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Which Debt to Pay Off First: Student Loan or Credit Card

It’s a common dilemma: Should you pay off credit cards or student loans first? The answer isn’t totally cut and dried. But if your credit card interest rates are higher than your student loan interest rates, paying down credit cards first will probably save you more money in interest.

But don’t stop there. Keep reading to learn how to calculate what’s best for your situation, and why. Along the way, you’ll learn more about how credit cards work, the complexities of student loans, and two very different strategies for paying down debt.

Prioritizing Your Debts

Experts are split over the best debt to pay off first. Some recommend you tackle the smallest balance first because of the psychological boost that comes from erasing a debt entirely.

However, from a purely financial standpoint, you’re better off paying off the debt that carries the highest interest rate first. That’s because the higher the interest rate, and the longer you hold the debt, the more you end up paying overall. This usually means tackling high-interest credit card debt first.

Keep in mind that prioritizing one debt over another does not mean that you stop paying the less urgent bill. It’s important to stay on top of all debts, making at least minimum monthly payment on each.

Failing to make bill payments can hurt your credit score, which can have all sorts of effects down the road. For example, a poor credit score can make it difficult to secure new loans at low rates when you want to buy a new car or home, or to take out a business loan.

You might consider setting up automatic payments on your loans. Automatic payments can make it easier to pay bills on time and juggle multiple payments.

If you’re having trouble making your monthly payments, consider strategies to make your payments more manageable, such as refinancing.

Student Loan vs Credit Card Debt

Before we get into if it’s better to pay off credit cards or student loans first, let’s look at how each debt is structured.

Student Loan Debt

A student loan is a type of installment loan used to pay for tuition and related schooling expenses for undergraduate or postgraduate study. Borrowers receive a lump sum, which they agree to pay back with interest in regular installments, usually monthly, over a predetermined period of time. In this way, student loans are similar to other installment loans such as mortgages, car loans, and personal loans.

At a high level, there are two types of student loans: federal and private. The U.S. government is the single largest source of student loans. Federal student loans have low fixed interest rates: Current rates are 4.99% for undergrad loans, and 7.44% for graduate and professional loans. These loans come with protections like income-driven repayment plans, deferment and forbearance, and loan forgiveness.

Private student loans are managed by banks, credit unions, and online lenders. They may have a fixed or variable interest rate, which is tied to the borrower’s credit score and income. Average interest rates range from 3.22% to 13.95% for a fixed rate, and from 1.29% to 12.99% for variable.

Private student loans don’t come with the same protections as federal student loans. For instance, they are not eligible for President Biden’s loan forgiveness plan.

Payback timelines vary widely. As with other loans, the longer your repayment timeline, the lower your monthly payment will be — but you’ll pay more in interest over the life of the loan. The shorter your repayment period, the larger your monthly payment, and the less interest you’ll pay.

Recommended: Types of Federal Student Loans

Credit Card Debt

Credit cards offer a type of revolving credit, where account holders can borrow money as needed up to a set maximum. You can either pay off the balance in full or make minimum monthly payments on the account. Any remaining balance accrues interest.

Credit cards usually come with higher interest rates than installment loans. The average credit card interest rate in September 2022 was 21.59%. But an individual credit card holder’s rate depends on their credit score. People with Excellent credit will pay an average of 18.04%, while those with Bad credit will pay closer to 25.14%.

Depending how the account is managed, credit card debt can be either very expensive or essentially free. If you always pay off credit cards in full each month, no interest usually accrues. However, if you make only minimum payments, your debt can spiral upward.

Recommended: Taking Out a Personal Loan to Pay Off Credit Card Debt

Should I Pay Off Credit Card or Student Loan First?

When it comes to student loan vs credit card debt, there’s no universal answer that fits everyone in every situation. A number of factors can tip the scales one way or another, especially the interest rates on your loan and credit card.

We’ll explore two scenarios: one in which paying off credit cards is the best move, and another where student loans get priority.

The Case for Paying Down Credit Cards First

If you are carrying high-interest credit card debt, you’ll likely want to focus on paying off credit cards first. As you saw above, the average credit card interest rate (21.59%) is significantly higher than the maximum student loan interest rate (13.95%). Even if your credit card interest rate is lower than average, it’s unlikely to be much lower than your student loan’s rate.

Credit card debt can add up quickly, and the higher the interest rate, the faster your debt can accumulate. Making minimum payments still means you’re accruing interest on your balance. And as that interest compounds (as you pay interest on your interest), your balance can get more difficult to pay off.

A high balance can also hurt your credit score, which is partially determined by how much outstanding debt you owe.

Paying Off Credit Card Debt

Once you decide to focus on paying off credit cards first, start by finding extra funds to send to the cause. Look for places in your budget where you can cut costs, and direct any savings to paying down your cards. Also consider earmarking bonuses, tax refunds, and gifts of cash for your credit card payment.

Next, make a list of your credit card balances in order of highest interest rate to lowest. The Debt Avalanche method refers to paying off the credit card with the highest interest rate first, then taking on the credit card with the next highest rate.

It bears repeating that focusing on one debt doesn’t mean you put off the others. Don’t forget to make minimum payments on your other cards while you put extra effort into one individual card.

You may also choose to use a Debt Snowball strategy. When using this method, order your credit cards from smallest to largest balance. Pay off the card with the smallest balance first. Once you do, move on to the card with the next smallest balance, adding the payment from the card you paid off to the payment you’re already making on that card.

The idea here is that, like a snowball rolling down a hill gets bigger and faster as it rolls, the momentum of paying off debt in this way can help you stay motivated and pay it off quicker.

Managing Your Student Loans

Meanwhile, it’s important that you continue making regular student loan payments while you’re prioritizing your credit card debt. For one thing, you shouldn’t just stop paying your student loans. If you do, federal student loans go into default after 270 days (about 9 months). From there, your loans can go to a collections agency, which may charge you fees for recouping your debt. The government can also garnish your wages or your tax return.

You can, however, typically adjust your student loan repayment plan to make monthly payments more manageable. If you have federal loans, consider an income-driven repayment plan, which bases your monthly payment on your discretionary income.

While this may reduce your monthly student loan payments, it extends your loan term to 20 to 25 years. That can end up costing you more in interest. So make sure the extra interest payments don’t outweigh the benefits of paying down your credit card debt first.

Refinancing Your Student Loans

It can also be a smart idea to refinance student loans. When you refinance a loan or multiple loans, a lender pays off your current loans and provides you with a new one, ideally at a lower rate.

You can use refinancing to serve a couple of purposes. One option is to lower your monthly payment by lengthening the loan term. This can free up some room in your budget, making it easier to stay on top of your monthly payments and redirect money to credit card payments. Just remember that lengthening the loan term can result in you paying more interest over the course of your loan.

Or you can shorten your loan term instead. This can be a good way to kick your student loan repayment into overdrive. Your payments will increase, but you’ll reduce the cost of interest over the life of the loan. In other words, you’re giving equal weight to paying off your student loans and your credit card debt.

When you refinance with SoFi, there are no origination or application fees. And as a SoFi member, you’ll have access to member benefits like unemployment protection, which can allow you to temporarily pause your payments if you lose your job. However, refinancing your student loans with a private lender means you’ll lose access to federal loan benefits, such as income-driven repayment plans, forbearance, and deferment.

To see how refinancing with SoFi can help you tackle your student loan debt, take advantage of our student loan refinancing calculator.

Take control of your debt by refinancing your student loans. You can get a quote from SoFi in as little as two minutes.

FAQ

Should you pay off your student loans or your credit cards first?

The answer depends on a number of factors, especially the interest rates on your loans and credit cards. But if your credit cards carry high interest rates, you’ll likely save more money in interest by paying off your credit cards before your student loans.

What is the best debt to pay off first?

From a purely financial perspective, it’s best to pay off your highest interest-rate debt first. This is called the Debt Avalanche method. Paying off the most expensive debt (usually credit cards) first will save you the most money in interest.

Is it smart to pay off credit card debt with student loans?

This is probably not a good idea. First of all, paying off credit cards with student loans may violate your student loan agreement, which limits the use of funds to tuition and related expenses. If you use a credit card exclusively for educational expenses like textbooks and computers, you might be able to use loan funds to pay it off. However, you should check your loan agreement carefully to make sure this is allowed.


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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 Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.

CLICK HERE for more information.


Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.


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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Ethereum Price History: 2015-2022

Ethereum Price History: 2015-2022

Ethereum is the second-largest cryptocurrency by market cap after Bitcoin, and it was the first to introduce blockchain-based smart contract technology. In part thanks to Ethereum’s many innovations, the value of ETH has been relatively high over the last seven or eight years — with a historic low of about 42 cents and an all-time high of about $4,800 in November of 2021.

The concept for the Ethereum platform was first proposed in a white paper by Vitalik Buterin in 2013. In 2014, he and a team of developers raised about $18 million to establish the nonprofit Ethereum Foundation and fund its development. The Ethereum platform launched in 2015.

From the beginning, the vision for Ethereum was distinct from Bitcoin or any other cryptocurrency at the time. The larger idea for Ethereum was to create a programmable blockchain that would enable a sort of free market environment, where developers could create applications and programs without any control or interference from a third party.

Ethereum Price History

The innovative spirit of the Ethereum blockchain has sustained its value over the years.

Many blockchain-based projects have been built on the Ethereum network, including countless decentralized finance (DeFi) apps, non-fungible tokens (NFT), and a long list of utility tokens that serve various use cases.

The Ethereum Virtual Machine (EVM) powers these automated agreements.

When it was launched in 2015, the price of 1 ETH was under a dollar – starting at $0.74. In 2016, the cryptocurrency was listed on Coinbase and was trading between $7 – $10. By 2017, a volatile year, the price skyrocketed as high as $1,600 before falling by about 95%, to $80.

Over the next few years, ETH would eventually see another bull market, taking its price to a new all-time high of $4,815 in November 2021. Since then, the price has fallen again, and was trading around $1,124, as of November 9, 2022.

Ethereum (ETH) Price History

Year

High

Low

2015 $1.39 $0.42
2016 $21.25 $0.93
2017 $881.94 $7.98
2018 $1,119.37 $82.83
2019 $361.40 $102.93
2020 $533.00 $95.18
2021 $4,815.00 $718.11

Ethereum Price in 2015: Starting Price

Price of Ethereum in 2015: $0.42 to $1.39

In 2015, the year that Ethereum first launched, the price started at around $0.74 and the lowest closing price for ETH was $0.42.

The year 2015 was the only time when Ethereum was worth one dollar or less, with the exception of January 2016.

There weren’t many significant events for the Ethereum price history in 2015. The network had only just been launched and the ETH token had little value.

Ethereum Price in 2016: First Hard Fork

Price of Ethereum in 2016: $0.93 to $21.25

Early 2016 was the last time that Ethereum was worth less than a dollar. The lowest price for ETH was in January, around $0.93. ETH climbed as high as $21.25 in June before falling back to $6 in December.

There were several significant Ethereum-related events that happened in 2016. Ethereum saw what was at the time the largest crowdfunding in history with its Decentralized Autonomous Organization (or DAO). The DAO was then hacked when attackers exploited an aspect of the crowdfunding mechanism inside a smart contract that allowed them to withdraw ETH from the fund.

As a result of this attack, Ethereum developers decided to hard fork the network. This allowed them to roll back the blockchain to a time when the DAO hack had never happened.

The original chain then became Ethereum Classic (ETC), and the new chain became Ethereum (ETH). This event is sometimes referred to as the ETC/ETH split.

In other important crypto news, ETH became the second-ever crypto to be listed on Coinbase in July of 2016. Up until that time, Coinbase users could only buy and sell Bitcoin. This helped set the stage for Ethereum’s massive bull run over the next few years.

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Ethereum Price in 2017: Becoming Mainstream

Price of Ethereum in 2017: $7.98 to $881.94

In 2017, awareness of Ethereum began to grow, and the ETH price started to soar. The lowest price for ETH that year was just under $8, where it began in January. The ETH price then rose as high as $881.94 by December.

In 2017, the crypto asset class as a whole started going mainstream. Bitcoin rose from about $1,000 in early 2017 to as high as $19,000 by December 2017. Ethereum and many other altcoins came along for the ride, seeing even more dramatic price increases. During this time, ETH would solidify its place as the second-largest cryptocurrency by market cap, where it still sits today.

Ethereum Price in 2018: Breaking $1K

Price of Ethereum in 2018: $82.83 to $1,119.37

In 2018, Ethereum reached $1,119.37, the highest price it had ever been at the time. But by December, the lowest price for ETH was $82.83, as the infamous “crypto winter” set in, and many cryptocurrencies saw their values plummet by 90% or more.

While there weren’t many significant events pertaining to Ethereum specifically in 2018, there was a lot of FUD (fear, uncertainty, doubt) surrounding crypto in general at this time. Many media reports declared that Bitcoin and cryptocurrency were “dead” after the market shed hundreds of billions of dollars off its total market cap.

Just two years earlier, in 2016, the entire cryptocurrency market cap had been under $10 billion. At the peak in 2018, it topped out at $820 billion, representing a rise of more than 80x in just a few years as traders piled into a speculative mania that would go down in history as one of the biggest asset bubbles ever.

Ethereum Price in 2019: The Uneventful

Price of Ethereum in 2019: $102.93 to $361:40

The lowest price for Ethereum in 2019 was $102.93, more than 90% down from $1,432, the highest price Ethereum had ever been at that point in time.

There weren’t many significant events regarding the Ethereum price history in 2019. It wasn’t a very eventful year in crypto.

Ethereum Price in 2020: The Coronavirus Effect

Price of Ethereum in 2020: $95.18 to $533.00

Ethereum began 2020 at about $127, a price not far above where it began the previous year. Times were tough, owing to the pandemic. But ETH was able to find its footing toward the end of the year.

In Q1 2020, the coronavirus pandemic and associated lockdowns led to a worldwide sell-off across all asset classes. Crypto was no exception. Ethereum fell below $100 in March 2020 before climbing higher in the second half of that year. This set the stage for the epic bull run of 2021.

Ethereum Price in 2021: Epic Bull Run

Price of Ethereum in 2021: $718.11 to $4,780.73

The lowest price for ETH in 2021 was $718. This year saw the highest price Ethereum has ever been, at $4,815.00. This smashed the previous record high of over $1,400.

2021 saw a bull market in most asset classes, including stocks, bonds, real estate, and crypto. The total crypto market cap crossed $3 trillion for the first time that year. Ethereum was supposed to undergo an upgrade (called the Merge) in 2021, but it was pushed to September of 2022.

Ethereum Price in 2022

Price of Ethereum in 2022: $896 to $1,965

The lowest price for Ethereum in 2022 so far has been $896, while the high has been $1,965. The price is currently hovering around the $1,100 level, as of Nov. 9, 2022.

Owing in part to the economic crisis brewing in early 2022, thanks to inflation and rising interest rates, crypto valuations have plummeted in value this year. The stablecoin crisis in early Q2 didn’t help, as Terra and its linked crypto LUNA, crashed. As of Q4 of 2022, the crypto markets had lost billions in value, and 2022 has been dubbed the next crypto winter.

Even Ethereum’s successful migration from a proof-of-work system to a proof-of-stake network in September has not yet delivered additional price momentum — but at least it’s not as low as some of its competitors. The merge marks the end of traditional crypto mining as a way to generate new Ethereum tokens.

💡 Recommended: What Is Ethereum 2.0? How Will It Be Different?

Considerations When Investing in Ethereum

Cryptocurrencies are volatile, and many altcoins, including ETH, can be even more volatile than Bitcoin. This increases the chances for outsized gains as well as steep losses. When investing in ETH, it’s important to consider a project’s past and future. The DAO hack of 2016 resulted in the ETC/ETH split, something that interested investors may want to consider researching further.

Another important factor to consider is Ethereum’s “merge,” or upgrade from a proof-of-work consensus mechanism to a proof-of-stake one. While this evolution hasn’t yielded big gains, it’s possible that the greater energy efficiency across the Ethereum network could still yield unforeseen benefits.

The Takeaway

Ethereum is one of the oldest and most successful crypto networks. It has made the DeFi revolution possible, thanks to its development of smart contracts and other innovative uses of blockchain technology.

Still, there’s no getting around the fact that crypto prices are volatile. Ethereum price history is one of ups and downs, ground lost — and ground regained. Ethereum launched with a value of about 1 dollar in 2015 and early 2016, but since then the price has soared way beyond those levels.

A correction of almost 95% happened after Ethereum’s 2018 high of over $1,400, and a correction of over 80% occurred after the more recent 2021 high of over $4,800, the highest price Ethereum has ever been.

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The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
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For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
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.
2Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2022. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

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$100 $499.99 $15
$500 $4,999.99 $50
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What Is the Average Monthly Cost of Car Insurance by Age in the US?

What Is the Average Monthly Cost of Car Insurance by Age in the US?

Car insurance underwriters look at many factors — such as age, gender, and location — when determining the risk a driver poses. To help you understand what you can expect to pay, we break down the average cost of car insurance by age and state, and other factors that may push your premiums higher or lower.

What Is the Average Cost of Car Insurance?

According to the National Association of Insurance Commissioners, the average car insurance premium per vehicle is $1,204, or $100.33 per month. The rate you’ll end up paying will depend on various factors such as your driving history, age, gender, and the age and make of your vehicle. If you’re currently paying much more than average, don’t switch car insurance without first talking to your carrier.

If you need to brush up on the difference between premiums and deductibles, check out our roundup of common car insurance terms.

Recommended: Does Auto Insurance Roadside Assistance Cover Keys Locked in a Car?

Average Car Insurance Rates by Age and State

One thing is consistent: The older you are, the less you’ll pay for car insurance, all else being equal. As you’ll see in the table, location also plays a large role in setting premiums, though the pattern isn’t as clear. One variable that should not affect your premium: whether you get your insurance through a brick-and-mortar office or online insurance company.

Below is the annual average cost of car insurance by age in every state. For monthly cost, divide the annual amount by 12.

State

Age

16 years

25 years

45 years

65 years

Alabama $3,470 $855 $697 $737
Alaska $2,311 $855 $697 $737
Arizona $3,838 $801 $661 $696
Arkansas $2,990 $784 $631 $626
California $2,845 $1,042 $844 $851
Colorado $3,632 $868 $725 $763
Connecticut $5,636 $1,280 $1,027 $1,063
Delaware $5,473 $1,381 $1,133 $1,125
District of Columbia $3,581 $813 $693 $714
Florida $3,390 $939 $814 $788
Georgia $4,924 $1,366 $1,095 $1,146
Hawaii $596 $501 $501 $501
Idaho $2,138 $497 $394 $401
Illinois $3,626 $841 $662 $675
Indiana $2,254 $606 $481 $508
Iowa $1,497 $416 $326 $332
Kansas $2,587 $658 $558 $552
Kentucky $4,300 $1,129 $931 $953
Louisiana $6,860 $1,592 $1,263 $1,399
Maine $2,351 $574 $456 $447
Maryland $4,629 $1,254 $1,069 $1,165
Massachusetts $2,408 $632 $565 $481
Michigan $6,508 $2,058 $1,908 $1,922
Minnesota $3,139 $925 $758 $776
Mississippi $2,896 $722 $578 $573
Missouri $2,952 $772 $587 $589
Montana $2,159 $520 $446 $456
Nebraska $2,271 $550 $427 $429
Nevada $4,870 $1,326 $1,108 $1,167
New Hampshire $2,265 $607 $438 $446
New Jersey $5,580 $1,447 $1,287 $1,255
New Mexico $2,504 $667 $555 $586
New York $7,305 $2,181 $1,828 $1,909
North Carolina $1,608 $510 $477 $473
North Dakota $1,921 $442 $370 $364
Ohio $2,113 $521 $414 $433
Oklahoma $3,450 $760 $643 $670
Oregon $3,765 $923 $789 $801
Pennsylvania $2,093 $591 $501 $497
Rhode Island $6,719 $1,086 $887 $998
South Carolina $3,689 $989 $817 $880
South Dakota $1,682 $410 $326 $325
Tennessee $2,553 $635 $498 $510
Texas $3,892 $965 $780 $809
Utah $3,681 $881 $750 $791
Vermont $1,648 $447 $341 $335
Virginia $4,300 $1,129 $931 $953
Washington $3,613 $909 $714 $743
West Virginia $2,411 $697 $568 $559
Wisconsin $2,488 $515 $418 $422
Wyoming $1,342 $325 $274 $274

Data courtesy of Quadrant Information Services

Recommended: How to Get Car Insurance

Factors That Affect Car Insurance Rates

There are a few factors that are within your control when it comes to insurance rates, and many that aren’t. The major factors include:

•   Your driving history

•   Age

•   Location

•   Age and model or your vehicle

•   Number of drivers on your insurance policy

•   Discounts you can take advantage of with your insurer

•   Your deductible

•   Type of coverage

For a deep dive into the process of selecting a carrier, see our story on how to get car insurance.

Recommended: How to Lower Car Insurance

How Age Affects Your Car Insurance Rates

Car insurance companies use your age to estimate driving risk. Statistically, younger and new drivers tend to get into accidents more frequently than older and experienced drivers. Once you hit 65, however, you’re again considered a risky driver because you become more likely to get into a car accident and be injured.

That said, age isn’t the only factor that affects your car insurance rates.

Age vs Location

Your location typically has as much of an effect as your age on car insurance premiums.

Age vs Vehicle Type

In most cases, vehicle type will affect younger drivers more than older or more experienced drivers. If your car is of higher value or has a higher likelihood of being stolen, your premiums may be higher.

Age vs Gender

While gender does have an effect on rates, not all states allow insurance companies to use this as a determining factor. For states that do, men generally pay more compared to women, with greater disparities among younger drivers.

Age vs Driving Record

Your driving record will affect your premium more than your age. If you have negative marks on your driving record, you’ll see your rates go up, especially for serious violations like a DUI.

Age vs Credit Score

In many states, companies aren’t allowed to use your credit score when determining your premiums. If you live in a state that factors in credit score, that usually won’t have as much of an effect as your age.

In states where credit score is used, some insurance companies will rerun your credit check and discount your rate if your score has improved. However, they won’t normally increase your premium if your score has gone down.

Recommended: How Much Does Insurance Go Up After an Accident?

How Gender Affects Your Car Insurance Rates

Many insurance companies consider your gender when setting your premium. According to data analysis from the U.S. Department of Transportation, men are found more likely to be involved in fatal car crashes, especially younger men. Because of this risk, premiums are usually higher for men than women.

Recommended: How To Save on Car Maintenance Costs

List of No-fault States

No-fault insurance laws mandate that every driver involved in an accident must file a claim with their insurance company, no matter who was at fault. Plus, all drivers need to purchase personal injury protection (PIP) as part of their minimum insurance coverage. PIP typically covers medical bills and lost wages due to an accident.

The 13 states and territories that have no-fault laws are:

•   Puerto Rico

•   Florida

•   Michigan

•   New Jersey

•   New York

•   Pennsylvania

•   Hawaii

•   Kansas

•   Kentucky

•   Massachusetts

•   Minnesota

•   North Dakota

•   Utah

Minimum Coverage Requirement Laws

Each state has its own minimum car insurance requirements. When purchasing a policy, you’ll need to meet those requirements. Most insurance carriers know what these are and will help you choose coverage that meets them.

While you’ll most likely need bodily injury liability and property damage as part of your insurance requirements, the coverage amount may differ. Some states also require PIP coverage and uninsured/underinsured motorist coverage.

For more on different coverage requirements, see our guide to how much car insurance you really need.

Ways to Save with Auto Insurance Discounts

Many insurance companies, in an effort to attract customers, offer discounts to qualifying drivers. A common discount is the “multiline,” where you are able to lower your car insurance premiums by bundling multiple policies. Other discounts include paying for your premium in full upfront, signing up for electronic delivery, and safe driver discounts. Contact your insurance company to see what they offer.

Bundling discounts are a good reason to schedule regular personal insurance planning sessions to review all of your coverage and find the best deals.

The Takeaway

Understanding the factors that affect insurance premiums can help drivers anticipate costs and budget for this necessary expense. The biggest factors affecting car insurance premiums are age and location. Some factors, like vehicle make and gender, are more of an issue for younger drivers. Knowing which factors are within your control may help you lower your premiums. Maintaining a clean driving record and asking about discounts are two ways to keep premiums down.

A great way to find the going rates for car insurance in your area is to shop around online. SoFi auto insurance helps you compare companies within minutes, saving you time and hassle.

Compare quotes from top car insurance carriers.

FAQ

How much does the average American pay for car insurance per month?

The average American pays $100.33 per month for a car insurance premium.

At what age is car insurance most expensive?

Around age 16. Typically, car insurance for first-time drivers is the most expensive.

Is insurance cheaper once you are 25?

The older you are, the more your insurance premiums tend to drop because you’re perceived as a more experienced driver. Of course, premiums also depend on other factors such as your driving history and vehicle type.


Photo credit: iStock/Tatyana Kochkina

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SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

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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Average Homeowners Insurance vs Condo Insurance Cost

Average Homeowners Insurance vs Condo Insurance Cost

Homeownership is expensive, no matter what type of property someone owns. And the cost of homeowners insurance can vary greatly depending on where someone lives, the size of the home, and the type of insurance.

If you’re debating whether you can afford to buy a single family home or a condo, make sure to factor in condo insurance vs. homeowners insurance costs. Keep reading for the full lowdown.

What Is the Difference Between Homeowners Insurance and Condo Insurance?

The difference between homeowners insurance vs. condo insurance is fairly straightforward. Both protect homeowners financially, but the policies differ in the scope of their coverage. (Neither policy should be confused with mortgage insurance, which is totally different)

Homeowners insurance protects most of the property someone owns (inside the home, outside the home, and the surrounding area). Condo insurance protects only the interior of the home. Because multiple condos share one building, the exterior and area around the condo are the responsibility of the homeowners association (HOA) master insurance policy.

You can learn more about both types of coverage by shopping around with online insurance brokers.

How Does Dwelling Coverage Differ for Home Insurance vs Condo Insurance?

When it comes to homeowners vs. condo insurance, how dwelling coverage works varies:

•   Homeowners insurance: Dwelling coverage is based on how much it might cost to completely rebuild the home.

•   Condo insurance: How much dwelling coverage is needed is based on what the HOA master policy covers. For example, some master policies may cover select interior structures (like drywall or ceilings) or the entire interior.

Recommended: First-Time Home Buyer’s Guide

How Does Liability Coverage Differ?

For liability insurance, coverage needs can also be different for condos and homes.

•   Homeowners insurance: Liability coverage extends to the entire property (inside and outside the home).

•   Condo insurance: Covers accidents that happen inside the condo.

How Does Personal Property Protection Differ?

Personal property protection works similarly whether someone has a homeowners policy or a condo policy. This type of coverage is designed to protect the policyholder’s belongings from damage and theft. HOA master policies don’t include this coverage, so condo owners need to make sure they purchase it. Both homeowners and condo owners can benefit from personal property protection.

Cost of Homeowners and Condo Insurance by State

To get a better idea of what each type of insurance costs, let’s look at the average condo insurance vs. homeowners insurance costs by state.

As with most insurance, you can lower your premiums by choosing a higher homeowners insurance deductible.

State

Condo Annual Premium

Home Annual Premium

Alabama $541 $1,611
Alaska $396 $1,078
Arizona $400 $927
Arkansas $539 $1,540
California $535 $1,133
Colorado $417 $1,680
Connecticut $399 $1,662
Delaware $431 $936
Florida $964 $2,193
Georgia $493 $1,424
Hawaii $310 $1,239
Idaho $420 $820
Illinois $398 $1,187
Indiana $354 $1,124
Iowa $295 $1,083
Kansas $439 $1,780
Kentucky $390 $1,246
Louisiana $748 $2,212
Maine $342 $991
Maryland $310 $1,165
Massachusetts $444 $1,672
Michigan $369 $1,059
Minnesota $312 $1,515
Mississippi $600 $1,727
Missouri $416 $1,444
Montana $382 $1,319
Nebraska $355 $1,664
Nevada $424 $849
New Hampshire $332 $1,092
New Jersey $450 $1,340
New Mexico $397 $1,143
New York $553 $1,471
North Carolina $456 $1,221
North Dakota $320 $1,408
Ohio $319 $969
Oklahoma $631 $2,119
Oregon $364 $761
Pennsylvania $385 $1,046
Rhode Island $500 $1,743
South Carolina $500 $1,426
South Dakota $307 $1,351
Tennessee $473 $1,344
Texas $790 $2,128
Utah $269 $778
Vermont $345 $1,032
Virginia $352 $1,123
Washington $374 $960
Washington, D.C. $369 $1,388
West Virginia $313 $1,051
Wisconsin $280 $876
Wyoming $379 $1,299

Condo data courtesy of Ramsey Solutions; home data from Hippo Insurance

Condo Insurance vs Homeowners Insurance Cost

Once someone is ready to buy homeowners insurance or condo insurance, price is likely top of mind. When it comes to the average condo vs. homeowners insurance cost, homeowners is $1,680 per year and condo is $429 per year.

Types of Condo Insurance

There are a few types of condo insurance to be aware of:

•   Personal property. When someone has personal property protection, they can be reimbursed for the cost of repairing or replacing their belongings, such as clothing and electronics, up to a certain amount.

•   Loss of use. If the owner needs to leave their condo to stay in a hotel during repairs after a covered incident occurs, loss of use coverage can help pay for things like hotel stays and dining out.

•   Liability. Liability coverage can help out if the condo owner is legally responsible for damage or injuries caused to someone else due to an accident that occurs in their condo.

•   Dwelling. This type of coverage steps in to pay for replacing or repairing everything in the condo unit (starting from the drywall in) after a covered loss.

•   Loss assessment. If an accident occurs in a shared area of a condo’s property (like the pool, stairs, or clubhouse), then the HOA master policy is the first line of defense. However, if damages exceed the amount that this policy will cover, then the residents may end up responsible for covering the remaining costs, which is where loss assessment coverage can come to the rescue.

Recommended: The Difference Between Homeowners Insurance and Title Insurance

Condo Insurance Benefits

While the HOA does have some insurance coverage that protects parts of condo units, residents really need to have their own condo policies to make sure they’re fully protected. The benefits of condo insurance are many, from covering repairs to replacing belongings after a break-in to paying medical bills after a guest slips and falls.

Condo owners who are still unsure what sort of policy to choose may benefit from reading How Much Home Insurance Do I Need?

Types of Homeowners Insurance

These are the main homeowners policy options:

•   HO-1: Only dwelling protection. Also known as hazard insurance.

•   HO-2: Includes personal belongings and extra perils on top of basic coverage.

•   HO-3: Includes dwelling, belongings, and liability coverage. This is the most popular type of coverage.

•   HO-4: Applies to policyholders who rent out their home and want liability and personal property coverage.

•   HO-5: This is a comprehensive policy that usually applies to brand-new homes and comes with extra coverage.

•   HO-6: The term HO-6 is another way of saying condo insurance.

•   HO-7: This type of coverage is for mobile homes.

•   HO-8: Robust coverage for older and historical homes.

It’s always possible to change homeowners insurance policies if someone decides they want more coverage.

Homeowners Insurance Benefits

The type of homeowners policy someone has influences the benefits of their policy. Generally speaking, the point of this insurance is to financially protect homeowners from disastrous events that can destroy a home, but it can also protect against theft and liability.

If you have a mortgage, homeowners insurance may be required by your lender.

The Takeaway

If someone owns a home or a condo, they need some type of insurance coverage to protect themselves from financial hardship. Homeowners policies typically include dwelling coverage for the building itself, while condo policies do not. Both cover the contents of the home, and may include liability coverage too. The average annual cost of a homeowners policy is $1,680, while the average annual condo policy is $429.

If you need a new homeowners policy, you can turn to SoFi. We teamed up with Lemonade to deliver homeowners insurance built for the 21st century — without brokers. Policies are customizable, and getting a quote online takes just minutes.

Lemonade is rated “A – Exceptional,” fully licensed, and reinsured by some of the most trusted names on the planet.

FAQ

What is the key difference between a homeowners and a condo policy?

The main difference between condo and homeowners insurance coverage is what each type of insurance protects. Condo insurance only protects the interior of the condo whereas homeowners insurance protects the entire property including the outside of the home and the land around it.

Which type of property insurance coverage is more expensive?

Generally homeowners insurance is more expensive (average cost of $2,777 per year) than condo insurance (average cost of $759 per year). That being said, the location, size, and repair cost of the property can lead to a condo being more expensive to insure than a single family home.

What’s the difference between HO3 and HO6?

An HO3 policy protects a single family home with dwelling, belonging, and liability coverage. An H06 policy on the other hand is designed for condo owners to protect the inside of the condo, as well as providing belonging and liability coverage.


Photo credit: iStock/miniseries

SoFi offers customers the opportunity to reach the following Insurance Agents:
Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

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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What Does Flood Insurance Cover?

What Does Flood Insurance Cover?

Flood insurance is designed to help homeowners, renters, and business owners cover losses caused by a flood. You can buy it to protect a building, the possessions in that building, or both.

Most standard homeowners policies don’t cover flood damage. So this separate insurance coverage is your best option for repairing or replacing property after rising water rises enters your home. In some areas, mortgage lenders can make buying flood insurance mandatory. Even if your lender doesn’t require flood insurance, you may want to consider it.

Read on for information that can help you decide if a flood policy should be part of your insurance coverage.

What Is Flood Insurance?

According to the Federal Emergency Management Agency (FEMA), just one inch of floodwater can cause up to $25,000 in damage. And that damage probably won’t be covered by your homeowners or renters insurance. You can, however, purchase a standalone flood insurance policy to help cover your losses.

A flood insurance policy is meant to cover losses directly caused by flooding or, as FEMA describes it, “an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.”

If your sewer backed up after heavy rainfall, or rising inland or tidal waters flooded your property, the damage would likely be covered by flood insurance. But if the backup wasn’t caused by flooding, the damage wouldn’t be covered by flood insurance. (Whether it’s covered by your homeowners insurance depends on your individual policy.)

Most people get their flood policy through the National Flood Insurance Program (NFIP), which is managed by FEMA and works with a network of insurance companies across the country. But some private insurance companies also offer their own flood policies, which are not government-backed.

Recommended: Mortgage & Homeowners Insurance Definitions

What Is Included in Standard Flood Insurance?

The NFIP offers two types of flood insurance coverage: one that covers buildings and another that covers the owner’s or renter’s personal contents.

A policy purchased through the NFIP can reimburse up to $250,000 in building damage and typically covers:

•   Foundation walls, anchoring systems, and staircases

•   Detached garages

•   Electrical and plumbing systems

•   Furnaces and water heaters

•   Fuel tanks, well water tanks and pumps, and solar energy equipment

•   Appliances, including refrigerators, stoves, and built-in dishwashers

•   Permanently installed cabinets, paneling, and bookcases

•   Permanently installed carpeting and window blinds

An NFIP policy can provide up to $100,000 in personal property damage, and typically covers:

•   Personal belongings, such as clothing, furniture, and electronic equipment (TVs, computers, etc.)

•   Valuables (like original artwork and furs) up to $2,500

•   Portable and window air conditioners

•   Washers and dryers

•   Microwave ovens

•   Carpets that may not be included under building coverage

•   Curtains and other window coverings

Recommended: A Guide to All Things Insurance

What Doesn’t Flood Insurance Cover?

There are a few things NFIP flood insurance doesn’t cover, even if the damage is directly caused by flooding. Items that aren’t covered include:

•   Any property that’s outside the insured building (such as a well, septic system, deck or patio, fences, seawall, hot tub or pool, and landscaping)

•   Cars and most other self-propelled vehicles and their parts

•   Cash, coins, precious metals, stock certificates, and other valuable paperwork

•   Damage from mold or mildew that could have been prevented by the property owner

Flood insurance also doesn’t cover costs incurred if you have to live in temporary housing because of damage to your property. Unfortunately, neither will the “loss of use coverage” you may have through your homeowners policy. (Loss of use coverage pays those expenses only when the reason you’ve been displaced is covered by your homeowners policy.)

What Does Flood Insurance Cover in the Basement?

The NFIP’s coverage for flood damage in the basement is limited to some specific (usually permanent or attached) items and cleanup. Some examples of what should be covered include:

•   Central air conditioners

•   Fuel tanks and the fuel in them

•   Furnaces and water heaters

•   Sump pumps, heat pumps, and well water tanks and pumps

•   Electrical outlets, switches, and junction and circuit breaker boxes

•   Unfinished drywall for walls and ceilings

•   Attached stairways and staircases

•   Foundation elements and anchoring systems required for building support

Most personal property kept in the basement isn’t covered, including clothing, computers, TVs, and furniture.

Where Can You Get Flood Insurance?

Federal flood insurance isn’t sold directly by the federal government. Instead, you can buy NFIP policies through private insurance companies, under what’s known as a Write Your Own (WYO) program.

The NFIP partners with more than 50 insurance companies, so you may be able to work with the same insurance agent or broker who helped you purchase your home and auto policies to get flood coverage.

You can get help finding an NFIP provider online at floodsmart.gov/ flood-insurance-provider or by calling the NFIP at 877-336-2627. You also can also check into any private, non-government-backed flood insurance policies that are offered in your area.

You may want to look at including flood insurance as part of your overall personal insurance planning. Don’t wait until you hear predictions of a storm heading your way to start inquiring about a policy, though. There is typically a 30-day waiting period for a flood insurance policy to go into effect.

How Much Does Flood Insurance Cost?

Like most insurance, the cost of a flood policy can depend on the coverage type (building and/or personal contents), the size and age of the building covered, the risk level in your location (based on your flood zone), and other factors, including whether you’re buying a private or NFIP policy.

According to a 2022 Forbes Advisor analysis of flood insurance rates, the average cost of one year of coverage with an NFIP policy is $995. And though that’s not nearly as much as the average cost of a homeowners policy, it can still be a hit to many household budgets.

You may be able to lower the cost of a flood policy by choosing a higher deductible. You can also elevate your home’s electrical panels, heating and cooling systems, and other utilities so they’re less vulnerable to water damage.

For renters, the NFIP offers contents-only policies for as low as $99 annually.

You can also look for a competitive quote on a private flood policy that isn’t backed by FEMA and the NFIP. Just make sure you’re getting a fair price from a stable company that is capable of paying out claims in the event of a major flood.

When Is Flood Insurance Required?

If you have a government-backed mortgage and your home or business is in a high-risk flood area, you are required to have flood insurance. If you don’t have a government-backed loan, your lender may still require that you purchase a flood policy. Even lenders in moderate- to low-risk locations may make it a loan requirement. (You may also be interested in Is Homeowners Insurance Required to Buy a Home?)

Who Should Buy Flood Insurance?

Knowing your designated flood zone can help you decide whether you want to prioritize purchasing flood insurance. You can find your zone by entering your address at the FEMA Flood Map Service Center at MSC.FEMA.gov.

Structures in zones A and V are at the highest risk, while those in zones B, C, and X are considered at moderate to minimal risk. Keep in mind, though, that you can still experience flood damage even if you don’t live in a high-risk zone. According to NFIP data, more than 20% of all insurance claims come from moderate- to low-risk zones.

If you’re moving to a new area where flood insurance isn’t required, you may want to speak with your real estate agent or neighbors about the area’s history and potential for flooding.

How Much Flood Insurance Do You Need?

In many ways, shopping for flood insurance is similar to how you buy homeowners insurance: Calculating how much you’ll need will depend on what you plan to protect and what it might cost to replace if it’s destroyed.

In fact, your homeowners insurance company may give you an idea of what it might cost to rebuild or repair your home if it’s damaged. Then you can add on the value of your furnishings and other personal possessions to decide how much flood insurance you need. (If you’re a renter, you can purchase a policy that covers only your belongings.)

Remember, there are limits to how much coverage you can get through an NFIP policy ($250,000 for a building and $100,000 for the contents). If your needs go beyond those limits, you may want to consider buying excess flood insurance through a private flood policy.

The Takeaway

Most homeowners insurance policies don’t cover flood damage, which can leave a big gap when it comes to protecting your home and belongings. Purchasing a separate flood insurance policy can help fill that gap, and it can be an important part of your overall insurance planning. Flood policies can cover the building itself, its contents, or both. Make sure you understand what isn’t covered by your policy, such as personal belongings stored in the basement or outside. An average flood insurance policy for homeowners costs $995 a year.

How can SoFi help? While we don’t offer flood insurance, we have teamed up with top carriers to help you find reliable homeowners and renters insurance online. With SoFi, you can easily search for the coverage you need at a price you can afford.

Let SoFi help you find the protection you need for your home, life, and vehicle.

FAQ

What losses are covered by flood insurance?

A flood insurance policy covers direct physical losses caused by a flood. That could mean repairing or replacing your home, or the furnishings and other belongings in your home, or both.

How do I know if I’m in a flood zone?

Everyone is in a flood zone, but some areas are at a higher risk than others. You can find your zone by entering your address at the FEMA Flood Map Service Center at MSC.FEMA.gov.

Is flooding covered by homeowners insurance?

Some types of water damage are covered by a standard homeowners policy, but flooding usually is not.


Photo credit: iStock/onurdongel

SoFi offers customers the opportunity to reach the following Insurance Agents:
Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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