Month: December 2021

Free Community College Is Dead — and Still Possible

Posted on by Colin Beresford

Until late October, community college in the U.S. was the closest it’s ever been to becoming free for everyone nationwide.

A $45.5 billion proposal for two years of free community college, part of the Biden administration’s “Build Back Better” agenda, promised students a path to attain a college degree without student loans — a transformative pledge in a country that collectively holds over $1.7 trillion in student loan debt. The proposal would’ve covered all tuition and fees associated with attending community college.

But after surviving several revisions to the forthcoming, scaled-back $1.75 trillion domestic investment proposal — also known as the “Build Back Better” bill — two years of free community college was cut. Other proposals aimed at higher education are expected to make it into the budget, including an increase to the Pell Grant and funding for historically Black colleges and universities and other minority-serving institutions.

Had the proposal made it into law, it would’ve soon paid for itself, according to an analysis from Bloomberg News and Georgetown University’s Center on Education and the Workforce.

If every state had implemented free community college, the study projected, higher wages for those who earned bachelor’s and associate degrees would boost GDP by $170 billion and tax revenues by $66 billion every year for the next decade. The analysis found that the increase in GDP would’ve resulted from more workers receiving higher wages after attaining bachelor’s or associate degrees.

Community colleges are already a crucial part of job training in the U.S; in 2019, roughly 49% of all employed college-educated Americans attended a community college. Moreover, community colleges educate a higher proportion of minority students compared with traditional four-year colleges.

Martha Parham, senior vice president of public relations at the American Association of Community Colleges, said via email that the AACC is disappointed the proposal for free community college was dropped. Still, she was “also proud that community colleges are being discussed at the highest policy levels as solution providers for increasing the number of skilled workers in America.”

Free community college proponents say they’re not giving up

Two years of free community college won’t make it into the federal budget for 2022, but those who have fought for it say they aren’t finished pushing to get the proposal into law.

“I’m going to get it done,” President Joe Biden said in an October CNN town hall. He added that first lady Jill Biden, who currently teaches at a community college, wouldn’t be happy with him if he didn’t. More recently, Education Secretary Miguel Cardona told the Detroit Free Press in November that he would continue to advocate nationwide for free community college.

Some members of Congress have echoed the sentiments, including some of the original sponsors of the free community college proposal. Since 2015, when the proposal was first introduced, lawmakers such as Sen. Tammy Baldwin, D-Wis., have pushed to make community college free nationwide.

Sen. Patty Murray, D-Wash., said in an email that the widespread support for free community college, from Congress to the White House, has created momentum behind the proposal. That momentum, she said, motivates her to continue pushing for free community college.

“We must build on the progress we make to get students and workers the support they need to succeed,” said Murray, a co-sponsor of the proposal. “Just like President Biden — and community college champions like Senator Baldwin — I won’t stop fighting until we finally make community college tuition-free.”

Free or not, community college has much to offer

In most parts of the country, community college still carries a price tag, but that doesn’t mean it’s not a good option for higher education.

Community colleges generally offer associate degrees, which can take at least two years to complete. Someone with an associate degree earns $938 a week on average, or $157 more than someone with a high school diploma and no college, according to 2020 data from the Bureau of Labor Statistics. Those with an associate degree are also less likely to be unemployed than someone with a high school diploma only.

​​» MORE: How to Pay for College

Although you’ll have to pay to attend community college in most states, the costs are still significantly lower than most public four-year colleges. For example, tuition for the 2021-22 academic year at an in-district two-year college was $3,800, while an in-state public four-year college cost $10,740, according to the College Board.

Eighteen states already offer free community college to at least some students, according to the Campaign for Free College Tuition, a nonprofit that aims to make college more affordable. In addition, there are states, such as Tennessee, that make two years of public community or technical college free for residents.

For those who want a bachelor’s degree from a traditional college, two years of community college, then transferring to a four-year school for completion is typically the least expensive path. However, if this is your intention, make sure the credits you earn from community college will transfer to the college you wish to attend.

Colin Beresford writes for NerdWallet. Email: cberesford@nerdwallet.com.

The article Free Community College Is Dead — and Still Possible originally appeared on NerdWallet.

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Winter Storms, COVID: How to Change a Flight Last-Minute

Posted on by Sally French

Rerouting, rebooking, diverting, you name it. Making last-minute flight changes can be an enormous stressor amid an already stressful holiday travel season.

Hundreds of flights have already been canceled last-minute due to pandemic-related staffing shortages. Perhaps a coronavirus variant surge forces you to cancel your trip. Or what if a winter snowstorm prevents you from taking off?

No matter the reason, be prepared for last-minute flight changes or cancellations this year.

Finding last-minute flights

If your flight is delayed or canceled, here’s how to quickly get on another:

Look to other airports

Many major cities are served by multiple airports, so broaden your airport search. John F. Kennedy International Airport in New York City might be backed up from a blizzard, but that doesn’t necessarily mean nearby airports Newark Liberty International or LaGuardia are out of commission.

And look beyond the major airlines. JSX is a semiprivate jet service, but fares often aren’t much more than commercial airfares.

Use booking tools

Even if you’re accustomed to booking via an individual airline’s website, tools like Google Flights will allow you to quickly compare routes across multiple airlines, nearby airports and selected dates. Booking tools may help surface an available route you’d otherwise miss.

Search for one-way, individual tickets and direct flights

Don’t limit your options by searching for round-trip tickets. In a pinch, book a one-way ticket and find the return flight later.

And, if you’re traveling with others, rather than searching for group tickets, consider searching for individual ones — especially if your group is comfortable splitting up. If one flight has only four seats left but another flight has two, then a search for your party of six wouldn’t show any available tickets. But if some folks are OK being left behind and catching up later, you improve your odds of getting to your destination, period.

Fly direct when possible. If it isn’t, try to connect through destinations that are less likely to be affected by bad winter weather (San Diego over Chicago, for example). While the flight with the layover might be cheaper, it might not be worth it if weather issues in the layover city are the reason you can’t take off.

Getting your money back

Here are ways to improve your chances of getting a refund for flights interrupted by winter storms or COVID-19:

Use a credit card with travel insurance

One of the best ways to get money back for canceled flights (or to get reimbursed for additional costs incurred during delays) is booking with a credit card that offers travel insurance.

Exact terms vary by travel credit card, but you can typically expect coverage for flights affected by severe weather. And usually, this type of insurance will cover not just the flight itself, but ancillary expenses, such as an additional hotel night to take a next-day flight.

Purchase travel insurance

If your credit card doesn’t include travel insurance as a benefit, consider purchasing coverage separately. Look closely at the terms and conditions as they vary significantly between plans. Learn more about travel insurance if you’re new to the concept.

Turn to social media

Technology can help you. Many airlines are embracing social media as a customer service tool, and account managers may even be equipped to directly help passengers rebook, issue flight credits and more.

If the delay is an airline’s fault, you might get compensation. For example, Southwest Airlines’ October 2021 meltdown cost the company $75 million, according to its third quarter 2021 earnings report. Much of that figure was attributed to customer refunds and “gestures of goodwill,” as Southwest offered vouchers to many customers who were affected.

Other tips for traveling during winter storm season

  • Be prepared to stay longer than you intended. Search for budget-friendly lodging near the airport before your trip. If your flight gets delayed and you need to stay an extra night, you don’t want to be scrambling to find a room that fits your standards and budget.
  • Pack small snacks. Protein bars or nuts are great backups in case you’re stuck in an airport overnight and the restaurants and stores are closed.
  • Avoid checking luggage. If there’s an opportunity to board another last-minute flight, you don’t want your luggage packed on a delayed flight to be the one thing holding you back. Carry-on travel allows you to be more nimble. If you do need to check luggage, keep items you can’t go without — like phone chargers and medications — with you.
  • Set up flight alerts. Check your flight status before leaving for the airport or, better yet, set up automatic flight updates via text alerts. An early alert might help you avoid arriving at the airport for a canceled flight or give you a jump-start on booking a new flight before other passengers.

The bottom line

You might not think the scramble to make a last-minute flight change will happen to you — until it does. And given the challenges of travel this holiday season, you should be more prepared than ever.

This article was written by NerdWallet and was originally published by The Associated Press.

Sally French writes for NerdWallet. Email: sfrench@nerdwallet.com. Twitter: @SAFmedia.

The article Winter Storms, COVID: How to Change a Flight Last-Minute originally appeared on NerdWallet.

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Keep an Eye on Debt Using Creative Visual Aids

Posted on by Melissa Lambarena

With an $82,000 pile of debt, buying a house seemed far in the distance for Ehren Sixon and his wife, Florida residents who embarked on a debt-free journey in 2016. They opted for the debt snowball method, a debt payoff strategy that encourages motivation by quickly attacking the smallest balances first.

The couple also tracked every milestone along the way with different visual aids as they paid off car loans, student loans and credit card debt.

“We wanted to be able to track our progress and keep us motivated,” says Sixon, a 32-year-old systems engineer and part-time YouTuber.

The internet is full of debt-tracking templates that can help you log milestones toward your debt-free goals. From coloring pages to spreadsheets, here’s how you can use visual aids to demolish debt.

Visual aids motivate

If you have a long journey ahead, a road map that logs your progress can offer support and encouragement.

“You get lots of little dopamine hits from checking off those smaller milestones or those smaller elements along the way, and that really keeps motivation going,” says Katharine Iesiev, owner of She Minds Money, a financial therapy service based in Massachusetts.

Iesiev favors creating something tangible that you can print out and view often at home.

Track your progress in several ways

The Sixons turned to the internet to research debt-tracking solutions. As you explore your options, consider what will be most motivating for you.

Spreadsheets

Sixon started with a spreadsheet to keep track of all lenders, balances and debts paid off. A spreadsheet can be as simple or elaborate as necessary. You can use it to log every payment to each lender or to update balances after making a payment. A key benefit is that it can keep debt and information organized. It also pairs well with other tracking systems.

Printables for everyday viewing

The Sixons also looked at templates online to facilitate checking off debt goals. They chose a thermometer for their fridge and later moved it to the front door as a daily reminder to stay true to their goal. At every monthly check-in, they would evaluate their progress and color in the thermometer upon paying off each 10% of their debt.

“With the spreadsheet, there were times when we just got so caught up in the outstanding balances instead of celebrating how much we’d paid off so far,” Sixon says. “I didn’t realize how fun and exciting coloring a portion of that debt thermometer was, but it made our debt-free journey more enjoyable.”

Also consider coloring pages that display images like a home to represent a mortgage or a car to represent a loan. You can fill in the increments as you make payments.

For a different creative approach, a progress map can offer an appealing and discrete artistic design with unlabeled increments that you color in a similar way. For the Sixons, their bold, red thermometer became a conversation starter and inspired some friends to pay down debt.

“They were thankful that they saw the way we put it up in our house and they were able to do the same,” he says.

Bullet journals

A bullet journal is less visible than a page you can print and display, but it could offer more frequent engagement with your finances. Keep it as simple or creative as needed. In 2018, Kaila Penner, co-owner of the blog Frugal Twins, drew an easy bar chart inside her bullet journal to track payments toward the last remaining $24,000 from a car loan and two student loans. She colored in each bar with pink, green or blue ink after meeting every $1,000 increment.

It’s possible to break down the increments further and designate different pages for different kinds of debt. So instead of a bar chart, you could opt for drawing graduation hats, dollar bills or anything else that you can color in to represent debts paid off.

Like Sixon, Penner also used a spreadsheet throughout her entire journey, but it wasn’t as motivating as the bullet journal. “Filling that in every month was much more satisfying for me,” the Iowa resident says.

She also added a thermometer on her refrigerator door for daily visibility. With all three trackers, she logged her progress to crush the debt.

Rely on visual aids long after debt

The Sixons paid off their debt sooner than projected in 2018 by budgeting cash in envelopes and cutting back in categories like dining out and streaming subscription services. They now use a thermometer to track savings instead. In anticipation of the arrival of their baby girl, the Sixons recently colored in a thermometer indicating their savings toward a family-friendly vehicle.

“To come out in 2021 and buy a car with no car loan — fully paid off — and have it ready for our child, I didn’t think we would be at this point in our financial journey,” Sixon says. “It’s incredible.”

They’re currently using multiple thermometers that remind them to focus on priorities like paying off their home and saving for renovations and travel.

This article was written by NerdWallet and was originally published by The Associated Press. 

Melissa Lambarena writes for NerdWallet. Email: mlambarena@nerdwallet.com. Twitter: @LissaLambarena.

The article Keep an Eye on Debt Using Creative Visual Aids originally appeared on NerdWallet.

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Get Skills — Not Bills — at an Unpaid Internship

Posted on by Sara Rathner

Every summer, students flood offices as unpaid interns, soaking up knowledge and seeking positive references as they take lunch orders and organize storage closets. But this reliance on unpaid work leaves behind students who can’t afford to work for free. Between temporarily relocating to another city, buying and maintaining office-appropriate attire, and paying for everyday costs, it can cost thousands of dollars to add a few lines to your resume.

According to Carlos Mark Vera, co-founder and executive director of Pay Our Interns, a nonprofit fighting to end unpaid internships across the country in all sectors, unpaid internships disproportionately harm specific populations. Women work for no pay more often than men, and compared to white interns, Black and Latino interns take on debt more often during their internships. “It really does create this glass ceiling for people of color,” Vera says.

Vera, who is still paying off the credit card debt he amassed when interning at the White House seven years ago, was inspired to launch Pay Our Interns after a conversation with a younger college student who was skipping buying groceries to afford dry cleaning for his internship clothes. “I think this whole grind/hustle mentality is so ingrained, that you have to pay your dues,” Vera says. “It’s daring to imagine how things could be.”

Sadly, unpaid internships are still the norm. Perhaps the Great Resignation will inspire employers to pay interns for their labor, as they should. But until then, if an unpaid internship would help you gain experience, here are some ways to soften the financial burden and limit how much you put on your credit card to get by.

Know your rights

The U.S. Department of Labor has guidelines on what constitutes a legal unpaid internship — your work can’t displace that of a paid employee, for example. If you suspect your internship is in violation, you can file a complaint to the Department of Labor or your state labor agency. You may be entitled to back pay.

Seek scholarships and specialty programs

Many universities offer scholarships specifically for unpaid internships, depending on your school and major. You need to apply and funding isn’t guaranteed, but the effort can pay off.

You can also find paid opportunities through specialty programs created by nonprofits and professional organizations. For example, Black and Latino aspiring financial planners can apply through the BLX Internship Program to be placed in a paid internship at a fee-only financial planning firm. According to Luis F. Rosa, a certified financial planner and co-founder of the BLX Internship Program, they placed 38 applicants into internships last year, and of those, 20 got job offers.

Fund unpaid work with paid work

“I would combine an internship with other side gigs or part-time jobs,” says Mark Reyes, a certified financial planner at Albert, a financial wellness app. “Depending on the internship time commitment, you may be able to balance more than one job at once.” However, he cautions that this can quickly lead to burnout.

Vera felt the pressure as a student working part-time while interning 20 to 30 hours per week. “Sometimes I was fighting not to fall asleep while doing the internship,” he says.

School plus two jobs is a lot to handle. To ease the burden, you can work for pay during the school year and save that money to cover the cost of a summer internship. Or limit unpaid work to a part-time schedule so you can also have time for paid work.

Gain internship experience within paid jobs

If you need the earnings from your paid job to fund tuition, living expenses and other costs, it can be difficult to earmark some of that money toward supporting yourself during an unpaid internship. But your paid job might already provide the chance to learn beyond your actual role.

Rosa couldn’t afford unpaid internships as a student because he contributed financially to his family. He found he was able to create internships within some of his paid jobs, like when he did office work at a law firm and asked to also spend some time learning about the industry.

Embrace remote opportunities

The pandemic transformed many office jobs into fully remote positions, and that’s a benefit for interns who can’t afford to spend a summer in an expensive major city. With a remote internship, you’ll avoid paying for relocation, commuting costs and work clothes. Plus, having remote work experience on your resume will strengthen your candidacy for a virtual position in the future.

Use student loans instead of credit cards

You can use funds from your student loan for living expenses if you’re doing an unpaid internship for college credit. It’s still debt, but student loans charge lower interest rates than credit cards.

“People have misconceptions that all debt is bad, but student loans are there to add value to your life,” Reyes says. “It takes discipline and it’s not for everyone. It’s not free money, but it’s cheaper debt than credit cards.”

This article was written by NerdWallet and was originally published by The Associated Press.

Sara Rathner writes for NerdWallet. Email: srathner@nerdwallet.com. Twitter: @sarakrathner.

The article Get Skills — Not Bills — at an Unpaid Internship originally appeared on NerdWallet.

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Don’t Spend a Dollar to Save a Nickel on Gas

Posted on by Philip Reed

With the cost of gas soaring, it’s not uncommon to hear people say, “I’ve really got to buy a hybrid.”

If your goal is to save money, this could be a disastrous move unless you needed a new car anyway. While you might save money at the pump, the cost of prematurely switching from a gas hog to a fuel-sipper would take years to pay off.

Why? You’re probably paying about $1 a gallon more for gasoline than you did a year ago. In a 25-mpg vehicle driving the average yearly mileage of 14,000, that would be $560 out of your pocket — enough to hurt.

But the average price paid for new cars has risen by 10 times that amount in the last year alone, topping $46,000 in October, according to Kelley Blue Book. Proportionately, used car prices are up even more than that.

It’s about the worst time possible to buy any car unless you absolutely have to. If your vehicle has been stolen or totaled, by all means look at a more fuel-efficient replacement.

But if that’s not the case, remember that gas prices rise and fall quickly; there are ways you can adjust that don’t require the commitment of 72 monthly payments. Instead of switching cars, the key to savings is pretty simple: Buy gas wisely (using a gas price app), maintain your car, and improve your driving style.

Note that I didn’t say “drive more slowly.” It is possible to boost your fuel efficiency and not turn into an annoying tortoise on the highway.

Buying smarter and cheaper

Choose regular over premium. Begin your money-saving strategy by purchasing the right grade of gas. While your car’s owner’s manual might recommend that you run premium, you can safely switch to mid-grade or even regular. “The modest fuel economy improvements found in AAA tests do not offset the higher cost of premium gasoline,” the American Automobile Association reports.

Compare prices with a gas app. The price of gas varies significantly from one station to the next, and one part of town to another. Instead of driving around to find the best price on gas, use a gas app such as GasBuddy to find the cheapest place to fill up.

But don’t drive 10 miles across town to save a penny on gas. While a gas app will show you the cheapest gas in your area, make sure the savings can erase the extra fuel consumed getting to that cheaper station.

Use gas cards and shopping clubs. Some credit cards will give you a rebate when you buy gas. Combine this with the discounted price of gas at shopping clubs, such as Costco, and the savings is substantial.

Maintenance and modifications

Besides a modest increase in fuel economy, the following maintenance tips have added benefits. Your car will last longer and you will drive safer.

Perform scheduled maintenance. In most cases, this calls for oil and filter changes and tire rotations. You should also change your air filter periodically. It’s cheap and you can even do it yourself.

Monitor tire pressure. Keeping your tires filled to the manufacturer’s specifications will give you better fuel economy, reduce tire wear and provide better handling.

Remove underused accessories. Roof racks and special carriers cause an aerodynamic drag on the highway, which puts a dent in fuel economy, according to AAA. If you’re not using them, lose them.

Skip the gadgets. That miracle device that boosts gas mileage to 200 mpg? It doesn’t exist. Consumer Reports once tested three such fuel savers and found no change in fuel economy. In one case, there was actually reduced performance. Their takeaway: “The best way to get the best mileage from a tank of gas is to follow the vehicle manufacturer’s service schedule and fine-tune your driving habits.”

Fine-tune your driving

Fine-tuning your driving style, especially if you have a larger vehicle, can lead to big savings at the pump. Many benefits await you if you open your mind and try something new.

Avoid aggressive driving. The biggest gas waster is unnecessarily aggressive acceleration combined with sudden braking. Doing so can lower your gas mileage by up to 30%, according to Fueleconomy.gov. Instead, accelerate moderately (unless you need to merge suddenly) and back off the gas when you see a red light in the distance.

Stop prolonged idling. If you plan to stop for more than 60 seconds, AAA says to shut off the engine to save fuel. Many newer cars already come equipped with an auto start-stop feature.

Drive the speed limit. Gas mileage decreases at speeds over 50 miles per hour. Every 5 mph you drive over 50 mph, you’re paying the equivalent of $0.18 more per gallon of gas. So if you reduce your speed by 5 to 10 mph, you can improve your fuel economy up to 14%, according to the U.S. Alternative Fuels Data Center.

Use cruise control. By driving at a steady speed, you avoid wasting gas with mid-range acceleration. A steady pace is also more relaxing and a good way to remind yourself to drive at — or near — the speed limit.

Philip Reed writes for NerdWallet. Email: articles@nerdwallet.com. Twitter: @AutoReed.

The article Don’t Spend a Dollar to Save a Nickel on Gas originally appeared on NerdWallet.

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8 Rules for Saving, Borrowing and Spending Money

Posted on by Liz Weston

This article provides information for educational purposes. NerdWallet does not offer advisory or brokerage services, nor does it recommend specific investments, including stocks, securities or cryptocurrencies.

The best personal finance advice is tailored to your individual situation. That said, a few rules of thumb can cut through the confusion that often surrounds money decisions and help you build a solid financial foundation.

The following guidelines for saving, borrowing, spending and protecting your money are culled from nearly three decades of writing about personal finance.

1. Prioritize saving for retirement

In an ideal world, you’d start saving with your first paycheck and keep going until you’re ready to retire. You also wouldn’t touch that money until retirement. Even if you can’t save 15% of your pre-tax income for retirement, as recommended by Fidelity and other financial services firms, anything you put aside can help give you a more comfortable future. Aim to take full advantage of any company match you get from a 401(k) at work — that’s free money — and borrow against or cash out retirement funds only as a last resort.

2. Save for a rainy day

You may have read that you need an emergency fund equal to three to six months of expenses, but it can take years to save that much. That’s too long to put off other priorities, like saving for retirement. A starter emergency fund of $500 can be your first goal, and then you can build it up. While you’re saving, try to create other sources of emergency cash, such as a Roth IRA (you can pull out your contributions at any time without taxes or penalties), space on your credit cards or an unused home equity line of credit.

3. Save for college

Got kids? Open a 529 college savings plan and contribute at least the minimum, which is typically $15 to $25 a month. Retirement savings comes first, but anything you can save will reduce how much your child may need to borrow. Also, research shows the simple act of saving for college increases the chances that a child from a low- to moderate-income family will go to college.

4. Borrow smart for college

A college degree can pay off in higher earnings, but lenders may allow you to borrow far more than you can comfortably repay. If you’re borrowing for your own education, consider limiting your total debt to what you expect to make your first year out of school. If you’re a parent borrowing for a child’s education, aim for payments that are no more than 10% of your after-tax income and that still allow you to save for retirement. If your payments are higher than 10% of your after-tax income, investigate income-driven repayment plans that could bring down your costs.

5. Use credit cards as a convenience

Credit cards offer convenience and can protect you from fraud and disputes with merchants. But credit card interest tends to be high, so don’t carry credit card balances if you can avoid it. If you routinely pay your balances in full, look for a rewards card with a sign-up bonus that returns at least 1.5% of what you spend.

6. Finance your home smartly

If you want to be a homeowner, the best time to buy your first home is when you’re financially ready and in a position to stay put for a few years. Opt for a mortgage rate that’s fixed for as long as you plan to remain in the home, and don’t make extra payments against the principal until you’ve paid off all other debt and are on track for retirement.

7. Buy used vehicles and drive them for years

Buying a car right now isn’t a great idea; supply-chain kinks and other pandemic-related issues have inflated the cost of both new and used cars. In general, though, buying a used car can save you a ton of money over your driving lifetime, as can driving your car for many years before replacing it. These days, a well-maintained car can last 200,000 miles without major issues, according to J.D. Power. This means you can get roughly 13 years of service out of your car if you drive it 15,000 miles a year. Ideally, you would pay cash for cars. If you need to borrow, try to limit the term of your loan to a maximum of five years.

8. Insure against catastrophic expenses

Use insurance to protect yourself against catastrophic expenses rather than smaller costs that you can easily pay out of pocket. If you have sufficient savings, consider raising the deductibles on your policies to save money on premiums. Be careful about high-deductible health insurance policies, though. Having a high deductible could cause you to put off medical care, and it’s better to err on the side of safety when it comes to health.

This article was written by NerdWallet and was originally published by The Associated Press.

Liz Weston writes for NerdWallet. Email: lweston@nerdwallet.com. Twitter: @lizweston.

The article 8 Rules for Saving, Borrowing and Spending Money originally appeared on NerdWallet.

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Cash Back, Miles or … Wine? Credit Card Rewards Are Evolving

Posted on by Sara Rathner

This article provides information for educational purposes. NerdWallet does not offer advisory or brokerage services, nor does it recommend specific investments, including stocks, securities or cryptocurrencies.

Rewards credit cards typically come in two basic flavors: cash back and travel — useful if you want to save money without couponing or spend less on that annual visit to the in-laws.

But a number of new credit cards are reimagining the role a rewards program could play in your life. These cards can help incentivize certain behaviors, or allow you to fund a hobby or investment account. They may offer rewards on spending that isn’t covered in the typical grocery-restaurant-travel triad, like rent payments or home fitness equipment. And while they might not be as rewarding as a premium card with a massive sign-up bonus, they offer a greater degree of personalization.

‘New ways of thinking’

The startups that create these cards are competing against major credit card issuers, which is no easy feat. While they lack the brand recognition and deep pockets of big banks, they have one thing in their favor: speed. Some financial startups rely on the services of other tech companies that provide the infrastructure (including selecting the bank partner and payment network, and establishing underwriting guidelines) for launching a new credit card. That makes it easier to turn an idea into reality.

“You’ll see that more of these interest-based cards come out because issuing a card is no longer as big of a lift,” says Ben Reid of M1 Finance, a personal finance startup with its own new credit card that targets investors.

How well this flood of new cards performs is another story. They all face a crowded credit card marketplace with lots of competition.

“The challenge that, frankly, we’ve experienced is it’s really hard to break through, and it depends on your demographic,” says Matthew Goldman, chief product officer at Apto Payments, a payments infrastructure company. Goldman’s startup created the Grand Reserve World Mastercard, a card designed for wine lovers. He found that people who are willing to spend hundreds on rare wines tend to have high incomes and credit scores, which would make them eligible for a wide array of premium cards.

No matter what, however, these kinds of cards will shake things up. “The thing that’s exciting about startups is most products won’t succeed,” Goldman says. “But they’re creating new ways of thinking about things.”

Credit cards that go beyond typical rewards

Here are some examples of credit cards with unconventional rewards programs:

Investing

Allocating rewards toward an investment account a few times per year can be a way to dollar-cost average without having to make room in your budget for your brokerage account. The Owner’s Rewards Card by M1, which launched in July 2021, earns extra cash back when you use the card to make purchases at select companies that you own shares of. Those shares must be held in an eligible M1 invest account, but your cash back can be automatically reinvested into your portfolio.

Cryptocurrency

Credit cards with crypto rewards are a hot trend, allowing you to obtain cryptocurrencies in small amounts through your normal spending. These cards can be appealing if you don’t have other uses in mind for your points and have been curious to learn what the fuss is all about.

Hobbies

The Paceline Credit Card earns extra cash back when you meet weekly fitness goals, and you can earn statement credits toward a new Apple Watch. With the Grand Reserve World Mastercard, currently closed to new applicants, you can earn more rewards on wine purchases and redeem them for wine, wine accessories and winery experiences.

Everyday expenses beyond the usual categories

We all eat and go places, so earning extra points on groceries, dining out and gas is helpful. However, a sizable portion of your monthly budget goes toward housing, especially if you live in a high-cost area, and previously, that expense would usually go unrewarded. But the Bilt Rewards Card earns points on rent payments, among other things, and you can redeem those points toward rent or even a future home purchase.

Are these kinds of cards for you?

If you want to use your credit card rewards to fund a highly specific purpose, you may enjoy using a card that feels like it’s custom-made for you. But, of course, you could also find value in a normal ol’ cash-back card with a generous sign-up bonus because you can allocate those cash-back rewards toward whatever you want.

It’s also worth noting that more established credit card issuers are beginning to offer cards with rewards programs that feel more customized. Some of these cards allow you to earn a higher rewards rate on your top spending category each month, and your earnings automatically shift with your expenses so you don’t have to track spending or activate anything.

They may not offer crypto as a rewards option, or credits toward fancy gadgets as a bonus, but you still get a bit of a personalized touch.

Sara Rathner writes for NerdWallet. Email: srathner@nerdwallet.com. Twitter: @sarakrathner.

The article Cash Back, Miles or … Wine? Credit Card Rewards Are Evolving originally appeared on NerdWallet.

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Omicron, Travel Bans and How They Could Impact Your Trip

Posted on by Sally French

As countries rush to impose travel bans to manage the spread of the omicron COVID-19 variant, some travelers have been left stranded. Meanwhile, those with trips planned might not be able to take off.

Here’s what you need to know about traveling and the omicron variant.

Review border closures and entry requirements

As of Nov. 29, the U.S. has restricted travel from Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa and Zimbabwe due to concerns over the new variant. While these travel restrictions do not apply to U.S. citizens, lawful permanent residents and certain other categories of travelers, some airlines are canceling flights from those countries anyway.

Many countries have imposed even stricter restrictions than the U.S. While some have banned inbound flights from specific countries, others, including Morocco, Japan and Israel, have temporarily banned international travel — with few exceptions — entirely.

Even if it’s just a layover, check the border closures and entry requirements at every stop on your trip. You can typically find a country’s most up-to-date travel policies by checking with the government’s travel and tourism office.

Understand your flight’s change and cancellation policies

In 2020, many major airlines introduced flexible and generous change and cancellation policies, and they’ve largely held on through 2021 (and likely will continue into 2022, too). Check with your air carrier, as you may be able to get a voucher toward a future flight and sometimes an outright refund if you opt not to travel — often no matter the reason.

Read the fine print. Policies on low-cost or basic economy fares tend to be less generous, and sometimes even the flight credits have tight expiration dates.

For flights specifically between the U.S. and many southern African countries, many airlines are rolling out special change policies, many of which leave you with tough, last-minute decisions to make.

For example, if you originally booked a flight for Johannesburg, South Africa, between Nov. 27 and Dec. 12, Delta is waiving the fare difference should you decide to fly elsewhere. However, you must take the new flight by Dec. 12, which doesn’t give you a lot of time to find a new destination. If you opt to fly after Dec. 12, Delta may charge you for the fare difference, which can be especially hefty if you’re booking last-minute.

Purchase ‘Cancel For Any Reason’ travel insurance coverage

Whether a prebooked trip is disrupted by a travel ban or you’re feeling more travel hesitancy now that omicron is in the lexicon, you might decide to cancel your trip altogether.

You can protect the money you shell out for a trip in advance with the right travel insurance coverage.

But sometimes even the biggest travel insurance policies won’t cover all omicron-related challenges. For example, while AIG’s Travel Guard insurance plan covers you in the event you get sick from COVID-19, it explicitly does not cover travel restrictions or travel warnings issued by any governmental body or health authority.

In that case, you’d need to have purchased Cancel For Any Reason coverage, which can get you a partial or full refund, no matter why you choose not to travel.

Have a quarantine plan

If you’re traveling abroad and returning to the U.S., you need proof of a valid, negative COVID-19 test to return — even if you’re vaccinated.

There’s still a chance you can get a COVID-19 breakthrough case while vaccinated, according to the Centers for Disease Control and Prevention. If you do, understand what quarantining for more than a week in a foreign country might entail. Plan where you might be able to stay. Make sure you’ve packed enough for the additional nights, including extra prescription medications or perhaps a laptop to help pass the time.

The bottom line

Given the ever-changing COVID-19-related travel restrictions, taking trips in 2021 is complicated. If you’re set on international travel, understand what you’re in for: potential lockdowns, canceled flights, lost money from upfront bookings, and the risk of having to quarantine. And even domestic travel might feel precarious for those uneasy about the emergence of omicron.

No matter where you’re headed, have a plan. And these days, it doesn’t hurt to also have a solid backup plan.

Sally French writes for NerdWallet. Email: sfrench@nerdwallet.com. Twitter: @SAFmedia.

The article Omicron, Travel Bans and How They Could Impact Your Trip originally appeared on NerdWallet.

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Will Inflation Be Good for Student Loan Borrowers?

Posted on by Anna Helhoski

Student loan borrowers are taking to social media to celebrate inflation.

That’s right, inflation: the sound-the-alarm scourge to consumers everywhere that’s hiking the price of goods and services. Over the last year, prices have risen 6.2% — the largest annual increase in three decades, according to October data from the Bureau of Labor Statistics.

Student loan borrowers face a payment restart in February after a 22-month pause. In the meantime, they’re praising inflation because — as they posit — it reduces the value of their debt.

“It’s always good to be a fixed debt holder during an inflationary period,” says Jason Delisle, senior policy fellow in the Center on Education Data and Policy at the Urban Institute, a nonprofit research organization.

This is the logic: Since student loans have a fixed interest rate, meaning the rate is not sensitive to market fluctuations like variable rate loans are, its value decreases as rising inflation devalues the dollar. The result is that loans borrowed in the past are worth less when you repay them in the present.

Kathryn Anne Edwards, an economist at the RAND Corporation, a nonprofit global public policy think tank, says, “In theory you can inflate away debt; it’s something we don’t recommend.”  She says borrowers might want to curb their expectations about inflation’s potentially positive effect. Your debt’s value may technically be lower, but that won’t matter if your wages don’t keep up with inflation, and if your other household expenses also rise faster than your wages.

Inflation’s impact on debt only benefits you if your wages increase

The value of your fixed rate debt only declines if your wages also rise at a comparable rate alongside inflation.

As inflation continues to climb, it’s unclear whether wages will rise across the board. It’s possible that labor shortages and widespread employee demands for higher pay will force employers to increase wages, but it entirely depends on the industry or sector, experts say.

And if the rate of inflation rises past the rate of wages, your ability to pay for goods and services — consumer purchasing power — declines, as does your ability to repay debt.

However, you could be more insulated from certain rising costs than certain groups. For example, increases in healthcare costs hit the elderly harder than others, and childcare costs hit those with young children as opposed to those with older children.

It’s unclear if wages will or won’t keep up with inflation. But long-term effects from that might not happen quickly, says Constantine Yannelis, an assistant professor of finance at University of Chicago Booth School of Business.

What we have seen so far is this: Real average hourly earnings for all employees decreased 1.24% from October 2020 to October 2021, according to November 10, 2021, data from the Bureau of Labor Statistics.

Wage increases could also increase your loan payments

Say your wage does increase along with inflation and your loan payment stays the same. You could benefit from inflation in that your loan will be less expensive since its amount does not change, but your income has.

However, if you’re enrolled in an income-driven repayment plan, you must recertify your income in order to stay on that plan. Income-driven repayment is beneficial for borrowers whose loan payments are more than they can handle. These plans set payments at a portion of your discretionary income and extend repayment.

That means if your income rises in response to inflation or other reasons, and you’re enrolled in an income-driven plan, then your monthly payment amount will also increase. There is an upside though: The higher your loan payment, the faster you pay off your debt and the more you’ll save on interest.

“It’s not necessarily a bad thing, but the perception of borrowers matters a lot here and there may be a little bit of a backlash when people see their payments rise because their incomes have gone up,” Delisle says.

Yannelis says inflation could affect your payment under an income-driven plan in a different way. If the federal poverty guidelines shift in response to inflation, then the amounts used to calculate discretionary income could change, as well.

All borrowers need to factor student loans back into their budgets

Nearly 43 million people will have had 22 months without federal student debt payments in their budget come February 2022. A lot can change in that time.

The payment pause was intended to give borrowers breathing room to focus on other financial needs. For some borrowers, this meant paying for rent and food. For others, it meant paying down their student loan principal, buying a home or a car, finding higher quality care for their children or elders, investing or padding a retirement account.

And according to data from the Federal Reserve Bank of St. Louis, many Americans were able to save since the start of the pandemic due — in part — to a combination of the payment pause, the expanded Child Tax Credit, extended unemployment insurance and stimulus checks.

Borrowers with financial cushioning won’t feel the sting of repayment or inflation’s impact on goods and service costs as quickly as others, experts say. But those who are still out of work or who were in default prior to the pandemic may have a tougher time with the transition.

What all borrowers can do ahead of payment restarting is contact their servicers about their options, which could include:

  • Enrolling in an income-driven repayment plan, which would lower your monthly payment to $0 if you’re unemployed.
  • Submitting an unemployment deferment request if you’re out of work but don’t expect to be for long, and if you don’t want to commit to an income-driven plan.
  • Requesting a hardship forbearance for a short-term hardship unrelated to unemployment.

If you choose to take an additional pause through deferment or forbearance, interest will continue to collect and will be added to your principal whenever you do start repayment.

Anna Helhoski writes for NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.

The article Will Inflation Be Good for Student Loan Borrowers? originally appeared on NerdWallet.

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