Whether you’re the buyer or the seller of a home, you’ll need to plan for closing costs.

Closing costs are the fees and expenses that both buyer and seller pay to finalize a home sale. For the buyer, these expenses typically include loan origination fees, appraisal fees and prepaid expenses such as taxes.

On the seller side, expenses usually include real estate agent commissions, seller credits and attorney fees.

We’ll take a closer look at the closing costs that buyers and sellers can expect to pay in a real estate transaction.

Who pays closing costs?

When it comes to closing costs, the homebuyer is typically on the hook for the bulk of the out-of-pocket expenses. Homebuyers closing costs are typically between 2% and 5% of the overall purchase price of the home.

But sellers also have closing costs, generally paying the real estate agent commissions for both the buyer and the seller. This commission, which is usually 5% to 6% of the home’s selling price, is typically split between the listing agent and the buyer’s agent.

Other seller expenses typically include such items as transfer taxes, seller credits and, depending on your state’s laws, attorney fees.

Learn more about how real estate agents get paid.

Common closing costs for buyers

The homebuyer usually needs to cover several costs at closing — including one-time fees such as appraisal and home inspection fees, loan origination fees and taxes. In addition to these one-time expenses, buyers may also have ongoing costs such as property taxes, private mortgage insurance (or PMI) and HOA fees.  

Here are some of the typical closing costs for buyers.

• Loan origination fee — This is what the lender charges for administrative services, including application processing, loan underwriting and funding the mortgage.
• Credit report fee — A credit report fee, which is usually less than $30, covers the cost of obtaining a borrower’s credit report to assess their credit health.
• Appraisal fee — The appraisal process helps determine the worth of a property. Buyers will usually pay a fee to the appraiser as part of closing costs.
• Home inspection fee — A buyer can usually expect to pay between $300 and $500 for a home inspection, which sheds light on the physical condition of a house.
• Title service fee — This includes the title search fee, the premium for the lender’s title insurance policy, as well as other costs and services associated with issuing title insurance. Depending on where you live though, these fees may be paid by the seller though.
• Recording fee — These fees are issued by local governments for recording deeds, mortgages and other documents related to a home loan.
• Prepaid expenses — These costs will likely include prorated property taxes, interest until your first payment is due and homeowners insurance. Your mortgage lender may set up an escrow account for these expenses and depending on where you live, an escrow account could be required by law.

Common closing costs for sellers

If you’re getting ready to sell your home, it’s a good idea to know what fees you may have to pay and how much they could cost.

Here are some of the typical closing costs for sellers.

• Real estate agent commissions — This commission typically amounts to 5% to 6% of the home’s sale price.
• Transfer tax — This is a tax on the transaction imposed by the state or local government.
• Seller credits — These are funds that the home seller may contribute to pay for a portion of the buyer’s closing costs or for necessary repairs.
• Attorney fees — These would apply if the state legally requires that an attorney be present at closing or if the parties involved prefer to have one present.
• Title insurance — Title insurance helps protect the buyer from financial losses that can occur when the title to a property is not free and clear. Depending on where you live, the policy can be paid by the buyer, the seller or split between both parties.

How to reduce closing costs

Closing costs can add up for both buyers and sellers. But there are steps you may be able to take to help reduce closing costs.

As a homebuyer shopping for a loan, you can ask about expenses and fees that might affect the cost of your loan. These costs may include items such as appraisal fees, pest inspection and insurance. By shopping around and getting multiple loan offers, you may have more leeway to negotiate.  

Buyers may also want to consider asking the seller to cover some of the closing costs — known as seller concessions. If you take this route, the seller may require you to pay a higher price for the home to cover the cost of these concessions. Seller concessions, which allow buyers to pay less money upfront at closing, can make a home more affordable by effectively rolling the costs into the buyer’s mortgage.

What’s next?

While both buyers and sellers face closing costs in a home sale, the amount can vary depending on a variety of factors, including home price, the type of mortgage loan, potential seller concessions and the location of the property.

Additionally, certain aspects of the transaction can be negotiated, with buyers and sellers divvying up expenses. With so much at stake in a property sale, factoring closing costs in advance can help you budget for them and steer clear of any unwelcome surprises.

Estimate your closing costs

If you’re buying a home, try our closing costs calculator to get a better idea of how much your closing costs could be.

Closing Cost FAQs

Homeownership is an exciting prospect, but it comes with some important decisions.

One common question is whether building or buying a home is cheaper. There are advantages and disadvantages associated with each path, and the cost can vary based on where you live and what type of home you build.

Let’s take a closer look at building vs. buying a house and what each option entails, including pros and cons, costs, and what to consider to make the right decision for your circumstances.

1. Is it cheaper to buy or build a house?
2. How to finance home construction
3. Financing options for buying a home
4. Pros and cons of buying a home
5. Pros and cons of building a home

1. Is it cheaper to buy or build a house?

Generally, buying a home is often more expensive than building one, though there are different variables to consider that can impact the cost.

The national median sales price of a single-family home was $442,100 in December 2022, according to U.S. Census Bureau and U.S. Department of Housing and Urban Development data. (The average sales price was $528,400.)

On the other hand, costs of building a house can vary greatly, with the national average in 2022 at $284,764, according to Home Advisor. But the company also notes that the typical range is from $110,765 to $495,152.

However, where you live can make a big difference. For example, the average cost of building a home in New York in 2022 was $600,000 compared to $214,040 in Iowa. 

2. How to finance home construction

If you’re planning to build a home, there are several types of construction loans you may want to consider.

Keep in mind that construction loans usually come with higher interest rates than mortgage loans. And instead of receiving a lump sum, it’s more common to get a series of smaller amounts throughout your home’s construction.

These are some popular types of construction loans that may work for your situation.

• Construction-to-permanent loan — This type of construction loan automatically converts to a traditional mortgage once the building of the home is complete, which saves you a step of having to apply to convert the loan. 
• Construction-only loan — On the other hand, with a construction-only loan, you’d likely need to apply to convert it to a mortgage loan if you can’t afford to pay it off in time. This leads to closing on a second loan and usually paying closing fees again.
• HELOC or cash-out refinance — If you already own a home and have built enough equity in it, you might consider taking out a home equity line of credit (HELOC) or a cash-out refinance to fund the new build.

3. Financing options for buying a home

If you’re looking to buy an existing home, there are different mortgage loans to consider. Here are some types of mortgages that may be available to you.

• Conventional loans — People with steady incomes and strong credit scores can usually qualify for a conventional loan from a private lender or bank. A conventional loan just means the mortgage isn’t part of a government program.
• FHA loans — FHA loans come from private lenders but are backed by the Federal Housing Administration, which usually makes them easier to qualify for if you have lower credit scores. The qualifications can be easier to meet, but FHA loans also require mortgage insurance, which can increase the cost of borrowing.
• VA loans — VA loans are backed by the U.S. Department of Veterans Affairs, which often makes them easier to qualify for if you’re a service member or veteran since the federal government guarantees a portion of the loan to the private lender, decreasing its risk. Lenders can still have credit requirements that applicants must meet.
• USDA loans — People looking to buy a home in a rural area can consider applying for USDA loans, which are backed by the U.S. Department of Agriculture. How these loans work can vary. Either the federal government backs a private loan or the government issues the loan directly. Usually you have to live in an area populated by less than 35,000 people to qualify for a USDA loan.
• Jumbo loans — Jumbo loans are issued by private lenders and refer to loans for large amounts that exceed Fannie Mae and Freddie Mac conforming loan limits.

It’s important to note that it’s helpful to shop around and compare a few potential mortgage loan. Make sure to consider the interest rate and other homebuying fees.

4. Pros and cons of buying a home

Let’s take a quick look at the advantages and disadvantages associated with buying a home.

Pros of buying

• Faster timeline — It’s typically much easier and faster to close on a sale of an existing home than it is to build a home from scratch.
• Established landscaping — While mature trees, lush lawns and blooming flowers might come with an existing home, when you build, you’ll likely have to tackle landscaping from the ground up.
• Existing community — Building a home can also involve building a community, whereas homes that already belong to a neighborhood can be easier to make connections in.

Cons of buying

• Less customization — You can opt to renovate but will face limitations when trying to modify an existing home (not to mention renovations can be expensive).
• More maintenance — Older homes especially can come with wear and tear, and you may need to handle expensive maintenance costs sooner rather than later.
• Bidding wars — When you make an offer on a home, you don’t know what other buyers are offering and can end up in an expensive bidding war to secure your dream home. 

5. Pros and cons of building a home

Now let’s look at how building a home stacks up.

Pros of building

• Dream home — You have the opportunity to build your home to meet your preferences.
• More space — Not only can you choose the square footage and design of your home, but you can choose a lot that is roomy and doesn’t have you sitting on top of neighbors.
• Ecofriendly and energy efficient — When you build a home from the bottom up, you can add the latest ecofriendly and energy-efficient features, like solar panels and high-quality windows that can help the environment and your utility bills.

Cons of building

• Need permits — Getting the right permits can add costs to your building project and can be time consuming to secure.
• Expensive to finance — Construction loans tend to have higher interest rates than mortgage loans.
• Stressful process — Designing and building a home from scratch is a lot of work and it can be quite stressful to oversee such a large project, even with contract help.

What’s next: Should I buy or build?

If you’re not sure if you should build or buy your next home, consider asking yourself these questions:

• What is your budget?
• Can you qualify for a construction loan if you decide to build?
• What’s your timeline for moving?
• Do you have “must haves” or specific dealbreakers for your future home?

Regions Bank LifeGreen® checking account at a glance

Like other big banks, Regions Bank offers a variety of services for personal banking, business banking, and investment and retirement management. Regions has multiple personal checking accounts to choose from — including a senior checking account or a checking account that earns interest. 

Their most popular account is Region’s everyday checking option, the LifeGreen account. Let’s dive into the details and see if it’s a good fit for you.

5 things to know about the Regions Bank LifeGreen® checking account

1. Monthly maintenance fee

While the monthly maintenance fee associated with this checking account can range from $8 to $11 per month, you can potentially have the cost waived. 

To waive the monthly maintenance fee, you’ll want to either set up direct deposit (a singular deposit of at least $500 or multiple deposits equaling $1,000 or more per month), or maintain a $1,500 average monthly balance. 

2. Overdraft protection

Overdraft fees with the LifeGreen account can be pricey ($36 per overdraft). Region’s overdraft protection allows you to transfer funds from a linked account — like your savings account — to cover the remaining balance if your checking account drops below zero during a transaction.  But you’ll still face overdraft charges if there isn’t enough in the second account to cover the overdraw.

3. ATM fee discount for military

Regular customers pay a $3 fee when using an ATM that isn’t associated with Regions Bank, but military members can avoid paying an ATM fee on two transactions made with non–Regions Bank ATMs per statement period. To access this perk, all they have to do is present their military ID when they open their bank account.

4. Exclusive cash back offers

Through the Regions Cashback Rewards program, merchants make special offers that can earn you cash back through debit card purchases. You’re automatically enrolled in the program via your debit card after you sign up for online banking. 

To activate a reward, simply log in to your online account and click on the offer. Then use your debit card at said retailer or provider and the cash back will be automatically deposited into your account.

5. One-stop banking

If you want to manage your financial life all in one place, Regions Bank may be a good fit. They offer a suite of options including everyday banking, investment, retirement and business services. And once you open a LifeGreen account, you also have the ability to open a savings account with no monthly fees.

What do you need to open a checking account at Regions?

To open a checking account at Regions Bank, you’ll need to provide your Social Security number or tax identification number, birth date, a form of personal identification (like a driver’s license, passport or state or government-issued ID), and a secondary form of identification (like a Social Security card, birth certificate or insurance card). 

You’re also required to make an opening $50 deposit. 

How do I avoid monthly fees at Regions?

There are two options available to account holders to help them avoid paying the $8 to $11 monthly maintenance fee.

• Set up a direct deposit. One $500 direct deposit per month or multiple monthly direct deposits that equal at least $1,000 will keep you free of the monthly maintenance cost.
• Maintain a monthly balance. Keep an average of $1,500 in your LifeGreen checking account to avoid a maintenance fee.

Not sure if Regions Bank LifeGreen® checking account is right for you? Consider these alternatives.

• Betterment checking: If you’re an avid traveler, Betterment checking might be a good choice — the account comes with automatic reimbursement of ATM fees worldwide.
• Capital One 360: To avoid monthly maintenance fees without having to jump through hoops, check out Capital One 360 checking, which doesn’t charge any account fees.

Buying a home is a major financial undertaking.

From the down payment to the everyday expenses that follow after you get the keys to your new place, it can be very expensive to buy a home. One potential area where homeowners may be able to save is on their closing costs.

It’s possible to negotiate lower closing costs or to roll those expenses into the loan. Keep reading to learn how to get closing costs waived and to understand the financial implications when you do it.

• What are closing costs?
• Can closing costs be negotiated?
• How to reduce or waive closing costs

What are closing costs?

Closing costs are fees you pay when you take out a mortgage to buy a home. The fees you pay as the buyer when closing on a home go toward paying the third parties involved in the transaction, including your mortgage lender.

Closing costs can include the following fees:

• Appraisal fees
• Title services
• Credit report fees
• Lender origination fees
• Government recording costs
• Tax service fees
• Survey fees
• Underwriting fees
• Attorney fees

Generally, the buyer pays all closing costs. But buyers can have the seller give them a “credit” to put toward their closing costs — typically resulting in the seller raising the price of the home to cover the costs. So instead of paying the closing costs upfront, the buyer gets them added to the loan amount.

Lenders can also offer to issue a credit to help with closing costs — either increasing your loan amount or charging you a higher interest rate in exchange for the credit.

How much are closing costs?

You usually pay about 2% to 5% of the home’s purchase price in closing fees. Alongside the overall cost of the house, the following factors can affect how much you spend on closing costs:

• Home location
• Home size
• Down payment amount
• Loan amount
• Loan term (length of loan)
• Annual property tax payment
• Annual homeowners insurance cost
• Interest rate

To get an idea of what you could spend in closing costs, you can use the Credit Karma Closing Costs Calculator.

Can closing costs be negotiated?

It’s possible for buyers to negotiate certain closing cost fees. You have the option to negotiate the terms and costs associated with your mortgage until you officially close on the loan, but neither the lender nor seller have to agree to lower any costs. That being said, it doesn’t hurt to ask. Some mortgage fees are easier to negotiate than others.

Typically, you’ll have better luck negotiating fees your mortgage lender is charging instead of fees that come from third parties. That’s because the lender typically pays fees to third parties at a set price, and they don’t have the ability to negotiate those rates down. So it’ll be tougher to get a deal on …

• Appraisal fees
• Tax service fees
• Credit report fees
• Flood certification fees

How to reduce or waive closing costs

If you want to try to reduce or eliminate certain closing costs, such as lender fees, these are some options.

1. Buy lender credits. When you use lender credits, you reduce your closing costs but agree to pay a higher interest rate in exchange. This increases the overall cost of your mortgage.
2. Ask for a no-closing-cost mortgage. If a mortgage loan doesn’t come with lending fees or closing costs, this can save you money upfront. But that usually means the lender will charge you a higher interest rate or tack the closing costs onto your mortgage, resulting in a higher total loan.
3. Apply for an FHA loan. FHA loans offer lower down payment requirements and low closings costs to qualified buyers.

What’s next?

Before you even start shopping for a home, it’s a good idea to get an idea of how much you’ll spend on closing costs by using a closing cost calculator.

It’s also a good idea to take some time to assess your financial situation so you can get a clear idea of how much of a down payment you can afford to make, what type of mortgage payment can fit into your budget, and how much you need to save for closing costs. You also need to budget for the ongoing costs associated with homeownership such as property taxes and homeowners insurance.

One way to save on mortgage and closing costs is to shop around for quotes from different lenders early in the process. That way you can get an idea of which lender will offer you the best interest rate for your situation and the lowest fees. Don’t forget to include government-backed loans like FHA loans in your search — as these can come with more-favorable interest rates and lower closing costs.

You may also find that a first-time homebuyer program can make it easier to afford your first home.

Truist checking accounts at a glance

Truist is one of the largest banks in the U.S. It offers standard banking products including checking accounts, savings accounts, certificates of deposit, money market accounts, credit cards, loans, investing and other financial products. In this article, we’ll be diving deeper into the bank’s Truist One Checking account.

With the Truist One Checking account, account holders don’t have to worry about overdraft fees and can potentially have their monthly maintenance fees waived, making it a good option for consumers looking to avoid traditional banking fees.

Let’s get into what else you should know before opening a Truist checking account.

5 things to know about a Truist checking account

Truist offers a few different checking account products, with two notable options — Truist One Checking and the Truist Confidence Account. Neither account charges overdraft fees, and both offer mobile and online banking services.

While they’re similar, these two checking accounts differ slightly: Truist One Checking offers an everyday checking feel with waivable maintenance fees, while the Truist Confidence Account is a checkless account to help you spend only the cash you have while offering free financial education — making it great for first-timers who need to open a bank account.

1. No overdraft fees

Overdrafts happen — and being financially penalized for them only adds to the stress. If you’re facing lean times or need to be very careful with your budget, overdraft fees can have a significant negative impact. Some banks, including Truist, are taking strides with friendlier overdraft policies. While not all Truist checking options can boast zero overdraft fees, both the Truist One and Trust Confidence accounts do.

2. Different levels of accounts

There are different benefit levels within the Trust One Checking account, each coming with its own set of perks. Level is based on your total monthly average balance across all your Truist accounts, including checking, savings and investments.

As you move into the next level, you’ll earn more rewards and perks, like additional free checks and having more fees waived. Here are the total monthly average balance requirements look like for each level.

• Level 1: $0–$9,999.99
• Level 2: $10,000–$24,999.99
• Level 3: $25,000–$49,999.99
• Level 4: $50,000–$99,999.99
• Level Premier: $100,000+

3. Online banking and mobile app

Thanks to digital account access, Truist makes it easy to manage your financial life on the go. You can set up bill pay, make deposits and more using the online banking mobile app with your smartphone.

Notable online banking features include …

• Mobile check deposit
• Sending money with Zelle
• Card controls
• Activity alerts
• Security features

You can download the Truist Mobile app in the App Store or Google Play Store.

4. $100 Negative Balance Buffer

On top of having no overdraft fees, you can also overdraw your Truist One Checking account up to $100 and still have your transactions go through — with no fees. So if you’re making a purchase and realize you don’t have the funds in your account, your transaction won’t be declined (up to that $100 overdrawn), as long as you qualify for the program.

To qualify for the Negative Balance Buffer, your account has to be open for at least 35 calendar days, your account must be funded with a positive balance, and you must make a direct deposit of at least $100 per month for two consecutive months. In order to maintain qualification, you have to continue to make a $100 direct deposit at least once a month.

5. Monthly service fees

Most Truist accounts have monthly service fees (up to $12 per month) — but there are five different ways to waive them. While a checking account maintenance fee is a typical practice (and $12 is just about in the middle of what you might pay elsewhere), if you meet one of the requirements below, you can expect to have the monthly service fee waived.

• Minimum of $500 in qualifying direct deposits every statement cycle
• Total combined ledger balance of $500 or more in Truist accounts (across both personal deposit and investment accounts)
• Have a personal Truist credit card, mortgage or consumer loan
• Have a linked Small Business Checking Account
• Be a student under the age of 25

How do I open a Truist checking account?

To apply and open a Truist checking account, you have to provide select personal and contact information like your Social Security number, two years of address history, and employment and income information. For the Truist One Checking account, there’s a $50 minimum opening deposit, but the Truist Confidence Account only has a $25 initial deposit requirement.

Is a Truist checking account right for me?

If you’re looking for a new checking account, Truist is a great option for consumers who like the convenience and functionality that mobile and online banking offer, but aren’t totally ready to make the switch to fully digital banking. And if you’re on a tight budget, the zero overdraft fees and additional $100 Negative Balance Buffer can help give you a little room to breathe.

If you’re looking for banking options that will earn interest, you may find that you can access interest-earning checking accounts with other banks. It’s always a good idea to shop around and compare different options before choosing to commit to an interest-bearing financial product.

Not sure if Truist is right for you? Consider these alternatives.

• Chase: With more than 4,700 banking locations and 16,000 ATMs, Chase is a solid option for someone looking for accessible in-person banking.
• Ally: If you’re good with fully online banking, Ally might be an option for you. The online bank offers more overdraft coverage and interest-bearing checking.

Big banks often have a large nationwide reach and, as a result, have a large amount of assets under management.

These banks typically have brick-and-mortar locations, ATM options, varied financial services and products, and other features.

We’re going to examine the 10 biggest banks in America, all of which have more than $300 million worth of assets, to better understand what kind of banking services they offer and what makes them stand out.

• Chase Bank: $3.38 trillion in assets
• Bank of America: $2.44 trillion in assets
• Citibank: $1.72 trillion in assets
• Wells Fargo: $1.71 trillion in assets
• U.S. Bank: $582 billion in assets
• PNC: $534 billion in assets
• Truist: $532 billion in assets
• Marcus by Goldman Sachs: $501 billion in assets
• TD Bank: $405 billion in assets
• Capital One: $388 billion in assets
• Big banks: Pros and cons

10 biggest banks in America

Big banking has a lot to offer its customers, but what makes each bank unique? Let’s dive deeper into the ten biggest banks in America and how each bank stands out.

Chase Bank: $3.38 trillion in assets

Chase Bank makes it easy to manage your financial life all in one place, offering checking and savings accounts, auto and home loans, credit cards, investment services and more. Chase Bank is a popular choice with many people, serving nearly half of U.S. households in some way.

Chase offers a wide array of digital banking services that make it possible to manage your account online by viewing statements, monitoring account activity, transferring money, and paying bills.

Learn about Chase’s checking account.

Bank of America: $2.44 trillion in assets

Similar to Chase Bank, Bank of America offers various checking, savings, investment and loan products.

People who value in-person banking services will likely appreciate that Bank of America has 4,000 brick-and-mortar financial centers and around 16,000 ATMs. With a wide selection of credit card options, there’s also a good chance you can find a Bank of America credit card that can meet your needs.

Learn about Bank of America’s checking account.

Citibank: $1.72 trillion in assets

From personal banking to small-business banking, you have options for how to protect and grow your money with Citibank. Citi offers checking and savings services, such as certificates of deposit, or CDs, and a variety of investment services. You can choose to manage your investments on your own, use a robo-advisor or work with a professional investment advisor.

Wells Fargo: $1.71 trillion in assets

With more than 12,000 ATMs and about 4,900 retail banking branches spread across the nation, Wells Fargo is another good banking option for people who prefer to have access to in-person banking services. For people who like to do some or all of their banking online, Wells Fargo offers online banking services, and it has a mobile app that makes it easy to check in on your account, transfer funds and pay bills.

U.S. Bank: $582 billion in assets

Alongside offering in-person banking services such as checking and savings accounts, loans, credit cards and investing services, U.S. Bank also has a robust digital presence. U.S. Bank makes staying organized easy by allowing you to store e-statements, tax documents, and other letters and notices in your online account, which you can view on a desktop computer or via a mobile app. Learn more about U.S. Bank’s checking account.

PNC: $534 billion in assets

You can expect to find most, if not all, of your traditional banking services with PNC, as well as a solid amount of loan options. PNC offers mortgage, auto and student loans, alongside home equity lines of credit. It even offers student loan refinancing.

PNC’s Virtual Wallet product also makes it easy to digitally manage your checking and savings accounts. Plus, you can potentially earn a bonus when you open a new bank account.

Truist: $532 billion in assets

The big selling point for Truist is the $100 Negative Balance Buffer, which protects qualifying customers from overdrafting their accounts up to $100 over — and Truist doesn’t charge overdraft fees. The bank also provides five different ways to waive monthly maintenance fees. This makes Truist a great option for someone wanting something similar to a free checking account.

Marcus by Goldman Sachs: $501 billion in assets

For people who are wary of the many new online-only banks popping up these days, Marcus by Goldman Sachs steps in to offer online banking backed by more than 150 years of experience. Marcus by Goldman Sachs passes overhead savings onto customers in the form of higher-than-average interest rates on savings products.

TD Bank: $405 billion in assets

If you’re looking to open a bank account, TD Bank often offers a bonus for new customers who set up and receive a qualifying direct deposit — which can be a nice perk. While TD Bank does have brick and mortar locations, it encourages customers to lean into digital and mobile banking. It also offers a variety of informational resources and tutorials to help you get the hang of online banking.

Capital One: $388 billion in assets

Between no account minimums or account fees and more than 70,000 fee-free ATMs, Capital One is working hard to attract people who are tired of spending more to access and maintain banking services. It’s another major bank that hasn’t been afraid to enter the digital space by offering a mobile app that provides 24/7 access to your account.

Big banks: Pros and cons

There are both advantages and disadvantages associated with choosing a big bank to tackle your checking and savings needs. Let’s look at the pros and cons, so you can decide if a big bank or small bank would better suit your needs.

Pros of using a big bank

There are many benefits to having an account with a big bank.

• More widely available — Many large banks have branches nationwide, which can give you easier access to in-person banking services and ATMs.
• More products and services — If you’re looking to manage your financial life all in one place, including checking, saving, loans and credit cards, then you may find that a large bank can give you access to all of the financial products and services that you need.
• Advanced tech features — If you want access to high-tech features like mobile banking, being able to deposit checks from your phone and e-transfers, then you’re more likely to find what you’re looking for at a larger bank.

Cons of using a big bank

Of course, there are also some disadvantages associated with mobile banking.

• Higher fees — Credit unions and online banks, both of which are usually smaller than big banks, tend to have lower fees. Online banks have lower fees because they lack expensive brick-and-mortar locations. Credit unions are often member owned and charge less in order to pass savings on to their customers.
• Less-intimate relationships — Smaller local banks often value customer relationships more than big banks and because of this, they can have more lenient lending requirements and other relaxed banking requirements for the people who have a strong history with them.

What’s next?

If you’re looking for a new bank but aren’t sure which one is the right fit for you, you can ask yourself the following questions about each bank you’re considering to get a better idea of whether or not it’s a good fit.

• Is it insured? You want to make sure your money is safe and sound by choosing to bank with a bank insured by the Federal Deposit Insurance Corporation or a credit union insured by the National Credit Union Administration. FDIC and NCUA insurance protect up to $250,000 per depositor so that even if your bank goes out of business, you won’t lose your money. Most banks and credit unions are insured, especially big ones, but it doesn’t hurt to double check.
• Does it have the products and services that I need? If you’re looking for services that extend past basic, make a list of what you’re looking for (loans, credit cards, automatic bill pay, etc.) and confirm whether each bank you’re considering has those features.
• What fees does it charge? Some banks charge monthly maintenance fees, wire transfer fees, overdraft fees, statement fees, out of-network ATM fees, stop payment fees, returned check fees, cashier’s check fees and certified check fees. The amount each bank charges for fees can also vary.

Take your time looking for the right bank to make sure it can provide you with services you need at a price that works for your budget.

Spotloan, an online lender with a short and speedy application process, can be used as an alternative to payday loans.

Here are our picks for the best loans like Spotloan.

• Best for new-to-credit borrowers: Upstart
• Best for borrowers with bad credit: OppLoans
• Best for small-to-medium loan amounts: OneMain Financial
• Best for getting funds quickly: CashNetUSA
• Best for repairing credit: Possible Finance
• What you should know about payday loan alternatives
• How we picked these loans

Best for new-to-credit borrowers: Upstart

Why Upstart stands out: Upstart uses artificial intelligence as part of an alternative lending model meant to “improve access” to personal loans. Upstart’s underwriting model considers education, workplace experience and other variables as well as your financial history. This means that you may be offered a loan even as a new borrower or somebody who doesn’t have great credit.

• Loan amounts range from $1,000 to $50,000.
• Upstart offers a prequalification option that doesn’t affect your credit scores. But your terms aren’t final until you submit a formal application and submit to a hard credit inquiry.
• Upstart reports loan payments to credit bureaus, which may help you build better credit if you pay in full and on time each month.
• Available loan amounts may be limited depending on your application data and the state where you live.

Read our full review of Upstart to learn more.

Best for borrowers with bad credit: OppLoans

Why OppLoans stands out: If you have bad credit, it can be difficult to secure a personal loan, but OppLoans offers loan products designed for people who don’t have great credit. OppLoans even offers loans with loan amounts as high as $4,000 with only a soft credit check required.

• All of its loans are fully amortizing, and none of its loans has balloon payments.
• You can pay off your loan at any time without running into prepayment fees.
• OppLoans reports your payments to the three major credit bureaus, so if you make payments as agreed, you can improve your credit.

Read our full review of OppLoans to learn more.

Best for small-to-medium loan amounts: OneMain Financial

Why OneMain Financial stands out: If you need cash to help bridge the gap between paydays, you can get a personal loan as small as $1,500 through OneMain Financial.

• OneMain Financial offers fixed rates and payments, and it doesn’t charge prepayment fees.
• You can apply online.
• If you prefer in-person service, you can meet one-on-one to discuss your loan options at a OneMain location.
• If you’re approved for your loan by noon, you may receive the funds that same day. Depending on your bank, there may be a wait before you can access your cash.
• You may be able to change your due date by calling, writing or emailing your local branch to inquire about the change.

Read our full review of OneMain Financial.

Best for getting funds quickly: CashNetUSA

Why CashNetUSA stands out: If your loan is approved before 1 p.m. Central time, you may be able to get a same-day deposit. CashNetUSA’s loans are designed to provide quick emergency funding.

• The application process only takes a few minutes, with a quick lending decision.
• Loan amounts are on the smaller side — they only go as high as $500.
• You’ll need to repay your loan on your next payday, but if you choose to pay off your loan early there are no prepayment fees.
• CashNetUSA loans aren’t available in all states.

Read our full review of CashNetUSA.

Best for repairing credit: Possible Finance

Why Possible Finance stands out: Possible Finance allows borrowers to receive up to $500 in a matter of minutes, even if they don’t have strong credit.

• Possible Finance doesn’t perform a hard inquiry on your credit when you apply, and it doesn’t use your credit as a factor when deciding your loan eligibility.
• You can work toward building your credit history as a borrower with Possible Finance if you pay your loan back in full and on time — the lender reports your installment payments to two of the three main consumer credit bureaus.
• To qualify for a personal loan with Possible Finance, you must have regular income, valid identification and meet certain income requirements. Plus, your checking account must have three months’ worth of history, with income deposits of about $750 a month and a positive bank account balance.

Read our full review of Possible Finance.

What you should know about payday loan alternatives

Payday loans can be extremely costly, which can make them challenging to pay off. Instead of taking out an expensive payday loan, you should consider what other borrowing options or solutions may be available to you. If you need help paying bills, you may consider asking your creditor for more time to pay your bills. A payment advance from your employer or taking out a low-interest-rate credit card may also help you avoid taking out payday loans.

Some lenders offer short-term loans with low borrowing amounts that can get you the cash you need and cost less than payday loans. Whenever you’re looking for a loan product, be sure to comparison shop and find the best rates and terms possible for you. Payday loan alternatives aren’t guaranteed to be less expensive than payday loans. You’ll also want to read reviews of any lenders you’re considering. And finally, if you have bad credit, applying for a personal loan through a credit union may be a more affordable way to gain access to a loan.

How we picked these loans

We reviewed a variety of lenders that offer alternatives to payday loans. We focused on lenders that have fast application, approval and funding processes.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

Updated June 25, 2024

This date may not reflect recent changes in individual terms.

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Written by: Jacqueline DeMarco

PrimeLending mortgage loan at a glance

• Conventional loans: Yes
• FHA loans: Yes
• VA loans: Yes
• Refinancing: Yes
• Jumbo loan: Yes
• Adjustable rates: Yes
• Fixed rates: Yes (15-year and 30-year loans)

PrimeLending is an online lender that offers help via a mortgage professional who will walk you through every step of the mortgage process. You can get in-person assistance at a branch where available or support by phone.

Pros

• Variety of loan offerings
• Down payment assistance available
• Borrowers can save money with biweekly payments

Cons

• Not licensed in all 50 states
• No home equity products
• Rates are not displayed online

5 things to know about a PrimeLending mortgage loan

1. Variety of loan offerings

If you aren’t sure which type of mortgage is the best fit for your needs, you’ll have quite a few options at your disposal through PrimeLending. The lender offers fixed-rate mortgages, adjustable-rate mortgages, conventional loans, jumbo loans, FHA loans, VA loans, USDA loans and new construction loans.

2. Down payment assistance available

PrimeLending offers to help you evaluate your down payment assistance program options. Down payment assistance programs can help consumers buy a home with as little as 3% down. Just remember that you’ll still need to qualify for any down payment assistance program.

3. Not licensed in all 50 states

PrimeLending is licensed in more than 20 states and Washington, D.C. You won’t be eligible for a loan through PrimeLending if you live in the states it isn’t licensed in.

4. Try saving money with biweekly payments

If you want to spend less money on interest and pay off your loan faster, you’ll appreciate having a biweekly payment option that can help you pay your mortgage off more quickly than if you made a payment once a month. When you pay biweekly, you cut your monthly mortgage payment in half and make a payment every other week, which leads to making one extra principal payment annually.

5. No home equity products

Even though PrimeLending has a lot of mortgage choices, it doesn’t have a HELOC option for homeowners who are looking to borrow against the equity in a home they already own.

Who is a PrimeLending Loan good for?

PrimeLending is a good option for those who want to consider many lending options before choosing which type of mortgage loan is right for them. This lender is also a good fit for consumers who are looking for down payment assistance, as PrimeLending helps applicants evaluate their down payment assistance program options. If you qualify, these programs can be really helpful for those who don’t have a large enough down payment in hand.

How to apply for a PrimeLending mortgage

You can go through the prequalification and application process with PrimeLending fully online, but you have to create an account first. 

PrimeLending aims to make the application process as simple as possible by allowing you to securely connect the necessary financial accounts and upload any documents required for your application. It even provides the option to take pictures of your documents using your mobile device to speed up the application process.

PrimeLending lists the following application steps:

• Submit any required documents
• Undergo a credit check
• Verify documentation
• Set a price range for the loan
• Compare your loan options
• Decide on your down payment amount
• Get prequalified
• Receive your loan estimate
• Express an intent to proceed

Not sure if PrimeLending is right for you? Consider these alternatives.

If you want to compare mortgage rates with multiple lenders or your application is denied, you do have a window of time where multiple hard credit inquiries by lenders only count as one hard inquiry on your credit scores. You typically have 14 days to make these multiple inquiries without being dinged multiple times.

• Better Mortgage: If you like the ease of online applications, you can also consider working with Better, which has a completely online loan process.
• Bank of America: Check out Bank of America if you’re looking for a mortgage lender with a national presence, as well as down payment and closing cost assistance programs that are helpful for first-time homebuyers.

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About the author: Jacqueline DeMarco is a freelance writer based in southern California who graduated from the University of California Irvine with a degree in literary journalism. She writes about a wide range of topics, including fin… Read more.
]]> 3980427 https://www.creditkarma.com/home-loans/i/stearns-mortgage-review Mon, 27 Sep 2021 23:13:59 +0000 https://www.creditkarma.com/?p=3978563

Updated April 28, 2023

This date may not reflect recent changes in individual terms.

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Written by: Jacqueline DeMarco

Stearns is no longer taking new mortgage applications. Read mortgage lender reviews for other options.

Stearns mortgage loans at a glance

• Conventional loans: Yes
• FHA loans: Yes
• VA loans: Yes
• Refinancing: Yes
• Jumbo loan: Yes
• Adjustable rates: Yes (3/1, 5/1, 7/1 and 10/1 ARM)
• Fixed rates: Yes

Stearns (Stearns Lending) is a nationwide mortgage lender that opened its doors 1989. Stearns provides both mortgages and refinancing options to prospective and current homeowners.

Pros

• Multiple loan types
• Plenty of mortgage options
• Lender is transparent about ARM loan options

Cons

• No home equity loan or HELOC products
• Online contact form required, no application forms online

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5 things to know about a Stearns mortgage loan

1. Multiple loan options

Stearns has a variety of borrowing options that may be able to suit your needs, whether you’re shopping for your first home or your next home — or you want to refinance. And if you’re looking for jumbo loans or fixer-upper mortgages, you’re in luck: Stearns offers both of those financing options.

2. Plenty of mortgage options

You’ll have a lot of options at your disposal when working with Stearns, which offers conventional, FHA, USDA and VA mortgages with fixed- and adjustable-rate options.

3. Loan terms vary

If you’re hoping to secure a mortgage that’s shorter than 30 years, you may find what you’re looking for through Stearns. It offers a variety of loan terms, starting at just 10 years for fixed-rate mortgages.

4. No home equity loan or HELOC products

Stearns doesn’t offer home equity loan or home equity line of credit (HELOC) products, which may rule this lender out if you’re looking to leverage your equity as a borrowing solution.

5. Website lacks transparency

Stearns doesn’t provide information about APRs on its website. You’ll have to connect with Stearns via phone, email or the website’s contact form to learn more about your potential APR options. According to a representative, you’ll have to fill out a form to learn more about the rates you qualify for.

Who is a Stearns mortgage loan good for?

Stearns offers lending options for both new and repeat homebuyers, so if you’d like to see a variety of mortgage and refinancing options, you may appreciate Stearns’ wide offering of lending products.

And if you need help covering the upfront costs of buying a home, Stearns mortgage loan originators can tell you whether your state offers down payment assistance.

Because it offers VA loans, Stearns may be a good fit for veterans and active-duty military who are looking to buy their first home.

How to apply for a Stearns mortgage

Stearns has mortgage loan originators available to help you with the application process, including understanding your down payment, closing costs and homeowner’s insurance requirements. Stearns also offers mortgage preapprovals, which could make it easier for you to put an offer in on your dream home when you’re ready.

You can apply for a Stearns mortgage either online or in person. You and your real estate agent will need to provide Stearns with the home purchase contract and any other information needed.

Once you verify your info online — a process that requires submitting both your Social Security number and bank information — you’ll go through the underwriting process before closing.

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About the author: Jacqueline DeMarco is a freelance writer based in southern California who graduated from the University of California Irvine with a degree in literary journalism. She writes about a wide range of topics, including fin… Read more.
]]> 3978563 https://www.creditkarma.com/personal-loans/i/float-me Mon, 27 Sep 2021 21:23:42 +0000 https://www.creditkarma.com/?p=3977687

Pros

• No interestnAbility to receive cash in minutesnCan help build emergency funds

Cons

• Users must pay a membership feenPaycheck direct deposit requirednUsers can only borrow up to $50
Check your Approval Odds* for a loan Get Started

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What you need to know about a FloatMe personal loan

FloatMe is a cash advance app that lets people borrow up to $50 without interest between pay periods. FloatMe calls this advance a “float,” and you can use the money to help cover an emergency, unexpected expense or pay a bill.

Here’s what else you need to know if you’re considering using the FloatMe app.

No interest — and few fees

Since the cash you owe is taken out of your next paycheck, FloatMe typically doesn’t charge late fees or penalties. And if you’re short on cash when the money is due back, FloatMe will only deduct a partial payment to help you avoid overdrafting your bank account.

Plus, FloatMe doesn’t charge interest on the money you borrow.

Fast funding

Getting cash from FloatMe typically takes up to three business days. But if you need cash fast, you may be able to get funds from FloatMe in as little as 30 minutes, depending on your bank.

Low borrowing amount

While FloatMe can provide access to cash quickly, the borrowing amounts are small and generally range between $10 and $30 to start. But, if you qualify, you may be able to access up to $50.

Membership fee

In order to use FloatMe, you’ll have sign up to be a member. The membership will cost you $1.99 a month, but you can cancel anytime if you no longer need FloatMe’s services.

Check your Approval Odds* for a loan Get Started

A closer look at a FloatMe personal loan

• No credit check — FloatMe doesn’t review your credit history, so you won’t have to worry about a hard hit on your credit during the application process. 
• Not available for the self-employed — FloatMe only approves people who are W-2 employees earning at least $200 per pay period. And the income you receive must come from having your paycheck direct deposited into a bank account. Payments from other sources, like PayPal, Venmo, Zelle or paper checks, won’t count.
• Helps you avoid overdraft fees — FloatMe keeps tabs on your bank balance and will send you an alert when you’re getting low, which can help you avoid costly overdraft fees. 
• Bank account access — Though the overdraft alert can be helpful for some, it’s worth noting that FloatMe will have access to view and comment on your bank account funds. FloatMe can also automatically debit your account when it comes time to pay your float back.
• No credit-building potential — FloatMe doesn’t report payments to credit bureaus, so even if you pay on time every month, it won’t help improve your credit history.
• Builds up your emergency savings — FloatMe helps people establish a savings by putting some cash aside as an “emergency stash.” Through the app, you can see when your next contribution will be and manually add or withdraw funds when you need them.

Who is a FloatMe loan good for?

If you need to borrow less than $50 to help make ends meet between paychecks, using the FloatMe app could help you get the cash you need — quickly. And it might be a less expensive alternative than turning to a payday loan.

But if you don’t want to pay the monthly membership fee or you’re looking for a loan than can help you build up your credit history, you might want to look elsewhere.

If you find yourself turning to a cash advance regularly to help make ends meet, it might be a good idea to take look at your monthly budget.

How to apply with FloatMe

To use FloatMe, you’ll have to download the app to your smartphone first. Then you can sign up by providing some personal information such as your address, cellphone number and email.

You’ll also need to verify your income and show that your paychecks are paid by direct deposit into a checking account and that you have at least three consecutive payments. 

FloatMe will also ask you to link the debit card you use with your checking account so it can send you cash and collect your monthly membership fee.

Not sure if FloatMe is right for you? Consider these alternatives.

• Earnin: Cash advance app Earnin allows you to borrow up to $500 — up to two days before your next paycheck.
• MoneyLion:  MoneyLion offers interest-free cash advances of up to $250 with no credit check.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

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About the author: Jacqueline DeMarco is a freelance writer based in southern California who graduated from the University of California Irvine with a degree in literary journalism. She writes about a wide range of topics, including fin… Read more.
]]> 3977687 https://www.creditkarma.com/personal-loans/i/peloton-financing Mon, 27 Sep 2021 20:36:03 +0000 https://www.creditkarma.com/?p=3977676

Thinking about purchasing a Peloton indoor cycling bike but not sure how to cover the cost? Peloton makes it easy to finance your equipment through Affirm.

If you’ve decided to get a Peloton bike or treadmill (or both!), you might be considering how you’ll cover the cost. With equipment starting around $1,495 , it’s a major purchase, so you might want to spread your payments out over time by using Affirm, Peloton’s finance partner.

Let’s take a closer look at how financing a Peloton through Affirm works, what you’ll need to apply and what some other options may be if you don’t want to use Affirm.

Planning a big purchase? Shop for Loans Now

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• How Peloton financing works
• How to finance a Peloton
• Can I get a Peloton with bad credit?
• How to finance a Peloton without Affirm

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How Peloton financing works

Affirm, which is Peloton’s financing partner, will do a soft pull on your credit when you apply for financing. The lender’s review of your loan eligibility won’t affect your credit scores.

If you’re approved for a loan, you may be able to get 0% APR financing with no money down. But not everyone can qualify. Affirm says on its website that a down payment may be required and that interest rates range between 0% and 30%, depending on the strength of your credit.

Loan terms are flexible. You can spread your payments over 12, 24, 39 or 43 months.

Unfortunately, loans apply only to Peloton equipment, so you won’t be able to finance the $39 monthly all-access Peloton membership fee that lets you access classes.

How to finance a Peloton

It’s unclear on the Peloton site what information you’ll need to provide in order to apply for Affirm financing, but according to Affirm, you’ll need to do the following:

• Select Affirm as a payment method during checkout
• Use your mobile number to set up an Affirm account or log into an existing account
• See if you’re approved

You’ll also have to be 18 years of age and provide your Social Security number to apply for a loan.

Read our full review of Affirm to learn more about Peloton’s lending partner.

Can I get a Peloton with bad credit?

When reviewing your application, Affirm will consider your credit scores, payment history and ability to make your monthly payments. If you don’t qualify for Affirm to finance the full cost of your Peloton purchase, you may be asked to make a down payment.

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How to finance a Peloton without Affirm

If financing your Peloton purchase through Affirm isn’t a good fit or you’re worried you may not be able to qualify, here are some other options that can help you finance this large purchase.

• Pay cash upfront. If you have the cash to cover the cost of the Peloton purchase, you won’t have to worry about making monthly payments. If you don’t have the money saved, you can work on saving toward the expense.
• Use a credit card with a 0% APR. Using a credit card with a 0% APR introductory offer can help you finance the purchase of a Peloton without additional interest charges. But to avoid interest charges, you’ll have to pay off the purchase before the introductory offer expires.
• Find another financing partner. Using another “buy-now, pay-later” app to get the cash you need might also be an option. Check out our roundup of 4 companies like Affirm.
• Use the Peloton app only. You don’t need Peloton-branded equipment to use the app, so you might consider using a bike you already have or finding a less expensive option to buy. At $12.99 a month for digital membership, you can access workouts without having to pay a hefty price tag for a new Peloton treadmill or bike.
Planning a big purchase? Shop for Loans Now

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About the author: Jacqueline DeMarco is a freelance writer based in southern California who graduated from the University of California Irvine with a degree in literary journalism. She writes about a wide range of topics, including fin… Read more.
]]> 3977676 https://www.creditkarma.com/money/i/what-to-know-about-jumbo-cds Wed, 14 Apr 2021 15:08:37 +0000 https://www.creditkarma.com/?p=82733

While there are very few guarantees in life, CDs do offer a guaranteed return on your investment.

Sounds too good to be true? Luckily, CDs live up to their reputation. There are many options for growing your money, and CDs are a secure way to do so with very low risks.

Jumbo CDs can promise even bigger returns for larger investments. Want to know more about how a jumbo CD works and if it’s a good fit for you? Keep reading to learn more.

Looking for a savings account? Start Saving

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• What is a jumbo CD?
• How do jumbo CDs work?
• What are advantages and disadvantages of jumbo CDs?
• When might I consider a jumbo CD?
• Jumbo CD rates and how they can change over time
• Next steps: Consider CD alternatives when you have extra money to invest

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What is a jumbo CD?

A certificate of deposit, or CD, is a type of deposit account that generally pays a higher interest rate than a traditional savings account. You deposit money in the account and agree to leave it there for a set amount of time — the CD’s “term.”

At the end of the term, when the CD matures, you can redeem the CD for all the money you originally invested, as well as the guaranteed amount of interest the CD earned. Withdrawing some or all of the money before the maturity date could mean you face an early-withdrawal penalty.

And just like deposits made to your checking and savings account, the Federal Deposit Insurance Corporation (or the NCUA, for credit unions) guarantees up to $250,000 of your deposits per covered account, making your CD a low-risk investment.

A jumbo certificate of deposit has a higher opening deposit requirement — generally $100,000 — with interest rates and annual percentage yields that are typically higher than those you’d get with a regular CD. You’ll still need to keep your money in the CD for a set period of time and may face penalties if you take your money out early.

With both regular and jumbo CDs, you’ll get higher interest rates and annual percentage yields with longer terms.

How do jumbo CDs work?

Jumbo CDs work the same way regular CDs do: Deposit your money, leave it there for the term, reap the interest at the end of the term.

You can generally find jumbo CDs at banks and credit unions. Some brokerage firms and independent salespeople also offer them. CD terms and interest rates can vary depending on where you get one, how much you deposit and how long the term is. As of March 15, 2021, the average rate for a 12-month $100,000 jumbo CD was 0.15%.

What are early-withdrawal penalties on jumbo CDs?

Early-withdrawal penalties vary by financial institution, so it’s worth reviewing the terms of your specific CD before opening it so that you understand what the early-withdrawal penalties will look like. Some banks and credit unions may waive that fee if you held their money in the CD for a minimum period of time.

Penalty amounts vary by account and banking institution. Federal law sets a minimum penalty of at least seven days’ worth of simple interest if you withdraw money in the first six days after opening the CD. But there’s no federal maximum penalty amount, so confirm what early-withdrawal penalties you may face for your specific CD.

Early-withdrawal penalties can come in the form of paying a fee or forgoing a portion of the interest earned.

What if I need to withdraw money for COVID expenses?

It’s worth noting that if you need to withdraw funds from your CD to pay for expenses related to COVID-19, you may be able to avoid early withdrawal penalties by speaking with your bank or credit union. The federal Office of the Comptroller of the Currency is encouraging these institutions to help ease financial strain for consumers. While financial institutions aren’t required to waive fees, they may be more understanding and willing to consider doing so right now.

Looking for a savings account? Start Saving

What are advantages and disadvantages of jumbo CDs?

Like any type of financial product, jumbo CDs have advantages and disadvantages worth considering.

Advantages

• You can find higher interest rates. CDs generally pay higher rates of interest than regular savings accounts. And jumbo CDs tend to pay higher rates than regular CDs.
• CDs are FDIC or NCUA insured. If you open a CD at a federally insured bank, it will be insured up to the FDIC insurance limit. CDs opened at a credit union will be insured through the National Credit Union Administration.
• It’s a low-risk investment. Unlike most investment opportunities, CDs have little risk associated with them. When you open a CD, the interest rate is locked in and the return is guaranteed, which makes CDs a safe savings opportunity.

Disadvantages

• You’re not supposed to touch your money. CDs ­­generally aren’t as liquid as savings accounts. Depending on your chosen CD term, you may be committing to locking up your deposit for as long as 20 years. Withdrawing money before the maturity date could result in early-withdrawal penalties.
• There are high opening balance requirements. Jumbo CDs can have very high opening minimum deposit requirements.
• Jumbo CDs can be a bigger commitment. You may need to tie your money up for a longer term in order to get the best jumbo CD rates.
• You may miss out on some interest opportunities. When it comes to CDs, there’s a risk that inflation will actually increase faster than the interest rate you receive on your CD, which can reduce your real returns over the life of your CD.
• Insurance is limited. While the $250,000 FDIC insurance is a great start, this amount can apply to multiple accounts in your name at one bank. This means that each CD doesn’t have insurance for $250,000 — all your financial holdings at that institution do. You may need to work with multiple banking institutions to fully cover all your savings.

When might I consider a jumbo CD?

Whether or not a jumbo CD is a good fit for you depends on a variety of factors. Consider a jumbo CD if the following descriptions sound like you.

• You have a lot of money in savings. If you want to earn some extra interest with your money, then a CD or jumbo CD might be a good fit. They’re secure and could pay a higher interest rate than a traditional savings account.
• You won’t be tempted to withdraw early. If you can afford to leave that money untouched for a set period of time — and therefore can avoid any early-withdrawal fees — a CD may suit you. It’s best to select a CD with a maturity date that takes your expected needs into account. For example, if you intend to buy a home in two years, you won’t want to put all your down payment money into a CD with a five-year maturity date.
• You’re risk-intolerant. If you’re at a place in your life where risky investments aren’t for you (such as those who are planning to retire soon), then this is a low-risk way to pursue growth and peace of mind at the same time.

Jumbo CD rates and how they can change over time

CD interest rates ebb and flow over time, and it can be tricky to know if you’re locking in a good rate when you open a CD. For example, the average rate for a 12-month, $100,000 jumbo CD on March 15, 2021, was 0.15%. But if you jump back about two years to March 11, 2019, the rate was much higher at 0.72%.

Here’s what the average rate on jumbo CDs looked like as of March 29, 2021, according to the FDIC. You can get weekly data on CD rates on the FDIC website.

Deposit products	National rate	Rate cap
1-month CD	0.05	0.80
3-month CD	0.07	0.82
6-month CD	0.10	0.85
12-month CD	0.15	0.90
24-month CD	0.19	0.94
36-month CD	0.23	0.98
48-month CD	0.26	1.01
60-month CD	0.31	1.06

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Next steps: Consider CD alternatives when you have extra money to invest

If you don’t feel like a CD or a jumbo CD is a good financial fit for you, there are alternatives for growing your money that you may find more appealing.

CDs can be a good option if you’re saving for a specific short-term goal or if you want a low-risk investment for a larger amount of money. But if you have enough money to open a jumbo CD, it may be worth looking at investment options that could have a higher rate of return, like a brokerage account. If you haven’t yet maxed out your retirement savings accounts, you may want to consider doing so instead of opening a jumbo CD. Contributing to a 401(k), IRA or other type of retirement account can also help you achieve long-term growth.

As always, when considering any financial product, do your research and think about consulting a financial advisor if you have questions.

Looking for a savings account? Start Saving

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About the author: Jacqueline DeMarco is a freelance writer based in southern California who graduated from the University of California Irvine with a degree in literary journalism. She writes about a wide range of topics, including fin… Read more.
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