Morgan Stanley Introduces Impact Quotient App for Advisors: Portfolio Products

Morgan Stanley launched an investing analytics and reporting application designed to help all Morgan Stanley Wealth Management clients further integrate social and environmental objectives into their investments.

It provides Morgan Stanley Financial Advisors with suggestions for investment solutions that could better align clients’ portfolios over time with the impact preferences that matter most to them.

“Increasingly, our clients and Financial Advisors are looking for data-driven insights to inform their investment decisions,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management in a statement.

The Morgan Stanley Impact Quotient (Morgan Stanley IQ) is available at no extra cost for the firm’s clients through its 3D advisor desktop application and is built into the firm’s client reporting system, Matt Slovik, head of Global Sustainable Finance at Morgan Stanley, told ThinkAdvisor.

The application provides customized insights into users’ current investment holdings and allows them to consider sustainability and impact goals through a comprehensive framework to identify and prioritize more than 100 social and environmental impact preferences. Then through “the insights of multiple third-party data sources and proprietary Morgan Stanley analytics” the app can instantly assess the alignment of investments with those preferences,” the company said in its announcement.

AdvicePay Launches New Fee Calculator for Advisors

AdvicePay, the billing and payments platform developed by Michael Kitces and Alan Moore who co-founded the XY Planning Network, has added a fee calculator for financial advisors designed to serve as an efficiency, productivity and compliance tool for fee-for-service payments.

The new AdvicePay Fee Calculator “simply and easily calculates the amount of fees that are due based on various client-fee schedules and scenarios, while automatically creating accompanying invoices for compliance purposes and to implement the actual billing process,” the company said in its announcement.

As the fee-for-service business model gains momentum, more advisors are working with clients by directly charging for their advice outside of or alongside an  asset management fee for portfolio management or a commission for product implementation, from monthly subscription fees to income-and-net-worth retainer fees and more, the company said.

“The challenge of the fee-for-service model is that for the first time ever, advisors are entirely on their own to determine what fee to charge in the first place,” Kitces said in a statement.

“The significance of AdvicePay’s Fee Calculator isn’t just that it is critical from a workflow automation perspective to standardize the fees that advisory firms charge across the business, but it will also provide a visual means for advisors to show and discuss how they set their fees with clients, and to justify and validate why the advisor is charging the fee that they do for the value they provide,” he said.

Addepar Expands its Wealth Management Platform for RIAs

Addepar expanded its wealth management platform by integrating with three major financial planning software providers: eMoney Advisor, Envestnet MoneyGuide Pro and Libretto.

The integrations give users the ability to “leverage the power of Addepar’s data network, providing a single point of access to hundreds of aggregated, normalized and reconciled custodian feeds, along with offline holdings such as alternative investments and real estate, directly within” those software applications, Addepar said in its announcement.

With the new integration, eMoney users can access Addepar reports directly in the eMoney File Vault, allowing advisors to give their clients “more holistic insight without transitioning between two systems,” Addepar said. Users can also seamlessly transition between eMoney and Addepar for efficient access to financial plans and portfolio performance data.

MoneyGuide users, meanwhile, can achieve consistency across Addepar and MoneyGuide workflows, ensuring that data presented in a financial plan matches the values in client reports. Users can also “search, access and link Addepar households in real-time via MoneyGuide,” Addepar said.

Libretto users can deliver household data from Addepar “with the click of a button, enabling powerful financial strategy tools including: priorities-based planning, liability-driven asset allocation, factor-level portfolio construction, asset location, product fulfillment, trade directives, wealth management directives and comprehensive reporting,” Addepar said.

“We aim to provide options for our clients so they can work with the provider that best suits their needs,” said William Armenta, Addepar’s senior director of product, in a statement.

IndexIQ Adds Third Actively Managed ETF

New York Life Investments Company’s IndexIQ launched the IQ Ultra Short Duration ETF Thursday with a net expense ratio of 0.24%.

The new fund is actively managed by NYL Investors, a division of New York Life Investments that the company says manages about $255 billion for its parent company and select strategic partners.

The new  IQ Ultra Short Duration ETF provides financial advisors with “flexibility to manage interest rate risk while seeking to deliver attractive current income,” IndexIQ said in an announcement.

It’s the third in a series of actively managed ETF offerings from IndexIQ following the launch of two active municipal bond funds: IQ MacKay Municipal Insured ETF and IQ MacKay Municipal Intermediate ETF.

“This Fund aims to provide investment solutions that generate consistent, risk-controlled excess returns for our clients [and] represents a strategy which helps mitigate interest rate risk while seeking to minimize price volatility,” Kenneth Sommer, the fund’s senior portfolio manager, said in a statement. “We believe this ETF can play an important role in managing client portfolios in any investment environment,” he added.

Orion Teams with HealthSavings Administrators on HSAs

Orion Advisor Services and HealthSavings Administrators have teamed up for an initiative designed to help RIAs easily integrate health savings accounts (HSAs) into retirement planning services for clients.

The Orion/HealthSavings integration allows RIAs to manage their clients’ HSAs on the same dashboard as other investment accounts that include IRAs, 401(k)s and more.

Orion is “committed to empowering advisors to build and manage customized dashboards that ease their back-office burden so they can focus on holistic financial and retirement planning recommendations,” said Jeff Kliewer, director of integration partnerships and support, in a statement. “The partnership with HealthSavings … gives our users a more complete picture of their clients’ portfolios,”

Franklin Templeton Lowers Fees on Three ETFs

Franklin Templeton reduced management fees for three LibertyShares ETFs that are available to U.S. investors.

The fee on its Franklin LibertyQ U.S. Equity ETF was reduced from a net expense ratio of 0.25% to 0.15%, while the fee on its Franklin Liberty International Aggregate Bon ETF was lowered from a net expense ratio of 0.35% to 0.25% and the fee on its Franklin LibertyQ Emerging Markets ETF was reduced from a net expense ratio of 0.55% to 0.45%, the company announced.

Patrick O’Connor, global head of ETFs for Franklin Templeton, explained in a statement on that the company is “constantly evaluating ways to improve client experiences.”

Check out last week’s portfolio product roundup here: Cambria Launches TOKE Cannabis ETF: Portfolio Products.

 

House Floats 'Flexible Giving Accounts' for Employees

(Photo: Shutterstock)

A bill introduced in the U.S. House of Representatives on July 25 would enable employees to set aside money for charity and receive a tax break.

The Everyday Philanthropist Act (H.R. 4002), sponsored by U.S. Reps. Vern Buchanan,R–Fla., and Thomas Suozzi, D–N.Y., seeks to “empower everyday, working Americans to give to charity.”

It would incentivize employees to set up a flexible giving account through their employer. This would enable them to set aside a pretax portion of their paycheck to donate to a nonprofit of their choice, resulting in an immediate reduction in their taxable income.

Employees’ annual pretax contributions would top out at $2,700; gifts beyond that amount would be included in taxable income. There would be no minimum contribution.

The proposed legislation comes at a time when overall giving in the U.S. has plateaued. Last year, Americans’ donations to charity were virtually flat.

This owed in part to the tax overhaul, which doubled the standard deduction, resulting in a drop in the number of households that itemized deductions, from more than 45 million in 2016 to between 16 million and 20 million in 2018.

In a recent report, researchers suggested several policies that could increase the number of donor households, including an enhanced deduction that provides additional incentives for low- and middle-income taxpayers.

Employers would enjoy several benefits from encouraging their workers to set up flexible giving accounts. Their corporate social responsibility profile would improve as they were seen to be doing social good. Recent research found that eight in 10 employees prefer to work for socially responsible companies.

In addition, the amount of payroll taxes employers pay would be reduced because the FGAs would lower employees’ taxable income.

Another bill, the Charitable Giving Tax Deduction Act, would allow taxpayers to write off charity donations whether or not they itemize. That bill was introduced and sent to the House Ways and Means Committee in May 2018.

— Related on ThinkAdvisor:

ETFs Are More Tax-Efficient Than Mutual Funds. Here's Why.

Not surprising to any advisor, a key advantage of using ETFs versus mutual funds is the former’s tax efficiency. However, a new Morningstar study explores the sources of ETFs’ tax efficiency verses index mutual funds, and found that  ETFs tend to be more tax-efficient for several reasons, including they distribute fewer (or none) and smaller capital gains, have low turnover and allow deferment of capital gains.

In “Measuring ETFs’ Tax Efficiency Versus Mutual Funds,” Morningstar’s Ben Johnson, director of global ETF research, and Alex Bryan, director of passive strategies, North America, found the two sources key to ETFs’ tax efficiency are their strategy and structure.

As of March 2019, 84% of all ETF assets were invested in funds that tracked market-cap-weighted indexes. These indexes have lower turnover than actively managed as well as non-market-cap-weighted funds, the authors state: “Low turnover tends to reduce realized capital gains and the resulting distributions that managers are required to make.” But this also applies to cap-weighted passive mutual funds.

The study found that over the past three years, the median turnover of a group of market-cap-weighted index ETFs was 17% versus 19% for cap-weighted passive mutual funds. The turnover typically is linked to index changes, thus “less buying results in fewer taxable events,” the authors state.

Although these strategies contribute to the tax efficiency, they are not the primary driver, as many mutual funds offer the same exposure.

Other findings of the Morningstar study included:

• ETFs’ structure is the primary driver of their tax efficiency. The ability to regularly purge low-cost-basis securities in-kind is a key advantage over traditional open-end mutual funds and has allowed even high-turnover strategies to avoid distributing gains.
• ETFs usually have a more favorable tax profile than open-end index mutual funds that track the same benchmarks. This is because outflows tend to hurt open-end mutual funds’ tax efficiency, while ETFs tend to be resilient.
• Though ETFs are more tax-efficient than mutual funds, they are not immune to taxation. Their primary benefit from a tax perspective is that investors are allowed to defer the realization of capital gains taxes.

Structure Is The Key

Structure is the primary source of ETFs’ tax efficiency; the study found, “the differences between how ETF shares and mutual fund shares are created and destroyed have important implications for investors in each wrapper.”

With mutual funds, the buying and selling of shares causes a friction, such as brokerage commissions, bid-ask spreads and market impact. Further, mutual fund managers will hold cash to meet regular redemptions, which can hurt performance in a bull market.

Also, capital gains distributions are “a meaningful part of the cost equation” for mutual funds, because as they have to liquidate securities they are hit with taxable capital gains that are passed on to investors.

The “creation-and-redemption mechanism for ETFs is a completely different animal,” the authors state, noting that most investors deal exclusively in the secondary market. “When supply and demand for ETF shares gets out of whack, actors from the primary market mobilize,” the study states.

From a cost perspective, market makers in the secondary market bear the brunt. Further, as the study notes, “long-term investors do not share in these costs.” There also is less “cash-drag” and “in-kind redemptions allow ETF portfolio managers to purge low-cost-basis positions from their portfolios without unlocking capital gains. This makes ETFs, in general, a far more tax-efficient wrapper than mutual funds.”

— Related on ThinkAdvisor:

Is a US Recession Coming? Yield Curve Sounds Loudest Warning Since 2007

(Image: Shutterstock)

The latest eruption in the U.S.-China trade dispute pushed a widely watched Treasury-market recession indicator to the highest alert since 2007.

Rates on 10-year notes sank to 1.74% on Monday, close to completely erasing the surge that followed President Donald Trump’s 2016 election. In early trading, they fetched as much as 32 basis points less than three-month bills, the most extreme yield-curve inversion since just before the 2008 crisis.

The move follows reports that China is responding to the U.S. president’s threat of more tariffs by allowing the yuan to fall and halting imports of U.S. agricultural products. Many major investors expect this slide in 10-year yields to continue given the risk this creates for markets.

Count BlackRock Inc., the world’s largest asset manager, among them. The firm’s global chief investment officer of fixed income, Rick Rieder, foresees 1.5% for the 10-year.

“We could be in a significantly lower-rate environment for a while” given that central banks are poised to ease, he told Bloomberg Television on Monday.

Columbia Threadneedle’s Ed Al-Hussainy also sees the potential for a further leg down in the 10-year benchmark, but says Federal Reserve rate cuts could help the yield curve snap back from its inversion.

“Potentially now the curve starts to steepen because the Fed is being pressured by a combination of data and obviously downside risks in trade to be more forceful,” the senior strategist said in a phone interview.

Heavy buying in fed funds futures contracts in the days since the Fed last week delivered its quarter-point reduction has driven the market to price in another reduction in September, and then some.

Al-Hussainy expects investors to turn to even more aggressive positioning for rate cuts. He says the signal from the curve suggests money markets should be pricing in a higher probability of the Fed’s policy rate going to zero in the coming year.

“There’s a huge disconnect now,” he said. “You don’t need to do a lot of mental gymnastics to get to the Fed having to cut 200 basis points to put off a recession.”

Copyright 2019 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

IRS' National Taxpayer Advocate Retires

(Photo: Allison Bell/ALM)

The National Taxpayer Advocate at the IRS has retired after 18 years on the job and no permanent replacement has been named. 

In an interview with The Wall Street Journal on Friday, Nina Olson, whose job was to represent the interests of American taxpayers before the agency, estimates she has solved problems for 4 million tax filers, made about 40 tax-related recommendations that were enacted by Congress and convinced the IRS to make hundreds of administrative changes. Olson was also the force behind the Taxpayer Bill of Rights, which the IRS adopted in 2014.

“My role is not to be a shill for the IRS,” Olson told the Journal.

Olson managed the Taxpayer Advocate Service consisting of more than 1,600 employees helping taxpayers address their problems with the IRS and oversaw annual reports to Congress abut taxpayers’ most serious problems and about her offices goals and planned activities.

In the Wall Street Journal interview, she lamented some of the shortcomings of the IRS, including its embrace of digitization at the expense of conversations with taxpayers.

Only 33% of taxpayers were able to get through to the IRS by phone to address compliance issues like liens and levies, and the average wait time for those who did get through was 41 minutes, according to Olson. 

In addition, said Olson, the agency’s technology is like a “Rube Goldberg contraption built on 1960s architecture that’s ripe for disaster.” Data on taxpayers such as collections and audits are stored in “bits and pieces” and may not be accessible to IRS employees who need the information, according to Olson.

The Taxpayer First Act, signed into law by the president on July 1, addresses some of these issues. It requires the IRS to develop a comprehensive strategy for customer service that it will submit to Congress by July 2020, creates an independent appeals process, strengthens the ability of the agency to combat identify tax refund fraud and requires the IRS commissioner to appoint a chief information officer responsible for the development, implementation and maintenance of information technology for IRS that is secure and integrated within its system.

It also allows IRS personnel to advise taxpayers of the availability of advice and assistance from qualified low-income taxpayer clinics that receive funding under the government along with location and contact information. 

In the Wall Street Journal interview, Olson said Congress needs to do more oversight of the agency and increase its funding — last year’s spending was more than $600 million below the 2011 level in nominal dollars. 

She also offered some examples of tax systems in other countries that Congress and the Treasury Department, which incorporates the IRS, may want to consider.  

Other countries base the taxation on the earnings of individuals rather than the family, which is the foundation for the U.S. system and which contributes to its complications. And many countries withhold enough money from individual taxpayers throughout the year so that they  don’t ever have to file returns.

Olson said the IRS has studied that possibility of such a “pay-as-you-earn strategy” and found that if taxes were withheld on about seven types of income, 62% of U.S. taxpayers would not have to file a return. 

Although she’s gone from the IRS, Olson, who’s 65, will continue to be an advocate for  taxpayers, as the founder and executive director of the Center for Taxpayer Rights. The center will be organizing, in partnership with the Taxpayer Advocate Service, the fifth international Conference on Taxpayer Rights: The four previous international conferences were organized by Olson when she was the taxpayer advocate at the IRS.

— Related on ThinkAdvisor:

Senate Democrats Fight IRS Ban on SALT Deduction Cap Workarounds

(Image: Shutterstock)

Senate Democrats are attempting to nullify the recently finalized Treasury and IRS rules prohibiting state workarounds to the new federal $10,000 limit on state and local tax (SALT) deductions.

Senate Minority Leader Chuck Schumer, D-N.Y., led the introduction on July 16 of S.J. Res. 50 under the Congressional Review Act to “restore states’ ability to work around the harmful caps, and allow homeowners to again fully retain their SALT deduction.”

Shortly after the SALT deduction cap was enacted under the sweeping 2017 tax law, New York and New Jersey passed laws allowing taxpayers to recharacterize most state and local taxes as a charitable contribution to a specific fund that would then qualify for a federal tax deduction and state tax credit.

The senators note that while the Treasury Department blocked states’ workarounds for individuals, Treasury in September 2018 issued guidance that allowed businesses to continue to benefit from these same workarounds.

Schumer said Thursday in a media conference that Senate Democrats would attempt to overturn the rule through the Congressional Review Act, which gives Congress 60 legislative days for both chambers to repeal the rule. The IRS issued the final rules in mid-June. They will be effective Aug. 12.

“As if the Trump-Republican tax bill wasn’t already bad enough for middle-class families, these new IRS regulations are another kick in the gut to homeowners in New York State and across the country,” said Schumer in announcing the resolution. “The IRS is seeking to deny hardworking homeowners the benefit of the full SALT deduction while continuing their tax giveaway to the wealthiest few and corporations.”

The senators, Schumer said, are “fighting back with a CRA Resolution of Disapproval, which is guaranteed a majority threshold up-or-down vote, [and] would overturn the IRS’ recent attempt to block states from implementing workaround plans, and would allow homeowners to again fully receive this tax benefit.”

The CRA, added Sen. Bob Menendez, D-N.J., “will reverse the flawed guidance issued by the IRS last month, which crippled state-level efforts to protect middle-class families from even higher property tax burdens.”

Menendez has also introduced the SALT Act, which would “fully reinstate the property tax deduction” and restore the 39.6% individual income tax rate bracket.

Why Prospects Don't Make Decisions

(Photo: Thinkstock)

“Let me think about it. I’ll get back to you.”

How many times have you gotten this answer when trying to close a sale? Often the sale never closes. You presented a good idea that was in the prospect’s best interests. You answered their questions.  It seems like a square peg and a square hole. Many agents and advisors wonder why prospects hesitate.

(Related: 7 Ways to Stay on Your Prospect’s Radar)

I wondered too. When doing research, I surveyed and interviewed advisors, asking the question, “Why don’t prospects (and clients) make decisions?”

I got six basic answers.

1. Fear

Buying investments and insurance is a major commitment. They can’t say “I want my money back” at any time. With insurance, surrender charges play a role. (Although there is the free look feature.) They worry they are making the wrong decision. If they are investing, they worry the stock market is too high. Or too low and heading even lower. This scares them off.

Strategy: Prospects often think it’s all or nothing. Starting with a smaller dollar amount is like walking into the pool at the shallow end instead of dicing in.

2. Delaying

People procrastinate. They assume nothing calamitous has happened to their holdings yet, so they can put off making a decision. “Let’s leave things as they are.”

Strategy: Politely explain “No decision is a decision.” By sitting tight, they are determining sticking with their current holdings is the best way forward. Is that what they believe?

3. Too Many Alternatives

This one’s your fault! They wanted income. You gave them lots of options. You want to sound smart, but you left them confused. Faced with choosing one of many options, they choose none. “So many choices. It’s so confusing.”

Strategy: Remember the joke about mother and dinner? “There are two options. Take it or leave it.” You wouldn’t say that, but they asked for your best idea. Let them know you considered others, this is the one you recommend.

4. Don’t See Value Added

Everyone wants to eliminate the middleman. They see ads to buy insurance online or trade stocks virtually for free. “Why should I pay extra to work with you?”

Strategy: You need to differentiate yourself. Insurance is complicated. Talk about “aftermarket service.”

5. Other Relationship

They have another agent or advisor. They aren’t doing a bad job. They think working with another advisor is like adultery. I already have an advisor. I’ll tell them about your idea and see what they think.”

Strategy: OK, they have one mechanic, accountant and barber. How many doctors do they have? Multiple relationships are OK.

6. Lack of Trust

They think agents and advisors are crooks. TV dramas don’t help. Newspaper stories don’t highlight the many people doing good, only the bad apples.

Strategy: Hopefully this prospect was a referral. You can lean on the reputation of the firm, its longevity, safety rating and financial strength.

These are logical reasons prospects don’t make decisions. Once you understand a prospect’s concerns, you can attempt to address them.

— Read 10 Ways to Tactfully Get Your Point Across, on ThinkAdvisor.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor,” can be found on Amazon.

Trump Is the Biggest Risk to the US Economy: Zandi

(Photo: AP)

The biggest risk to longest running U.S. economic expansion, now in its eleventh year, is none other than the man in the White House, according to Mark Zandi, chief economist at Moody’s Analytics.

“President Trump is the biggest existential threat to the record U.S. economic expansion,” Zandi tells ThinkAdvisor.

His “upside-down economic policies,”  including a trade war with China, which Trump says will expand on Sept. 1, and “massive deficit-financed tax cuts” at a time when unemployment was already very low have unnerved businesses and “thrown the Federal Reserve off course,” according to Zandi.

Fed Chairman Jerome Powell admitted as much in the press conference last Wednesday following the Fed’s first rate cut since the financial crisis.

“Trade is unusual,” said Powell in response to a reporter’s question. “It’s something that we haven’t faced before and that we’re learning by doing … with trade we have to react to the developments, and we don’t know what they’ll be.”

A day later Trump announced plans to slap an additional 10% tariffs on $300 billion of Chinese imports on top of the 25% tariffs already levied on $250 billion worth of Chinese imports. If Trump sticks with his latest plan, essentially all Chinese imports into the U.S. will be subject to a tariff.

The Chinese government, which has already levied tariffs on about $110 billion in imports from the U.S., vowed to respond to the new levies but gave no specifics.

Trump has also renewed threats to impose U.S. tariffs on European auto imports.

Trade tensions “do seem to be having a significant effect on financial market conditions and on the economy,” said Powell at his press conference, noting that trade uncertainty, slowing global growth and muted inflation below the Fed’s 2% target were the reasons behind the Fed rate cut. He called the rate cut a “mid-cycle adjustment” and “not the start of a series of rate cuts.” 

But by Friday the financial markets weren’t buying that outlook, according to Collin Martin, director of fixed income at the Schwab Center for Financial Research. 

“An additional round of tariffs could potentially slow the U.S. growth even more than expected,” leading to additional Fed rate cuts, Collins explains.

By the close of trading on Friday, the S&P 500 was down 3.1% for the week, posting its worst performance since December, and the 10-year U.S. Treasury note fell to 1.864%, its lowest level since the day before the 2016 presidential election.

Fed fund futures were pricing in 97% odds of another 25-basis-point Fed rate cut in September and roughly 50% odds of another same-sized cut in October or December, according to the CME FedWatch Tool.

“The Fed won’t tolerate an economic slowdown while President Trump is determined to “win” the trade war,” wrote Bank of America Securities Economists Michelle Meyer and Alexander Lin, in their latest weekly report. “The risk is that we end up with an ever-escalating trade war matched by an ever-lower fed funds rate. It is a dangerous adverse feedback loop.”

And it may not even help the economy.

“Reducing rates now, which are already so low, won’t do much good,” says Gary Shilling, founder of the investment advisory firm A. Gary Shilling & Co., who believes the U.S. economy is already in recession. “There’s too much credit in the system now … Lowering rates, with a zero bound Fed policy, will not encourage borrowing and spending, but saving.”

The U.S. savings rate reached 8.1% in June, its highest level since December 2012, according to the Federal Reserve Bank of St. Louis.

David Kotok, chairman and chief investment officer of Cumberland Advisors, agrees with Shilling. “When you lower rates you get a capital markets kick one time and we got it, it’s over. Then you have to live with reduced income flows and that’s where we are.” 

“Investors ought to stop focusing on what the Fed does and more on why the Fed is easing policy, which is the softness of the economy,” says Shilling.

And Trump’s latest escalation of the trade war could intensify the slowdown. BofA Securities’ Meyer and Lin warn  that “all tariff options — 25% tariffs on China, autos, and Vietnam — are on the table.” 

U.S. businesses are already feeling the impact of the U.S.-China trade war, refraining from making big investments despite last year’s big corporate tax cut, and slowing hiring, according to Zandi. 

U.S. consumers have also been hurt. A New York Fed report found that the 10% tariffs on $200 billion worth of Chinese exports — which were increased to 25% in May — cost the typical household $419 per year and that will only grow if the tariffs do.

About 40% of all the clothes sold in the United States are made in China, as are about 70% and 90% of the shoes and toys.

“What I fear now is a move by Trump to put currency exchange into this fight, and the Chinese worry about that too,” says Kotok. If the Chinese permit the yuan to weaken further above seven yuan to one U.S. dollar that would suggest they are ready for a “full-blown trade war and there will be no negotiation,” says Kotok. “At 7.15 the U.S. will call China a currency manipulator, which would invoke different U.S. laws.”

In trading Monday morning the yuan breached the 7-per-dollar level.

In the meantime the Fed  is “working hard to offset the fallout from the president’s capricious trade decisions” and Trump’s constant criticism of the Fed and Twitter attacks on Powell for not lowering rates more aggressively, Zandi wrote in a recent opinion piece on CNN.com. He tells ThinkAdvisor that “monetary policy is working,” but whether it can “save the day depends on the president … I don’t see this ending gracefully.”

Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, has “full faith” that the Fed is not being influenced by the White House, but she notes that the administration’s negative comments toward the central bank and its chairman “feed into the markets, which impacts market sentiment on where the expansion is going. Does the market lose faith in the Fed? It’s a concern.”

— Related on ThinkAdvisor:

5 Takeaways From the Fed’s Rate Cut

Fed Chairman Jerome Powell. (Photo: AP)

The Federal Reserve cut rates by a quarter-percent on July 31, the first rate cut since December 2008. Financial markets reacted with collective disappointment — stocks fell, bond yields fell and the dollar strengthened. The 3-month/10-year yield curve remained inverted and the 2-year/10-year yield curve flattened significantly.

Fed Chair Jerome Powell’s somewhat “wobbly” press conference created more confusion for market participants. Equities fell sharply after Powell’s initial comments, then partially recovered after Powell softened his initially hawkish tone. President Donald Trump was quick to criticize the Fed’s decision, a continuation of his apparent strategy to make Powell the scapegoat for slowing economic growth. Five takeaways from the Fed’s decision may provide insight into the future path for monetary policy:

1. Powell may be willing to defy Trump, but he is less likely to defy markets. Powell characterized the Fed’s move as a mid-cycle adjustment to policy rather than the start of a long series of rate cuts. Powell subsequently clarified his initial comments by pointing out that he wasn’t implying that the Fed would be “one and done” after the July cut. According to Powell, further cuts will be dependent on incoming data and evolving risks to the outlook. Slowing economic growth and rising trade tensions makes it likely that more than one “insurance” rate cut will be necessary. Powell might ignore Trump’s rhetoric threatening the Fed’s independence, but he is not likely to ignore signals from financial markets. The next cut may be as soon as September, given the market’s “verdict” on the Fed’s decision, Trump’s announcement of a new 10% tariff on $300 billion of Chinese goods effective Sept. 1, and worsening yield curve dynamics.

2. The Fed plans to end its balance sheet reduction process two months early, which may be more important than July’s rate cut. The effective end to quantitative tightening is a signal that the Fed’s balance sheet is back in play as a potential mechanism to support a faltering economy. By rolling over maturing Treasury holdings and reinvesting proceeds from maturing mortgage securities into Treasury debt, the Fed could ease financial conditions by more than the one-quarter percent cut in the federal funds rate. Based on the projected cash flows from the Fed’s mortgage portfolio, the Fed will be a significant net new buyer of Treasuries to help fund the federal deficit in the coming year. Fed purchases of Treasuries could play an important role in normalizing the yield curve.

3. Fed policy is increasingly influenced by conditions outside the U.S. Powell discussed economic conditions outside the U.S. in his press conference, noting the slowdown in economic growth in the EU and China. U.S. manufacturing activity fell close to three-year lows in July, evidence of the impact of trade tensions and slowing growth outside the U.S. S&P 500 earnings and revenue growth were relatively weak in the second quarter, with multinational companies among the hardest hit by trade tensions and the strong dollar.

4. Central banks can’t solve the world’s economic problems by themselves. The Fed and European Central Bank are setting the tone in a world in which central banks implement expansionary monetary policies. However, the equity selloff after Trump’s latest tariff announcement is a reminder that monetary policy isn’t a universal cure for what ails the global economy.

Trade policy is the primary cause of slow business investment, not the cost of capital. The latest round of tariffs will hit U.S. consumers harder than any prior trade actions, underlining the diminishing effectiveness of tariffs as a policy instrument. Worst-case outcomes on trade would have a direct bottom-line impact for many companies and impose significant costs on companies forced to reconfigure their supply chains.

5. Powell has a delicate balancing act within the Fed. Kansas City Fed President Esther George and Boston Fed President Eric Rosengren voted to keep rates unchanged, with low unemployment and the rising stock market among the factors motivating their dissent. The Fed’s leaders also worry about the risk that if monetary policy is too expansionary, destabilizing imbalances will build within the financial system. The rapid buildup in corporate debt is certainly on the Fed’s radar screen, though the vast majority of corporate borrowing has moved from bank balance sheets to the balance sheets of unleveraged investors. Consequently, the level of corporate debt would likely amplify an economic downturn but is less likely to create a crisis in the financial system.

Closing thoughts. The Fed has been widely criticized for recent policy decisions and a frequently unsteady communication approach. Critics are on shakier ground, however, in challenging the seriousness of the Fed’s commitment to the dual mandate of maximum employment and price stability. The yield curve is an important barometer of economic health and the longer that inversion persists, the more aggressive that Fed actions will be to normalize the curve. With inflation continuing to fall short of Fed targets, the U.S. economy softening, global manufacturing in recession, and trade tensions heating up, a rate cut in September is likely.

Daniel S. Kern is chief investment officer of TFC Financial Management, an independent, fee-only financial advisory firm based in Boston.

Prior to joining TFC, Daniel was president and CIO of Advisor Partners. Previously, Daniel was managing director and portfolio manager for Charles Schwab Investment Management, managing asset allocation funds and serving as CFO of the Laudus Funds.

Daniel is a graduate of Brandeis University and earned his MBA in Finance from the University of California, Berkeley. He is a CFA charterholder and a former president of the CFA Society of San Francisco. He also sits on the Board of Trustees for the Green Century Funds.

US Stocks Plummet in Worst Trading Day of the Year

Traders at the NYSE. (Phoyo: AP)

Financial markets buckled after China escalated the trade war with the U.S., sending American stocks to the biggest drop this year and sparking a rally in global bonds. Gold surged with the yen.

The S&P 500 Index plunged 3% and losses in the Dow Jones industrial average surpassed 700 points. Apple and IBM slid at least 4% as all but 11 companies in the U.S. stock benchmark traded lower. The Cboe Volatility Index surged 36%. The 10-year Treasury yield was close to completely erasing the jump that followed President Donald Trump’s election. China’s yuan sank beyond 7 per dollar, a move that suggests the level is no longer a line in the sand for policy makers in Beijing. Oil tumbled.

Investors are starting to grasp the potential for a protracted conflict between the world’s two largest economies, with a Treasury-market recession indicator hitting the highest alert since 2007. As demand for haven assets spiked, gold made a run toward $1,500 an ounce and the Japanese yen extended its rally. Major cryptocurrencies, increasingly seen as a refuge during distressed times, climbed as Bitcoin approached $12,000. Fear gauges for the corporate bond market rose the most since March as traders rushed to hedge their positions.

“The trade war is now intensifying and it’s possible that a currency war will start as well,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “Neither is good for the global economy and both will hurt equity markets.”

People’s Bank of China Governor Yi Gang said the nation won’t use exchange rates as a tool in the escalating trade dispute with the U.S. Yet for President Trump, the latest decline in the yuan is “called ‘currency manipulation.”’ The American leader also indicated he’d like the Federal Reserve to act to counter the Chinese action. Swaps show bets the central bank will ease by 100 basis points by December 2020, a quarter point more than what was priced in after last week’s cut.

The trade war has been a consistent catalyst for market volatility and hopes of a resolution are now being sent even further out in the horizon, according to Mike Loewengart, vice president of investment strategy at E*Trade Financial Corp. While that could continue to challenge portfolios, investors should not make the mistake of trying to time the markets amid the sell-off, he said.

“This too shall eventually pass, and bouts of volatility in recent months have shown this can happen quickly,” said Loewengart.

These are some key events to watch out for this week:

• Earnings from financial giants include: UniCredit, AIG, ABN Amro Bank, Standard Bank, Japan Post Bank.
• Five Asian central banks have rate decisions including India, Australia and New Zealand.
• A string of Fed policy makers speak this week, including St. Louis chief James Bullard on Tuesday and Chicago’s Charles Evans a day later. All are Federal Open Market Committee voters.

Here are the main moves in markets (all sizes and scopes are on a closing basis):

Stocks

• The S&P 500 declined 3.1% to 2,842.37 as of 3:28 p.m. New York time.
• The Stoxx Europe 600 Index decreased 2.3%.
• The MSCI Asia Pacific Index dipped 2.4%.
• The MSCI Emerging Market Index decreased 3.2%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro advanced 0.8% to $1.12.
• The Japanese yen increased 0.4% to 106.13 per dollar.

Bonds

• The yield on 10-year Treasuries declined 10 basis points to 1.74%.
• Germany’s 10-year yield decreased two basis points to -0.52%.
• Britain’s 10-year yield dipped four basis points to 0.512%.

Commodities

• The Bloomberg Commodity Index decreased 0.6%.
• West Texas Intermediate crude declined to $54.69 a barrel.
• Gold increased to $1,476.50 an ounce.

– With assistance from Tracy Alloway, Andreea Papuc, Samuel Potter, Laura Curtis, Todd White, Olivia Rinaldi, Nancy Moran, Lu Wang and Sophie Caronello.

Copyright 2019 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

What Are Secured Credit Cards, and How Do They Work?

Here's a catch-22: A credit card is the quickest way to build good credit, but you often can't get a credit card without good credit.

Secured credit cards can help people with bad credit or short credit histories escape this paradox. Here's what you need to know to understand secured cards and how they differ from regular unsecured cards.

What is a secured credit card?

A secured credit card is backed by a cash deposit you make when you open the account. The deposit is usually equal to your credit limit, so if you deposit $200, you'll have a $200 limit.

The deposit reduces the risk to the credit card issuer: If you don't pay your bill, the issuer can take the money from your deposit. That's why these cards are available to people with bad credit or no credit.

What happens to that $200 deposit if you always pay your bill on time? You'll eventually get it back. Use the card responsibly, and you can improve your credit enough to qualify for an unsecured card — one that doesn't require a deposit.

“

The deposit is usually equal to your credit limit, so if you deposit $200, you’ll have a $200 limit.”

Some of the best secured cards may allow you to upgrade your account directly to an unsecured card. Others don't have an upgrade process, so you'll have to apply elsewhere, then close the secured card. When you upgrade or close a non-delinquent secured card, the issuer refunds your deposit.

The minimum and maximum amount you can deposit varies by card, but you should be prepared to come up with at least $200 for a secured card deposit.

Secured vs. unsecured cards

Whether you need a secured card comes down to how good your credit is.

For unsecured cards, which don't require a deposit and therefore pose more risk to the issuer, credit-card companies typically require at least average credit, and good or excellent credit for the best ones.

“

Some unsecured cards advertised as easy to get come with extremely high fees.”

Some unsecured credit cards advertise themselves as easy to qualify for even if you have bad credit. But these cards usually charge extremely high fees. NerdWallet recommends applying for a secured card rather than a high-fee unsecured card.

How secured credit cards work

Once the initial deposit is paid, secured cards work just like unsecured ones:

• You can use them wherever credit cards are accepted, including online

• You can build or rebuild your credit by using the card responsibly and paying your balance on time

• You incur interest if you carry a balance

Most major credit card issuers offer both secured and unsecured cards. Annual fees are common, but you shouldn't pay more than $50. You can find secured cards with a $0 annual fee among our favorites.

If you can't qualify for an unsecured card, a secured card can be a great tool as you look to improve your credit. But it's as important to be responsible with a secured card as it is with any other loan or bill that shows up on your credit report.

Secured credit cards vs. prepaid debit

Prepaid debit cards seem similar to secured credit cards. You have to pay money before you can use the card, and they typically have a Visa, MasterCard or American Express logo.

But with prepaid debit cards, you're using your own money to make purchases — not money borrowed from the issuer. You load money onto the card, then the issuer uses that money to pay for your purchases.

“

If building credit is your goal, a secured credit card is a better bet than a prepaid card.”

Since these cards don't extend any credit, account activity isn't reported to the credit bureaus. Therefore, you're not building a credit history by using a prepaid card. Prepaid debit cards can also have fees that secured credit cards do not.

If building credit is your goal, a secured credit card is really your best bet.

How to use a secured card effectively

Although they require a deposit, secured credit cards are a powerful tool for rebuilding credit. Here's how to use one most effectively:

1. Use the card sparingly, making only one or two small purchases every month

2. Pay your balance in full every month before the due date. When you pay in full, you won't be charged interest. Interest rates on secured cards are generally higher than those on unsecured cards.

3. Keep an eye on your credit score over time; when it has meaningfully improved, ask your issuer about upgrading to an unsecured card

Many people find that by using a secured card carefully, it takes only about a year to improve their credit score enough that they're able to qualify for an unsecured card. Some issuers will let you transfer your secured line of credit to an unsecured one, which is better for your credit score because it doesn't require you to open a new account.

But even if you do have to apply for a new unsecured credit card, you may be able to enjoy some of the benefits of having good credit — lower interest, rewards and more competitive fees.

When that day comes, your time rebuilding your credit with a secured credit card will have been worth it.

3 Labor Day Beach Getaways You Can Book With Points

Summer's halfway gone, but if you haven't yet had a chance to enjoy some time in the sand and surf, it's not too late.

Here are three places where you can use points and miles to close out your summer with a Labor Day weekend beach getaway.

A private beach on Florida’s Gulf Coast with Hyatt points

Ft. Myers, Florida, is known for its beautiful beaches, and Naples for its pier and shopping, but the lesser known Bonita Springs is about a half-hour from both and is home to the Hyatt Regency Coconut Point Resort and Spa, where you can stay for 20,000 points a night. The average room rate over Labor Day weekend was $231 when we checked, plus taxes and a $30 daily resort fee.

This resort has a free ferry that takes you out to a private beach. There are also pools with waterslides on site, and a lazy river at a sister property you can access by courtesy shuttle.

The hotel overlooks Estero Bay Preserve, a national park where you can go hiking or kayaking.

If your Hyatt balance is low, you can transfer points from the Chase Ultimate Rewards® program to World of Hyatt to book the Coconut Point resort. Or if you're willing to forgo the resort experience, you can stay at the lower-priced Hyatt Place Coconut Point a couple of miles inland for 12,000 points or around $114 a night plus tax.

While you're in the area, if you're looking for a beach on a barrier island, check out Sanibel (near Ft. Myers) or Marco Island (just south of Naples).

Thrills and chills using Radisson points near Virginia Beach

Moving up the East Coast a bit, the Virginia Beach area is a popular beach getaway destination. Combine sand and surf with thrills and chills by staying at the Country Inn & Suites by Radisson Williamsburg East.

The hotel is near Busch Gardens and Water Country theme parks, though you'll have to drive a half-hour or so to get to the ocean.

Rooms were priced at 28,000 Radisson Rewards points per night, or $127 plus tax, over Labor Day weekend when we checked.

Harbor views in San Diego on Marriott points

West Coasters, we haven't forgotten about you: Labor Day weekend almost guarantees you slam-dunk-gorgeous weather in Southern California.

For 35,000 Marriott points per night (or an average base rate of $223 per night when we checked), enjoy harbor or city views at the Sheraton San Diego Hotel & Marina. The hotel is a short 5-minute drive from downtown San Diego and about 10 minutes in the opposite direction to Mission Beach, where you can rent bikes on the boardwalk or just enjoy the sound of the surf.

As with Hyatt, you can transfer Chase Ultimate Rewards® points directly to Marriott if your balance is low — or you can book the room outright through the Ultimate Rewards® travel portal, which may represent a better value.

The bottom line

No matter where you're staying, if you want to get away for Labor Day weekend and haven’t already booked your hotel, act fast, as inventory is sure to go quickly (especially if you're using points). If you change your mind, most chains will let you cancel as late as 24 to 48 hours in advance of your stay, but always read the cancellation policy before booking just to be sure.

8 Ways a Rewards Credit Card Can Alleviate the Pain of Thanksgiving Travel

Lots of people love Thanksgiving, but nobody loves Thanksgiving travel. The day before Turkey Day is famous for being one of the most miserable travel days of the year, with packed flights, long security lines and steep airfares.

Having a travel rewards credit card can make your Thanksgiving trip a more positive experience. From early boarding to lounge access, here are eight ways a travel rewards credit card's perks can improve your holiday trip back (or away from) home:

Free (or nearly free) plane tickets

Anyone who collects miles or points knows you’re not likely to find saver-level award seats if you redeem miles during peak Thanksgiving travel season, but if you have airline miles stashed away, it can't hurt to look on your rewards program of choice. Booking while the holiday is still months out could help your chances.

Of course, award seats aren’t the only option. You can redeem points from some travel rewards cards toward the cash cost of a flight.

Earlier boarding

A number of airline-branded credit cards, such as the AAdvantage Aviator Red World Elite Mastercard, come with preferred boarding. You can get on the plane earlier than other economy passengers, and with this card, you don't even have to use it to purchase your ticket.

Why does that matter? Competition for overhead bin space can be fierce. Earlier boarding means you can stow your carry-on well before the mad scramble for overhead space begins.

Free checked bag

Do you plan on arriving with a sleigh full of gifts for your friends and family? Many airline credit cards, including the JetBlue Plus Card, come with free checked bags. So you can transport those treasures without paying a fee.

» Learn more: Airline credit cards that offer free checked bags

Airport lounge escape

When a holiday mob has formed at your departure gate, kids are running around screaming and you can’t find a place to sit, there’s no better perk than airport lounge access. These luxury waiting areas offer free snacks, drinks, comfortable seating and, generally, some peace and quiet.

While you almost always have the option to pay full price for lounge access, the price tag can be a deal breaker. If you have the right credit card in your pocket, getting in can be cheaper or even free. For example, the United℠ Explorer Card comes with two free United Club passes every year. (Just beware that starting in a few months, you have to be flying United to use these passes.)

Meanwhile, Chase Sapphire Reserve® cardholders can get free access to the Priority Pass network of more than 1,200 lounges.

Travel concierge

If you have a credit card that comes with a free 24-hour “travel concierge,” like the Citi Prestige® Card, you may have shrugged off this benefit as not very beneficial. But this time of year, having a live human helper on standby can be a godsend. Canceled flights, out-of-stock rental car agencies, hotel check-in disasters and booked restaurants are just some of the headaches Thanksgiving travel can bring.

Your credit card travel concierge exists to help you navigate these catastrophes. Read your card’s benefits before you travel so you know how to reach one if you need to.

Seat upgrades

Points and miles aren’t just for free tickets. They can also be used to upgrade to business or first class. If you’re going to spend a weekend enduring questions about why you haven’t produced any grandchildren or what you were thinking when you got that hairstyle, you deserve a little luxury.

» Learn more: How I use mindfulness to make budget travel more comfortable

Hotel nights

If your hotel credit card offers a free night certificate, now may be the time to use it. Free night certificates like the ones offered by the Marriott Bonvoy Boundless™ Credit Card can be applied at low and mid-tier hotel categories. When you’re facing the prospect of cramming into your old room in a house full of relatives, a no-frills Holiday Inn Express or SpringHill Suites can look downright heavenly in comparison.

The perfect change of subject

If you’re dreading how the conversation around the Thanksgiving dinner table might go, have this idea locked and loaded: Everyone wants to learn how they can get free or deeply discounted travel. A simple line like “Did I mention my plane ticket here was pretty much free?” can quickly reroute a potentially catastrophic dinner table conversation. Plus, tales of your travel rewards conquests will have Mom beaming with pride at her frugal, savvy offspring.

10 Best High-Yield Online Savings Accounts of August 2019

High-yield savings advantages

A high-yield savings account can earn well over 2% APY, which is much higher than the national savings average of 0.09% APY. If your money is in an account that earns a high interest rate, your balance will grow faster without any additional effort on your part. A balance of $10,000 would earn about $10 in an account with a 0.10% APY. That same balance would earn about $230 in an account with a 2.30% APY.

How to choose the best high-interest savings account

Look for accounts that have high interest rates and low service charges. You want to make sure you don’t have to pay a fee to the bank each month. Some institutions don’t charge monthly fees, while others do but will waive them if you meet a balance minimum.

Be willing to look beyond the larger, well-known banks. Many smaller institutions — including online banks — have savings accounts with attractive rates and low deposit requirements.

Accessing your funds

With online banking, you can access your account securely day or night. Online banks offer the highest savings rates on the market while charging fewer fees than traditional banks. Online banks often offer good websites and mobile apps that typically let customers deposit checks and pay bills.

Do the best online savings accounts have fixed rates?

No, rates are variable and can change over time. The accounts featured in this article are among those with the consistently highest rates.

How to open an account

Depending on the type of bank, you can open a high-rate account either online or in person. You’ll need to provide your Social Security number and contact information, along with at least one form of identification, such as a driver’s license or a passport. (For a joint account, everyone wanting access to the account must provide this information and ID.) The bank will often require you to deposit money into the new account right away. You can do that by depositing cash or checks, or through a wire transfer.

What to do if you can’t open a high-interest savings account

Occasionally, a bank may not approve an application to open an account. This is likely because of issues with a customer’s previous banking history.

Unpaid bank fees and bounced checks can result in a negative file on ChexSystems, a consumer reporting agency that financial institutions use to evaluate a prospective customer’s banking history.

There are options for customers who have a ChexSystems file, including opportunities to open alternative accounts. For more information, read our primer on what to do if you have a ChexSystems record.

How often can I take money out of a savings account?

Savings accounts are subject to a federal rule called Regulation D, which limits the number of convenience withdrawals to a maximum of six per month. Affected withdrawals include online withdrawals, overdraft protection transfers and transfers initiated by telephone. If you have more than six of these transactions each statement cycle, your bank may levy an excess withdrawal fee each time you go over the limit.

Withdrawing cash from an ATM or from a branch teller does not count toward this limit.

»Want to learn more about savings withdrawal limits? Read our primer on Regulation D.

Is my money safe in an online savings account?

In short, yes. Most online banks are federally insured by the Federal Deposit Insurance Corp., up to $250,000 per depositor. If the account is with a credit union, the account will likely be insured through the National Credit Union Administration, also for $250,000 per depositor. This means that if a bank or credit union were to fail and go out of business, you would not lose the money you have in the account, up to the insured amount.

» Want to know more about how your money is protected? Read how FDIC and NCUA insurance programs work.

What is the difference between a high-interest savings account and a money market account?

Money market accounts are a type of savings account. They generally come with high APYs, high minimum deposit requirements and some check-writing privileges. NerdWallet’s guide on money market accounts can help you learn more about these products and help you decide if a money market account is a good place to stash your funds.

A high-interest savings account, on the other hand, typically does not come with checks, though it will still offer a strong APY.

High-yield savings account terminology

Here’s a look at some important savings terms to know.

Savings account: A deposit account from a bank or credit union that typically earns interest.

Money market account: A type of savings account that often offers higher interest rates in return for a steep minimum deposit. (Think $5,000 or more.)

Interest: Money a bank pays into an account over time.

Compound interest: Compound interest is the interest you earn on both your original money and on the interest you keep accumulating. In an account that pays compound interest, the return is added to the original principal at the end of every compounding period, typically daily or monthly. Each time interest is calculated and added to the account, the larger balance earns more interest.

Annual percentage yield: The APY, or annual percentage yield, is the amount of compound interest an account earns in a year. The calculation is based on the account's interest rate and the number of times interest is paid during the year.

» Read more about 10 essential banking terms you need to know

More top choices for the best savings interest rates

Here are seven more competitive choices for high-yield savings. These banks may have a higher minimum balance to earn interest, or a slightly lower APY. But when you're shopping for the account that fits you best, they're worth checking out.

» Interested in getting money from banks? See NerdWallet's best bank account promotions and bonuses

NerdWallet Announces Acquisition of aboutLife

SAN FRANCISCO, June 28, 2016 /PRNewswire/ -- NerdWallet™ today announced it has acquired retirement planning startup aboutLife. This is NerdWallet's first acquisition.

"The aboutLife team has made great strides in understanding the retirement challenges Americans face," said Tim Chen, co-founder and CEO of NerdWallet. "That expertise, alongside their underlying technology and skills, are huge assets for NerdWallet as we establish ourselves as consumers' go-to resource for retirement planning."

NerdWallet.

All aboutLife employees will join NerdWallet.

"I started aboutLife because I saw a need for simple, straightforward retirement guidance that would benefit consumers," said Rajat Kongovi, founder of aboutLife. "NerdWallet shares our consumer-first values; I am thrilled we've joined the team and can continue to develop the tools people need to take control of their financial futures."

About NerdWallet
NerdWallet offers consumers clarity for all of life's financial decisions. Whether it's credit cards, insurance, loans or investing, people lack the clear, unbiased information they need to make the best choice. With NerdWallet, consumers have free access to user-friendly tools and advice that save time and money, and give them the freedom to do more. NerdWallet is based in San Francisco and employs more than 350 Nerds. For more information, visit nerdwallet.com.

"NerdWallet" is a trademark of NerdWallet Inc. All rights reserved. Other names and trademarks used herein may be trademarks of their respective owners.

Press Contacts
Nicole Colwell
Head of Communications at NerdWallet
Nicole@nerdwallet.com
(925) 699-3380

Logo - http://photos.prnewswire.com/prnh/20140924/148263

SOURCE NerdWallet

Related Links

http://www.nerdwallet.com

Tapan Bhat Joins NerdWallet as First Chief Product Officer

"If I've learned one thing in my 20-plus years leading product, marketing and engineering teams, it's that listening to consumers, understanding what drives them and addressing their needs is absolutely critical to success," said Bhat. "NerdWallet knows this. The company knows that consumers must be at the center of it all — product, engineering, content, design, everything. I can't wait to work with this talented group and build products that help answer life's most complex financial questions."

Working with NerdWallet's product, engineering and design teams, Bhat will accelerate product development and deliver a unified experience to millions of Americans who need help managing or optimizing their finances. He will set the strategic product direction at the growing company, applying his adept understanding of consumer motivations to build products to bring financial clarity to the 7 million people who visit NerdWallet every month.

"Tapan's got it all," said Tim Chen, co-founder and CEO of NerdWallet. "He's a seasoned leader with deep product expertise and incredible consumer intuition, who has spent years building award-winning products and scaling talented teams. Most importantly, he shares our No. 1 value of always putting the consumer first. He has that 'NerdWallet spark,' and I can't wait to watch him raise the bar here." 

Bhat began his career at Quicken, where he built one of the earliest personal finance sites focused on helping people navigate a variety of financial decisions, from banking and loans to mortgages and investing. He also served as Worldwide Owner of Yahoo's Integrated Consumer Experiences business group, growing the organization to 500 employees, and he had executive roles at Adobe and Intuit. In each position he focused on empowering consumers through product innovation, and emphasized the need for a close interrelationship between applications and content, a principle that continues to guide his work today.

NerdWallet is growing, profitable and on track to hit 450 employees by year's end. Bhat's arrival comes on the heels of another major technology and talent investment NerdWallet made earlier this year with its acquisition of retirement planning startup aboutLife. Both moves highlight the company's strong growth trajectory, and reinforce NerdWallet's commitment to building a world-class product and engineering team who will empower consumers with the financial products and expert advice they need to achieve financial freedom. 

About NerdWallet 
NerdWallet offers consumers clarity for all of life's financial decisions. Whether it's credit cards, insurance, loans or investing, people lack the clear, unbiased information they need to make the best choice. With NerdWallet, consumers have free access to user-friendly tools and advice that save time and money, and give them the freedom to do more. NerdWallet is based in San Francisco and employs more than 400 Nerds. For more information, visit nerdwallet.com.

"NerdWallet" is a trademark of NerdWallet Inc. All rights reserved. Other names and trademarks used herein may be trademarks of their respective owners.

Contact
Keely Spillane
kspillane@nerdwallet.com
925-200-2215

Logo - http://photos.prnewswire.com/prnh/20140924/148263

SOURCE NerdWallet

Related Links

http://www.nerdwallet.com

Average American Household With Credit Card Debt Owes $16,061, According to Annual NerdWallet Study

"Cost of living continues to outpace wage increases, contributing to increasing debt levels," says Sean McQuay, NerdWallet's credit and banking expert. "While credit cards are an attractive option to cover today's purchases, they come at a high cost — 18.76 percent per year on average. Paying down credit card debt will mean changing spending habits or increasing earning power, both of which may be difficult adjustments, but they are the only way to build financial freedom."

U.S. Debt: By the Numbers

Total owed by average U.S. household carrying this type of debt

Total debt owed by U.S. consumers

Credit cards

$16,061

$747 billion

Mortgages

$172,806

$8.35 trillion

Auto loans

$28,535

$1.14 trillion

Student loans

$49,042

$1.28 trillion

Any type of debt

$132,529

$12.35 trillion

The 'Why' Behind Debt Levels in the U.S.

NerdWallet's Annual American Household Credit Card Debt Study analyzes data from several sources, including the Federal Reserve Bank of New York and the U.S. Census Bureau. Key findings include:

• Cost of living continues to outpace income growth: Cost of living increases have outpaced income growth over the past 13 years. Median household income has grown 28% since 2003, but expenses have grown significantly more. Medical costs increased by 57% and food and beverage prices by 36% in that same span.
• Credit card interest is costly and expected to rise: The average household with credit card debt pays a total of

  $1,292

  in interest on that debt each year. This could increase to

  $1,309

  if the Federal Reserve hikes rates a quarter of a percentage point.
• Total household debt continues to increase: Total debt is expected to surpass the amounts owed at the beginning of the Great Recession by the end of 2016. Americans will soon owe more than they did in

  December 2007

  .

Debt Resources

About NerdWallet
NerdWallet offers consumers clarity for all of life's financial decisions. Whether it's credit cards, insurance, loans or investing, people lack the clear, unbiased information they need to make the best choice. With NerdWallet, consumers have free access to user-friendly tools and advice that save time and money, and give them the freedom to do more. NerdWallet is based in San Francisco and employs more than 400 Nerds. NerdWallet was ranked 76 on the 2016 Technology Fast 500 Award List. For more information, visit nerdwallet.com.

Contact
Thomas McLean
tmclean@nerdwallet.com
559-801-8733

SOURCE NerdWallet

Related Links

http://www.nerdwallet.com

NerdWallet Announces 2018 Best-of Award Winners

SAN FRANCISCO, Jan. 9, 2018 /PRNewswire/ -- NerdWallet, the go-to resource for all of life's personal finance decisions, today announced the winners of its 2018 Best-of Awards Program for multiple categories, including credit cards, mortgages, banking, personal loans and investing. In its third year, NerdWallet's Best-of Awards Program recognizes industry-leading options for consumers across a variety of financial products. As part of providing consumers with clear and objective recommendations for all their financial decisions, the Nerds evaluated dozens of financial products across multiple product categories to identify the best options of the year.

"I am thrilled to congratulate the winners of NerdWallet's 2018 Best-of Awards Program on their industry-leading personal finance products," said Tim Chen, co-founder and chief executive officer at NerdWallet. "Consumers have more choice than ever when it comes to personal finance products, and our Best-of Awards highlight those that truly rise to the top. We're very fortunate to work with partners who deliver products that help consumers with all of their financial needs."

Below is a list of select winners from NerdWallet's 2018 Best-of Awards. A complete list of winners can be found here.

NerdWallet's Top 10 Credit Card Award Winners for 2018 are:

• Best Flat-Rate Travel Rewards Card: Capital One® Venture® Rewards Credit Card
• Best Bonus Category Travel Rewards Card: Chase Sapphire Preferred® Card
• Best Flat-Rate Cash Back Card: Citi®Double Cash Card
• Best Bonus Category Cash Back Card: Discover it® - Cashback Match™
• Best Family Card: American Express Blue Cash Preferred®
• Best 0% Intro APR Card: Citi Simplicity® Card
• Best Card for Fair/Average Credit: Capital One® QuicksilverOne® Cash Rewards Credit Card
• Best Card for Building Credit: Discover it® Secured Credit Card
• Best College Student Card: Discover it® for Students
• Best Small Business Card: American Express SimplyCash® Plus Business Credit Card

NerdWallet's Top Savings Account Award Winners for 2018 are:

• Best Savings Accounts: Ally® Bank
• Best Savings Accounts: Alliant Credit Union
• Best Savings Accounts: Bank of Internet

  USA

• Best Savings Accounts: Barclays
• Best Savings Accounts:

  Chase Bank

• Best Savings Accounts: CIT Bank®
• Best Savings Accounts: Discover
• Best Savings Accounts: Marcus by Goldman Sachs®
• Best Savings Accounts: Synchrony Bank

NerdWallet's Top Investing Product Award Winners for 2018 are:

• Best Robo-Advisors: Betterment
• Best Robo-Advisors: Wealthfront
• Best Brokers for Stock Trading: Fidelity Investments
• Best Brokers for Stock Trading:

  Charles Schwab

NerdWallet's Best Overall Online Mortgage Award Winners for 2018 are:

• Best Overall Online Mortgage Lenders: Rocket Mortgage®
• Best Overall Online Mortgage Lenders: Guaranteed Rate®

NerdWallet's Best Personal Loans for Good Credit and Debt Consolidation Award Winners for 2018 are:

• Best Personal Loans for Good Credit: SoFi®
• Best Personal Loans for Good Credit: Marcus by Goldman Sachs®
• Best Personal Loans for Good Credit: Discover
• Best Personal Loans for Good Credit: FreedomPlus®
• Best Personal Loans for Good Credit: LendingClub®
• Best Personal Loans for Good Credit: LightStream

While the financial products listed above represent the best offerings in their respective categories, NerdWallet knows that each consumer has a unique financial situation. Consumers can easily find a comprehensive list of all the award winners across these categories and more here to help determine which product best suits their financial needs.

About NerdWallet
NerdWallet offers consumers clarity for all of life's financial decisions. Whether it's regarding credit cards, insurance, loans or investing, people lack the clear, unbiased information they need to make the best choice. With NerdWallet, consumers have free access to user-friendly tools and advice that save time and money, and give them the freedom to do more. For more information, visit nerdwallet.com.

Contact
Thomas McLean
tmclean@nerdwallet.com
559-801-8733

SOURCE NerdWallet

Related Links

http://www.nerdwallet.com

I'm trying to reset my password, but I don't remember the answer to my security question.

Note that NerdWallet members have the option to choose Google authentication as their mode for signing in. If you think you may have chosen this option, be sure to try these steps before you attempt to re-register:

• Click on this link: https://www.nerdwallet.com/home/signin
• Click on the button that says "sign in with Google"
• If you're already logged in to your Google account, you should be taken right to your NerdWallet account homepage. If not, simply enter your Gmail credentials and you'll be taken to your NerdWallet account homepage.

If you have not set up Google authentication:

The final step to reset your NerdWallet account password is answering the security question you set when you created your account. If you’re unable to remember the answer to your security question, it’s not possible for NerdWallet to provide you with the answer or ask you a different question.

There is a workaround that can help you regain access to your account: NerdWallet can close your account, which will allow you to re-register. This way, you'll be able to set up a new password and security question.

How to close your account:

• You can close your account by logging into your account from a mobile or desktop browser, visiting the "Settings" section, and clicking the red "Close my account," link at the bottom of the "Edit Profile" tab. It's not possible to close your account directly from the NerdWallet app at this time.

  • You can also email us at

    support@nerdwallet.com

    letting us know you’d like to close your account because you’ve forgotten the answer to your security question. Please be sure to send this note from the email address you used to create your NerdWallet account.

• We’ll email you back to let you know as soon as we’ve closed your account.

• Then you can re-register

  here

  .

17 Tips for First-Time Home Buyers

Buying a home can be nerve-racking, especially if you're a first-time home buyer.

These tips will help you navigate the process, save money and avoid common mistakes. We organized them into four categories:

• Mortgage down payment tips.

• Mortgage application tips.

• House shopping tips.

• First-time home buyer mistakes to avoid.

Mortgage down payment tips

1. Start saving for a down payment early

It’s common to put 20% down, but many lenders now permit much less, and first-time home buyer programs allow as little as 3% down. But putting down less than 20% may mean higher costs and paying for mortgage insurance, and even a small down payment can still be hefty. For example, a 5% down payment on a $200,000 home is $10,000.

Play around with this down payment calculator to help you land on a goal amount. Some tips for saving for a down payment include setting aside tax refunds and work bonuses, setting up an automatic savings plan and using an app to track your progress.

2. Explore your down payment and mortgage options

There are lots of mortgage options out there, each with its own combination of pros and cons. If you’re struggling to come up with a down payment, check out these loans:

• Conventional mortgages They conform to standards set by the government-sponsored entities Fannie Mae and Freddie Mac, and require as little as 3% down.

• FHA loans Loans insured by the Federal Housing Administration permit down payments as low as 3.5%.

• VA loans Loans guaranteed by the Department of Veterans Affairs sometimes require no down payment at all.

Making a higher down payment will mean having a lower monthly mortgage payment.

If you want the smallest mortgage payment possible, opt for a 30-year fixed mortgage. But if you can afford larger monthly payments, you can get a lower interest rate with a 20-year or 15-year fixed loan. Use our calculator to determine whether a 15-year or 30-year fixed mortgage is a better fit for you. Or you may prefer an adjustable-rate mortgage, which is riskier but guarantees a low interest rate for the first few years of your mortgage.

3. Research state and local assistance programs

In addition to federal programs, many states offer assistance programs for first-time home buyers with perks such as down payment assistance, closing cost assistance, tax credits and discounted interest rates. Your county or municipality may also have first-time home buyer programs.

Mortgage application tips

4. Determine how much home you can afford

Before you start looking for your dream home, you need to know what’s actually within your price range. Use this home affordability calculator to determine how much you can safely afford to spend.

5. Check your credit and pause any new activity

When applying for a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help determine your interest rate and possibly the loan terms.

So check your credit before you begin the homebuying process. Dispute any errors that could be dragging down your credit score and look for opportunities to improve your credit, such as making a dent in any outstanding debts.

To keep your score from dipping after you apply for a mortgage, avoid opening any new credit accounts, like a credit card or auto loan, until your home loan closes.

6. Compare mortgage rates

Many home buyers get a rate quote from only one lender, but this often leaves money on the table. Comparing mortgage rates from at least three lenders can save you more than $3,500 over the first five years of your loan, according to the Consumer Financial Protection Bureau. Get at least three quotes and compare both rates and fees.

As you’re comparing quotes, ask whether any of the lenders would allow you to buy discount points, which means you’d prepay interest up front to secure a lower interest rate on your loan. How long you plan to stay in the home and whether you have money on-hand to purchase the points are two key factors in determining whether buying points makes sense. You can use this calculator to decide whether it makes sense to buy points.

7. Get a preapproval letter

You can get pre-qualified for a mortgage, which simply gives you an estimate of how much a lender may be willing to lend based on your income and debts. But as you get closer to buying a home, it’s smart to get a preapproval, where the lender thoroughly examines your finances and confirms in writing how much it's willing to lend you, and under what terms. Having a preapproval letter in hand makes you look much more serious to a seller and can give you an upper hand over buyers who haven’t taken this step.

House shopping tips

8. Hire the right buyer's agent

You’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right buyer's agent should be highly skilled, motivated and knowledgeable about the area.

9. Pick the right type of house and neighborhood

You may assume you’ll buy a single-family home, and that could be ideal if you want a big yard or a lot of room. But if you’re willing to sacrifice space for less maintenance and extra amenities, and you don’t mind paying a homeowners association fee, a condo or townhouse could be a better fit.

But even if the home is right, the neighborhood could be all wrong. So be sure to:

• Research nearby schools, even if you don’t have kids, since they affect home value.

• Look at local safety and crime statistics.

• Map the nearest hospital, pharmacy, grocery store and other amenities you’ll use.

• Drive through the neighborhood on various days and at different times to check out traffic, noise and activity levels.

10. Stick to your budget

Look at properties that cost less than the amount you were approved for. Although you can technically afford your preapproval amount, it’s the ceiling — and it doesn’t account for other monthly expenses or problems like a broken dishwasher that arise during homeownership, especially right after you buy. Shopping with a firm budget in mind will also help when it comes time to make an offer.

In a competitive real estate market with limited inventory, it’s likely you’ll bid on houses that get multiple offers. When you find a home you love, it’s tempting to make a high-priced offer that’s sure to win. But don’t let your emotions take over. Shopping below your preapproval amount creates some wiggle room for bidding. Stick to your budget to avoid a mortgage payment you can’t afford.

11. Make the most of open houses

When you're touring homes during open houses, pay close attention to the home’s overall condition, and be aware of any smells, stains or items in disrepair. Ask a lot of questions about the home, such as when it was built, when items were last replaced and how old key systems like the air conditioning and the heating are.

If other potential buyers are viewing the home at the same time as you, don’t hesitate to schedule a second or third visit to get a closer look and ask questions privately.

First-time home buyer mistakes to avoid

With so much to think about, it’s unsurprising that some first-time home buyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar fate.

12. Not budgeting for closing costs

In addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage, which can be significant. Closing costs generally run between 2% and 5% of your loan amount. You can shop around and compare prices for certain closing expenses, such as homeowners insurance, home inspections and title searches. You can also defray costs by asking the seller to pay for a portion of your closing costs or negotiating your real estate agent's commission. Calculate your expected closing costs to help you set your budget.

13. Not saving enough for after move-in expenses

Once you've saved for your down payment and budgeted for closing costs, you should also set aside a buffer to pay for what will go inside the house. This includes furnishings, appliances, rugs, updated fixtures, new paint and any improvements you may want to make after moving in.

14. Buying a home for today instead of tomorrow

It's easy to look at properties that meet your current needs. But if you plan to start or expand your family, it may be preferable to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering will suit them.

15. Passing up the chance to negotiate

A lot can be up for negotiation in the homebuying process, which can result in major savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing to pay for any of the closing costs? If you’re in a buyer's market, you may find the seller will bargain with you to get the house off the market.

16. Not knowing the limits of a home inspection

After your offer is accepted, you’ll pay for a home inspection to examine the property’s condition inside and out, but the results will only tell you so much.

• Not all inspections test for things like radon, mold or pests, so be sure you know what's included.

• Make sure the inspector can access every part of the home, such as the roof and any crawl spaces.

• Attend the inspection and pay close attention.

• Don’t be afraid to ask your inspector to take a look — or a closer look — at something. And ask questions. No inspector will answer the question, “Should I buy this house?” so you’ll have to make this decision after reviewing the reports and seeing what the seller is willing to fix.

17. Not buying adequate homeowners insurance

Before you close on your new house, your lender will require you to buy homeowners insurance. Shop around and compare insurance rates to find the best price. Look closely at what’s covered in the policies; going with a less-expensive policy usually means fewer protections and more out-of-pocket expenses if you file a claim. Also, flood damage isn’t covered by homeowners insurance, so if your new home is in a flood-prone area, you may need to buy separate flood insurance.

How much house can I afford?

To calculate your general affordability range, we take into account a few primary items, such as your household income, monthly debts (for example, car loan and student loan payments) and the amount of available savings for a down payment. That said, as a home buyer, it’s important to have a certain level of comfort in understanding your monthly mortgage payments. While your household income and monthly debts may be relatively stable, your overall savings and how much you wish to allocate toward your home can vary depending on how much you want to set aside for a rainy day or how much you want to set aside for a future expenditure.

A good rule of thumb is to have three months of your housing payments, including your monthly expenses, in reserve. This will give you an additional buffer in case there is some unexpected event.

Best Lenders for No- and Low-Down-Payment Mortgages in 2019

Low- and no-down-payment FAQs

What’s the catch with no- and low-down-payment home loans?

It depends on the type of loan you apply for. With FHA loans there can be geographic loan limits that put a cap on the price of the home you can buy. On HomeReady and Home Possible conventional loans, there can be income limits or a requirement that you are a first-time home buyer.

Other loan programs are available to borrowers in some low-income regions. There are local and regional low-down-payment mortgage programs, with various criteria needed to qualify.

» MORE: Check out first-time home buyer programs in your state

Do I have to be a first-time home buyer for a low- or no-down-payment mortgage?

Not always. For example, some low-down-payment loans are assisting buyers in economically disadvantaged areas, or catering to borrowers with military connections, such as with VA loans. USDA loans are looking to boost buyers in rural and suburban areas.

Some conventional loans, such as HomeReady and Home Possible, have income limits rather than first-time home buyer requirements — though the programs also have first-timer spinoffs.

» MORE: HomeReady and Home Possible allow 3% down

What’s the credit score required for a low- or no-down-payment mortgage?

To qualify for the lowest 3.5% down payment on an FHA loan, you’ll need at least a 580 credit score or better. With a score between 500 and 579, you’ll need a 10% down payment.

On conventional loans, a 620 or better is generally required.

For borrowers who have a military connection, VA loans don’t have credit score requirements — they’re based more on an applicant’s ability to repay the loan.

However, lenders often require a 620 FICO score even on VA loans and can add their own credit score and other qualifications, so it’s always a good idea to shop more than one lender.

» MORE: FHA loan credit score requirements

Are there income limits on low-down-payment home loans?

Sometimes but not always. In today’s “3% down is the new normal,” there is often a workaround. Income over the threshold? First-time buyers are excluded from such limitations. Same goes if you’re buying in a particular targeted area, or if you’re a military veteran.

Yet, just because you can put just a little down doesn’t always mean you should. If you have a really good income, consider your down payment options along with everything else such as how long you plan to stay in the home and what’s a comfortable monthly payment.

» MORE: What down payment is required?

Can I get a low- or no-down-payment home loan with bad credit?

Sure. Lenders are looking to make good loans. If you have the income and recent payment record that shows an ability and willingness to repay a loan, you can qualify — even with a checkered credit history.

But the setback that dinged your credit has to be in the past. If you’re still worrying about paying your bills paid on time, it’s best to wait on buying a house, no matter how tempting low down payments may be.

» MORE: How credit score affects your mortgage rate

More from NerdWallet