Capital One® Platinum Credit Card Review

The is a great credit-building choice with valuable perks that reward you for practicing responsible financial behavior.

Card	APR	Annual Fee	Intro Bonus	Credit Needed	Key features
Capital One® Platinum Credit Card	26.99% (Variable) APR	$0	None	Fair to Good	Credit-building

What we like about it

If you don’t want to go the secured credit card route but you still want to build your credit, the is a no-fuss way to accomplish that financial goal. This card boasts $0 in annual fees, no security deposit and eventual access to a higher amount of credit after an account review and five initial on-time payments. Besides the simple terms, the Capital One® Platinum Credit Card also touts benefits to support users trying to create a healthier financial future with perks like account alerts, autopay and easy access to your monthly recurring transactions for subscriptions and bills. These extras help card users stay vigilant and improve the chances of on-time payments.

In addition, $0 Fraud Liability protects you if the card is lost or stolen, which means you’re never on the hook for unauthorized charges. The included CreditWise app provides unlimited access to a user’s credit score, an important bellwether of creditworthiness. If you want to improve, rebuild or establish credit, this feature empowers you to take a hands-on approach to your credit card experience. CreditWise makes it easy to monitor your credit profile and immediately spot any issues or maybe even celebrate improvement.

You can imagine the Capital One® Platinum Credit Card as a kind of financial stepping stone to apply for another credit card in the future with lower rates, robust rewards or other perks that come with better credit health, which lenders use to evaluate credit card and loan applicants.

Things to consider

The main drawbacks of the are the lack of rewards and the low credit limit. If you’re looking to use this card as your main credit card, you’re not really going to get much out of it besides establishing a consistent credit history. For some credit card users who are just starting their credit history, this might be just fine. But if you’re a seasoned credit card holder, it might benefit you to look into options with rewards like cash back or travel points.

The other potential issue is the low credit limit. Again, if you’re just using this card as part of your strategy to build your credit, it may not be a big deal. This is especially true if you make the first five payments on time and successfully increase your credit limit.

Another drawback is the high-interest rate. This isn’t a great card to carry a high balance on or max out the limit, so if you choose this credit card, make sure you’re paying the balance in full each month. Otherwise, you risk creating a disastrous financial situation for yourself and watching your credit score dip.

Capital One® Platinum Credit Card credit-building details

After five months of on-time payments, your credit limit may increase after an official account review. If you don’t max out your new higher credit limit, your credit utilization ratio will be lower, an important factor that goes into your credit score. Just so we’re on the same page here, your credit utilization is defined as the amount of credit you’re actually using compared to the total available credit available. The lower your utilization, the higher the likelihood of a credit score bump

Capital One® Platinum Credit Card fees

Planning international travel generally means planning out what cards to use since some carry high foreign transaction fees when you swipe them aboard. The , however, has no foreign transaction fee, so you can make international purchases without an extra surprise cost tacked on. If you choose to get a cash advance, you’ll be charged $10 or 3% on the advance, whichever is more. Late payments will set you back up to $39. But there’s no penalty APR and no returned payment fee. Of course, it’s good practice to avoid making late payments even if there is no penalty. Practicing good financial habits over time can boost your credit score.

How does it compare to other credit-building cards?

The Citi® Secured Mastercard® is a smart credit-building choice with a slightly lower APR. The main difference here is that cardholders must put down a security deposit that acts as the credit limit, between $200 and $2,500. It’s held in a Collateral Holding Account, where it will not earn interest for a term of up to 18 months. However, there is no annual fee, and if you need to establish or rebuild your credit, this card can help you reach that goal.

The card is another secured option if you want to build credit for the first time or rebuild it while earning cash-back rewards. Plus, there’s no annual fee. But again, the drawback is that applicants must provide a security deposit in order to get approved for this card.

Both of these competitors provide new credit card owners and those trying to rebuild a chance to improve their credit in a low-risk manner. But both require a security deposit, and if you default on your account, those lenders can apply your deposit to your remaining balance and close your account.

If you don’t want to put down a security deposit, the Capital One® Platinum Credit Card is a prudent choice since it offers a lower credit limit with the chance of a higher credit limit later. It’s a no-frills way to pick up the pieces if you’ve made a few hiccups here and there during your financial life.

The bottom line

The provides beginners — and those who’ve had a couple of credit missteps — with a way to build up a better credit score. While you may start out with a lower credit limit, on-time payments can unlock access to a higher line of credit. This is an excellent choice for credit card users who don’t want to deal with the hassles of secured credit cards and don’t want or need rewards.

Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view a list of partners, click here. Opinions expressed here are the author's alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser's page for terms & conditions.

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Discover it® Chrome Credit Card Review

You won’t pay an annual fee to keep the credit card in your wallet, and there’s no need to worry about rotating bonus categories or complicated redemption strategies. This is a straightforward cash-back card that offers 1% cash back on everything and 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Discover matches your rewards at the end of the first year.

Card	APR	Annual Fee	Intro Bonus	Credit Needed	Key features
Discover it® chrome	0% for 14 months, then ongoing 13.49% - 24.49% Variable APR	$0	Discover automatically matches all the cash back you’ve earned at the end of your first year	Good to excellent	Cash back

What we like about it

The credit card is a simple rewards card with no annual fee. Cash-back rewards, earned at 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases, never expire. At the end of your first year as a Discover it® chrome card user, Discover will match the cash back you’ve earned throughout the year as a bonus.

There aren’t any restrictions about when you redeem your rewards, and there are no minimum redemption amounts. You can even use your Discover it® chrome cash-back rewards at Amazon.com at checkout.

The Discover it® chrome card is also an excellent balance transfer option, with 0% introductory APR for the first 14 months on balance transfers and purchases, then an ongoing 13.49% - 24.49% Variable.

Things to consider

To get the credit card, you’ll need good to excellent credit scores.

For those who frequently travel outside the United States, the Discover it® chrome card may not be the best choice as a sole credit card. Discover isn’t accepted in many countries, including the majority of Africa, most countries directly east of China and some South American countries.

Cash-back rewards at the 2% level convert to 1% when you reach the maximum of $1,000 in purchases each quarter. Earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases. So, even though it’s a nice rate of rewards, you can earn just $20 in cash-back rewards per quarter at 2% cash back.

For the first 14 months that you own the card, you’ll get an introductory interest rate of 0% on new purchases and balance transfers. There’s a 3% balance transfer fee, up to 5% fee on future balance transfers (see terms). After the introductory period, you’ll pay 13.49% - 24.49% Variable APR if you decide to carry a balance with the card.

Discover it® chrome Credit Card cash back details

The card is a cash-back card with no annual fee. You’ll get 1% cash back on every purchase made with the card, without limits. The first $1,000 in combined purchases each quarter you spend at gas stations and restaurants earns 2%. After you reach the spending limit during a quarter, the rewards rate in those categories reverts to 1%. At the end of your first year, after your 12th statement, Discover will match your cash-back earnings without limits.

Redeeming rewards is simple. You can choose to credit your account when your cash-back balance is just $.01. You can pay select merchants with your cash back, deposit cash-back rewards into an account, use cash back as a charitable donation or use it to purchase eCertificates and gift cards from Discover’s partners.

Discover it® chrome Credit Card fees

The Discover it® chrome credit card is light on fees. There’s no annual fee, no foreign transaction fee, no overlimit fee and Discover won’t charge you a late fee the first time to fail to pay your bill on time. Making a late payment won’t trigger a penalty APR, like many other cards.

If you choose to transfer debt from other credit cards, you’ll pay a 3% balance transfer fee, up to 5% fee on future balance transfers (see terms).

How does it compare to other cash back cards?

If you think the cash-back card is a good choice, consider the Capital One® Quicksilver® Cash Rewards Credit Card and the Citi® Double Cash Credit Card. Like the Discover it® chrome card, both of these cards have no annual fee and no overlimit fee. Late payments with the Capital One® Quicksilver® Cash Rewards Credit Card won’t increase your APR, and there aren’t any foreign transaction fees with this card. The Citi® Double Cash Credit Card won’t charge you a late fee the first time you miss a payment due date.

With the Citi® Double Cash Credit Card, you’ll earn 2% cash back on all purchases, but you’ll get 1% when you use the card and 1% when you pay the bill. There are no limits or caps on earnings with this card, unlike the Discover it® chrome card, which imposes a $1,000 limit on the 2% reward level per quarter.

With the , you’ll earn a flat 1.5% cash back on every purchase without limits. This card also offers an introductory 0% APR on balance transfers and purchases for 15 months, then an ongoing 15.74% - 25.74% (Variable).

Discover it® chrome is the only cash-back card offering a 100% match of the rewards earned at the end of your first year of owning the card. This feature, plus a good introductory 0% APR on purchases and balance transfers within the first 14 months and then an ongoing 13.49% - 24.49% Variable makes the Discover it worthy of a place in your wallet.

The bottom line

The credit card is a great option for people who want a simple cash-back card. While the 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter is a nice perk (then, 1%), the per quarter limit lessens its value. The year-end cash-back match is where this card excels, making it an ideal card for everyday purchases. For those with good to excellent credit who want a straightforward cash-back card, the Discover it® chrome deserves a place on their list of options.

Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view a list of partners, click here. Opinions expressed here are the author's alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser's page for terms & conditions.

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Capital One® Quicksilver® Cash Rewards Credit Card Review

The has set the bar for standardized cash back rewards on all purchases at a rate of 1.5%. Cardholders can earn on an unlimited amount, and there are no revolving spending categories or extra steps needed to redeem rewards. In addition, the cash rewards accrued don’t expire as long as the account is open.

The Capital One® Quicksilver® Cash Rewards Credit Card cash-back card is an ideal option for credit card users with good to excellent credit looking for flat-rate rewards on everyday purchases like gas, dining and other living expenses.

Card	APR	Annual Fee	Intro Bonus	Credit Needed	Key features
Capital One® Quicksilver® Cash Rewards Credit Card	0% intro on purchases For 15 Months, then ongoing 15.74% - 25.74% (Variable) APR	$0	$150 after spending $500 within three months of account activation	Good to Excellent	Cash back

What we like about it

The offers an uncapped 1.5% cash-back reward on all purchases. There’s no limit to what you can earn and no quarterly spending category bonuses to monitor — a real benefit to the less detail-oriented among us. Cardholders aren’t charged an annual fee, and there are no foreign transaction fees, so users won’t be hit with extra charges while on international trips.

To sweeten the deal, new card members receive a $150 cash bonus as long as they spend $500 on purchases within three months of the account activation. The low spending requirement to receive that sign-on cash bonus means that cardholders won’t feel as pressured to overspend in order to earn the reward. Other cards may offer higher sign-on cash bonuses which can tempt credit card users to spend more money than they otherwise would in pursuit of that cash bonus. And at that point, the cash bonus may not make much of a difference in terms of profit margin.

The 0% APR period of 15 months, then an ongoing 15.74% - 25.74% (Variable) APR is another bonus that card users can easily take advantage of — especially if a big purchase is looming in the near future. Of course, you should only go this route if you know you can pay off the purchase within that intro period.

The high rewards rate of the Capital One® Quicksilver® Cash Rewards Credit Card and no minimum redemption allows cardholders a gimmick-free way to earn cash back on every single purchase without having to parse through complex reward structures.

Things to consider

While the certainly offers plenty of benefits for no-fuss cash back, there are other cards that may provide better terms — depending on what you’re specifically looking for in your credit card.

This cash-back card offers no bonus rewards categories, so for users who want to optimize how much they can earn in different spending areas, this isn’t the way to go. But if you want a blanket rate that applies to everything you buy, that 1.5% cash back is a high enough rate that can pay off in the long run if you use it as your primary card throughout the year.

Capital One® Quicksilver® Cash Rewards Credit Card cash-back details

The 1.5% cash-back reward is applicable to all of your everyday purchases. Rewards don’t expire as long as the account is active. You can redeem your cash back in the form of statement credit, to cover a recent purchase or in the form a gift card.

You can redeem your rewards for any amount that you choose, at any time you want. This flexibility is great for those who don’t want to wait to reach a minimum redemption amount.

Capital One® Quicksilver® Cash Rewards Credit Card fees

Overall, the low-fee structure of this credit card makes it a standout choice compared to other cards that may offer better or more robust rewards but stick cardholders with a hefty annual fee and other caveats that water down the benefits.

If you’re interested in this card in order to complete a balance transfer, you’ll have to pay a 3% balance transfer fee. While that fee isn’t terrible compared to market rates, it will hurt your wallet if you’re trying to transfer a larger balance.

How does it compare to other cash-back cards?

The Citi® Double Cash Card offers a higher cash-back rate at 2% on all purchases with no cap and no annual fee. However, the drawbacks include a lack of a cash sign-on bonus and no 0% introductory APR on purchases (although there is a 0% APR balance transfer offer). So, if you want a higher cash-back rate and you’re okay with losing out on a sign-on bonus, that may be the right choice.

The is another good cash back card that comes with a $0 annual fee and 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate. Plus, earn unlimited 1% cash back on all other purchases. Discover will match the cash back you earn at the end of the first year.

While comparing these cash-back cards, it’s important to consider your financial habits and your own preferences. If you want a flat-rate cash-back card with a low fee structure, the Capital One® Quicksilver® Cash Rewards Credit Card might be the right choice. But if you want to invest more time monitoring spending category cash-back bonuses, the card will allow you to optimize your rewards. And the Citi Double Cash Back boasts a higher 2% cash-back rate on all purchases but no sign-on bonus. So, you’ll have to weigh the pros and cons of what makes the most sense based on your spending habits.

The bottom line

Simple credit card users will appreciate the ’s straightforward cash-back rewards and 1.5% cash-back rate on all purchases, with no cap. But for those looking to optimize their credit card rewards to put toward travel points and larger cash-back percentages in rotating spending categories, other cards may be a better choice. The Capital One® Quicksilver® Cash Rewards Credit Card is best for consumers looking for a no-brainer cash-back solution who are fee-averse.

Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view a list of partners, click here. Opinions expressed here are the author's alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser's page for terms & conditions.

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Ask Yourself These 5 Questions Before You Start a Ridesharing Gig

You have a vehicle. You need to supplement your income. Driving for Uber or Lyft may seem like a no-brainer.

Since Uber’s 2009 launch (and Lyft in 2012) rideshare driving has become almost synonymous with side hustles and the gig economy. Lyft self-reports 1.5 million drivers in the U.S. Uber doesn’t share its numbers, but many drivers work for both apps, which tout flexible work and quick money. 

But is ridesharing all it’s cracked up to be? Before you sign up, take some time to answer these sobering questions.

1. How Much Will I Really Be Making?

Uber and Lyft drivers are considered independent contractors, not employees. So earnings can get a little tricky. First of all, the companies don’t pay by the hour. They pay per fare.

Even trickier, the pay is broken down into several parts: base pay (a guaranteed amount), plus bonuses, promotions and tips. Every part of that equation may fluctuate per ride — making hourly earnings nearly impossible to project.

Still, on average, drivers can rake in decent dough. The Penny Hoarder analyzed self-reported wage data from Glassdoor and found that Uber drivers earned between $12 and $16 per hour, based on 461 wages. Lyft drivers took home $15 to $16 an hour, according to 394 drivers.

But technically, as an independent contractor, you’re only getting paid if you’re en-route or already chauffeuring a passenger. The time you spend waiting for a fare or returning to a populated area after you’ve dropped off a passenger doesn’t count.

All the while, you’re racking up mileage and burning gas, another expense that should be subtracted from your earnings.

Jerry Brown, a library tech and former rideshare driver from Louisiana, started picking up on these “invisible expenses” when his bank account balance wasn’t what he expected.

“I did a cost-benefit analysis,” he said. “The profit only ended up being $10 an hour when we broke down all the other expenses… I didn’t really think of that going in.”

2. Can My Vehicle Handle It?

The first thing you need to determine is if you’re vehicle is eligible for ridesharing. In our Uber vs. Lyft guide, we break down the basic requirements. The biggest one being: Your car, truck or SUV needs to be a 2002 model or newer to drive for Uber and a 2006 model or newer to drive for Lyft. 

Your vehicle must be able to fit at least four passengers for both services. It needs to be in good working condition, too. But just because it’s in good condition at first doesn’t mean it’s going to stay that way. Besides gas, Brown said his maintenance costs piled up quickly.

“I put almost 30,000 miles on my car,” Brown said.

Those miles cost more than just gas and oil changes. They depreciate your car’s value, too.

“I eventually decided to pivot away from Uber as a side hustle because it was too much wear and tear on my car,” he said.

3. What Are the Risks?

The most dangerous part of driving for a rideshare company … is the driving part. Driving is one of the most dangerous things we as Americans do on any given day.

According to the National Highway Traffic Safety Administration, law enforcement recorded 6.5 million automobile accidents in 2018. Those accidents resulted in 36,560 deaths and 2.7 million injuries.

In addition to the nature of the job, rideshare drivers and gig workers in general have a few other factors to keep in mind. While drivers have to go through background checks and submit government-issued IDs to the gig companies, passengers are often anonymous and untraceable.

“The risks workers encountered are pretty extensive,” said Dr. Alexandrea Ravenelle, a gig economy researcher and professor of sociology at the University of North Carolina. “Workers don’t always know what they’re getting involved in” when they take a fare.

In December, Uber released the extent of those risks in its first ever “US Safety Report.” The study analyzed fatal accidents, physical assaults and sexual assaults across 2.3 billion trips in 2017 and 2018. The company reported 5,981 incidents of sexual assault. An analysis of Uber’s data indicates that in almost 2,700 of those incidents, the driver was the victim. Twenty two drivers died in car accidents, and seven died from physical assaults.

Lyft has not released similar statistics.

4. Are Dash Cams a Good Idea?

If you are prepared to invite strangers into your car, a dash cam may be a good investment. Because of your independent contractor status, neither Uber nor Lyft will cover the cost of the camera, but it could be a lifeline should something go wrong during a trip.

Dash cameras are relatively inexpensive and easy to set up. On Amazon, a standard HD camera costs between $30 and $100.

Both Uber and Lyft offer complimentary insurance for drivers, but the policies are nuanced. Uber insurance coverage varies depending on if you are merely online, en route to a passenger, or have a passenger in your car. Lyft’s insurance policy works similarly. The biggest difference between the two is deductibles: $1,000 for Uber and $2,500 for Lyft.

A dash cam provides legal backup in case an accident happens while you’re logged on. It may also strengthen your claim to receive reimbursement if a passenger damages your car.

For example, if a passenger spills a box of greasy take-out all over your back seat, you’re going to have to stop taking fares and deep clean your upholstery. You can make an inconvenience claim to receive up to $250, but the hard part is proving who caused the damage. That’s where a camera comes in handy.

Perhaps the biggest perk is the Hawthorne effect: When you have a camera clearly visible to passengers, they’re likely going to be on their best behavior.

5. What’s My Exit Plan?

The gig economy offers easy entry compared to the traditional job market. It’s the leaving part where most people get stuck.

It’s easy to start depending on the extra money from driving. But once that cash starts going toward rent or groceries, quitting puts your finances at risk. And that situation can easily snowball into never-ending work.

To avoid that scenario, create a side hustle exit plan before you take on additional work. Compared to some side gigs, the startup costs to rideshare driving are relatively low. So your plan doesn’t have to be bound and laminated. 

It can be something as simple as: I want to pay down my remaining $1,500 in credit card debt by driving for Uber on the weekends.

Pro Tip

Give yourself clear working hours. Having a cut-off point can go a long way.

When Brown started driving for Uber, he had a clear financial goal in mind to pay off his car loan in six months. Even with that goal, he said the work sucked him in.

“It was kind of addictive,” he said, telling himself “just one more ride, just one more ride.”

Brown was indeed able to pay off his car, but his hustling wasn’t sustainable. He wanted to take better care of himself. 

He realized, “I need to spend less time working so I can enjoy life.”

Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, entrepreneurship and unique ways to make money. Read his ​latest articles here, or say hi on Twitter @hardyjournalism.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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Deferment vs. Forbearance: How to Decide Which Can Help With Student Loans

Are you struggling to pay your student loans? You may have heard of deferment and forbearance.

Those are two temporary options for reducing or postponing payments on federal student loans for a period of time, typically due to a financial hardship. 

The emphasis here is temporary. Neither program will reduce the total amount you owe on your student loans, and they may end up costing you a lot more in interest.

But if you’re experiencing a qualifying economic hardship (more on that later), these options could be a lifeline when you can’t pay your student loans. 

Let’s compare deferment and forbearance to see which could work best for you.

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Deferment vs. Forbearance for Student Loan Payments

So you may be wondering: If deferment and forbearance won’t save you money or let you off the hook for the full amount, why should you bother requesting them? Should you simply stop paying instead?

You should ask about them because both options can help you avoid defaulting on your federal loans — that happens when you’ve missed payments for 270 days (or about nine months). Defaulting on your loans can wreak havoc on both your credit score and bank account.

Unfortunately, it’s a common situation: More than 350,000 borrowers had loans that entered default in the third quarter of 2019, according to the National Student Loan Data System. If you default on your loans, the government can collect on the debt by garnishing your wages or income tax return refunds.

Pro Tip

You can’t qualify for forbearance or deferment if your loans are already in default — you’d need to rehabilitate your student loans before you could be eligible again.

Having a default on your credit report will also tank your credit score and make you ineligible for additional federal student aid. That black mark can even affect your ability to get an apartment and, in some cases, a job.

But qualifying for a deferment or forbearance before defaulting can provide you the relief from the payments — and neither will affect your credit score.

Ready to find out if one is right for you? 

Student Loan Deferment

If you qualify for a deferment, you typically do not pay the interest that accrues on subsidized or Perkins loans, but you will still accrue interest on Plus loans and any unsubsidized loans — including the unsubsidized portion of a consolidation loan.

How to Qualify

You may qualify for deferment under the following circumstances:

1. You’re enrolled (or you’re a parent with Plus loans who has a student enrolled) at least half-time in an eligible college or career program or you’re enrolled in an approved graduate fellowship program.
2. You’re receiving cancer treatment (and for six months after).
3. You’re enrolled in an approved rehabilitation training program for the disabled.
4. You’re unemployed or unable to find full-time employment (for up to three years).
5. You’re serving in the Peace Corps (for up to three years).
6. You’re on active duty military service involved in a war, military operation or national emergency (and for 13 months after).

How to Apply

If you’re enrolled in a college or career program, your loan will be placed in a deferment automatically — if it isn’t, contact your school. 

For all other deferments, you’ll need to submit a request and documentation to your loan servicer.

Student Loan Forbearance

During a forbearance period, you may not have to make your monthly student loan payments; however, interest continues to accrue on the loan during that time.

There are two types of forbearance: Mandatory and general.

Mandatory Forbearance

A mandatory forbearance means that your loan holder must grant you a forbearance if you qualify and supply supporting documentation. Mandatory forbearance is only available for direct loans and Federal Family Education Loans (FFEL) except in the case of income-based forbearance, which also includes Perkins loans. 

You may qualify for mandatory forbearance under the following circumstances:

1. You have a medical or dental internship or are in a residency program.
2. Your monthly student loan payment is 20% or more of your monthly gross income.
3. You’re serving in an AmeriCorps position.
4. Your current job qualifies you for Teacher Loan Forgiveness.
5. You qualify for partial repayment of your loans within the U.S. Department of Defense Student Loan Repayment Program.
6. You are a member of the National Guard who’s been activated.

General Forbearance

General forbearance (aka discretionary forbearance) means your lender has the option to decide whether you qualify. It’s available for Direct, FFEL and Perkins loans.

You can request a general forbearance for the following reasons, among others your lender may accept (you’ll have room to explain your situation on the form):

1. Financial difficulties
2. Medical expenses
3. Change in employment

How to Apply

To request a forbearance, submit an application and documentation to your loan servicer — even if it’s for a mandatory forbearance. 

The forbearance period can last for a maximum of 12 months, but you can request another forbearance if you still meet the economic hardship eligibility requirements. The total number of forbearances you can receive depends on the forbearance and loan type.

Comparing Deferment vs. Forbearance

Deferment is the better option of the two if you have subsidized or Perkins loans, since they won’t accrue interest during deferment. 

How much can it save you? If you have a $30,000 federal loan at 6% interest, with a $333 monthly payment, here’s the difference:

	Outstanding Principal After One Year	New Monthly Payment	Total Repaid Over the Life of the 10-Year Loan
Subsidized or Perkins loan in deferment	$30,000	$333	$41,767
Any federal student loan in forbearance (during which your interest is accrued quarterly and the interest capitalizes at the end)	$31,841	$354	$42,420

One year of deferment instead of forbearance could save you $653.

Alternatives to Deferment and Forbearance

Here’s the cold, hard truth: If there’s any way to avoid deferment or forbearance — whether it’s by tightening your budget or picking up a side gig, for instance — do that first. By finding ways to make your student loan payments, you’ll finish paying them off that much sooner and pay less in interest in almost every scenario.

Pro Tip

Even after you request forbearance or deferment, continue making the payments on your federal loans until you receive approval — otherwise, your loans will become delinquent and go into default.

If you don’t foresee ever being able to afford the monthly payments on your student loans or the financial hardship you face is a longer-term problem, deferment and forbearance may not be right for you. 

At that point, your best option may be to enroll in an income-driven repayment plan, which can offer lower payments long-term as well as loan forgiveness at the end of the repayment period.

If you have multiple loans and making all the payments is unmanageable, consider a loan consolidation.

Deferment and Forbearance for Private Student Loans?

If you have private student loans, you’ll need to contact your loan servicer directly for options. Start by determining who you owe and how much you owe in student loans. 

Once you have a list of your private loan servicers, call them to ask about possible payment extensions or even deferment or forbearance options they may offer (they aren’t required to offer them, but they may). 

You’ll want to prepare any documentation before you get on the call — have your loan numbers, pertinent dates and a clear, simple explanation why you currently cannot make a payment as well as when you will be able to start paying. This last piece of information is essential, as a private lender’s willingness to offer options will likely depend on whether you can assure them the situation is temporary.

Alternatively, if your interest rates on private loans are astronomical, you can also consider refinancing to make your payments more manageable.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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Dear Penny: I’m 55 With No Savings or Life Insurance. What Are My Options?

Dear T.,

At 55, you’re young enough that you can expect to live another 25 to 30 years — and quite possibly longer. Since it sounds like you’re in good health, you have a long retirement to prepare for and not much time to save for it.

But at 55, you’re old enough that your life is expensive to insure.

Statistically, you’re way more likely to die than a twentysomething. So by the time you’re in your 50s, you’ll pay anywhere from three to six times more for life insurance than someone in their 20s.

For whole life insurance — the most common alternative to term life insurance — the cost of premiums could seriously impede your ability to save. A healthy 55-year-old can expect annual premiums of $6,000 or more for a $250,000 policy.

The tricky thing about financial planning is that we really don’t know whether we’ll live to be 100 or get struck down by lightning tomorrow. In a perfect world, you’re prepared for both extremes and everything in between.

But in the real world, we have finite resources. I’m assuming you haven’t started saving for retirement because you have a limited amount of cash.

So while building a nest egg and buying a non-term life insurance policy are separate goals, I’d suggest they’re also mutually exclusive. As in, you may very well have to choose one or the other.

If you still have dependents, I’d suggest you reconsider term life insurance and purchase a policy that would cover their basic needs until they’re able to be independent. For example, if you have a 12-year-old child, you might purchase a 10-year policy to get them to adulthood should you die.

Beyond that, unless you have extenuating circumstances — say, a child with a disability who will need lifelong support and care — saving for your own future is your No. 1 priority.

Unfortunately, I don’t have any personal finance magic tricks for building a healthy retirement fund at 55. You’ll need to put every resource into saving money and plan to work for as long as you can.

Since you say you work full time when work is available, I assume you don’t have access to an employer-sponsored retirement plan, like a 401(k) or 403(b). This probably falls into the obvious file, but I’ll throw it out there anyway: If you can use your 37 years of work experience to find a steadier job with retirement benefits, by all means, do it.

Regardless, open an individual retirement account (IRA) pronto. It’s pretty simple to do using one of the many online financial companies that use robo-advisers, which means that a computer picks your investments for you. You’ll typically be asked to estimate how many years you have until retirement, along with a series of questions to gauge your risk tolerance.

From there, you’ll get recommendations for how to allocate your portfolio. While I can’t tell you how you should invest your money, what I can tell you is this: It can be intimidating to trust a computer’s recommendations, but historically, computers fare better at choosing investments than humans.

Because you’re over age 50, you can contribute up to $7,000 in your IRA for 2019; for people under 50, the limit is $6,000. Try to put every spare dollar you can in your IRA with the goal of maxing out your contribution every year.

Yes, that’s a lot of money to sock away, but there are lots of ways to make money beyond your full-time job. Consider possible ways to earn side income, like driving for a ride-hailing service, petsitting or renting out a spare room on Airbnb — anything to bring in extra cash.

If you can fully fund your IRA, try to make paying off any debt you have your next-highest priority. Retirement will be a lot less stressful without a mortgage or car payment.

Just know that the greatest gift your loved ones is to prepare for your future so you’ll need fewer of their resources in retirement. So use what you do have to fund what I hope is a long and healthy life.

Robin Hartill is a senior editor at The Penny Hoarder and the voice behind Dear Penny. Send your questions about retirement to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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Chase Freedom Unlimited® Review: A cash-back credit card with unlimited rewards

With the credit card, you’ll get unlimited rewards in the form of 1.5% cashback on all purchases made with the card. Chase doesn’t charge an annual fee for Freedom Unlimited® cardholders, making this an even better deal.

Your rewards accumulated starting with your very first Chase Freedom Unlimited® credit card purchase, and you’ll enjoy an introductory 0% APR for the first 15 months of owning the card, then a ongoing 16.49% - 25.24% Variable APR is applied.

The rewards never expire, so you can let them pile up until you are ready to go on that dream trip. Or, you can choose to have your cashback rewards regularly and automatically redeemed to lower the balance on the card.

You’ll also get a $150 bonus reward if you spend $500 or more within the first 3 months you own the card.

Card	APR	Annual Fee	Intro Bonus	Credit Needed	Key features
Chase Freedom Unlimited®	0% for 15 months, then ongoing 16.49% - 25.24% Variable APR	$0	$150 welcome bonus when you spend $500 with the card within three months of opening the account	Good to excellent	1.5% cash-back rewards on every purchase made with the card

What we like about it

The bonus offer for new credit card users is $150, which is a nice perk for a spending level of just $500 in three months. To get the bonus, you’ll need to spend an average of $167 per month with the card, which is a low bar compared to other credit card bonus requirements.

The low 0% APR for 15 months on new purchases and balance transfers is notable (then a ongoing 16.49% - 25.24% Variable APR), as well. This means you could potentially save money by moving your credit card debt over to the Chase Freedom Unlimited® credit card, so long as you pay it off within one year and three months of opening the account.

Things to consider

Even though the spending requirement for the Chase Freedom Unlimited® credit card bonus reward is just $500 over the course of three months, people who aren’t used to pulling out their credit card for everyday purchases may have problems reaching that level of spending. If you are considering this card but aren’t a frequent credit card user, make a plan to dedicate some of your larger purchases to this card (even if it’s just temporary) for the first three months you own the card so you can be sure to get the $150 bonus.

For credit card users who habitually carry a balance on their cards from month to month, the 15 month introductory 0% APR may look like a great deal. It is, but the APR goes up to a 16.49% - 25.24% Variable after the introductory period ends. That interest rate could help you rack up a bigger credit card bill than you’d like if you don’t pay off your balance before your 16th month with the card.

Chase Freedom Unlimited® cash back details

Unlimited cash-back rewards are a flat 1.5%. Unlike credit cards with rotating categories, this simple cash-back card offers the same flat rewards rate for every purchase.

While you have many choices for a no-annual-fee credit card, the credit card is the only one with a flat rewards rate of 1.5%. So, cardholders don’t have to think about how or where they are spending money as it relates to rewards. Competing cards offer higher cashback rates on certain categories but their “everything else” category is consistently 1%.

With the Chase Freedom Unlimited® credit card, you’ll also get credit card perks like zero liability protection, purchase protection and extended warranty.

Chase Freedom Unlimited® fees

While you’ll enjoy 0% introductory APR on purchase for the first 15 months of owning the Chase Freedom Unlimited® credit card, that APR goes up to 16.49% - 25.24% Variable after the introductory period ends.

There’s no annual fee, but you’ll pay up to a $39 late fee if you miss the card’s due date.

How does it compare to other cash-back credit cards?

The does offer a solid cash-back rate, but if you’re willing to work a little bit harder, you can earn more with a different credit card.

For example, you could get 5% cashback with the credit card on spending at gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate. But, the category changes every three months. All spending outside the focus category during any quarter is a flat 1%. The intro bonus with this card is a match of cashback rewards earned at the end of the first year.

The offers 3% cash back at U.S. supermarkets on up to $6,000 per year in purchases, then 1%. Cardholders get 2% cash-back rewards at U.S. gas stations and at select U.S. department stores. All other spending receives a 1% cashback reward. The welcome offer is $150 after spending $1,000 with the card within three months of opening the account. For credit card users who don’t routinely spend that much with their cards, the Chase Freedom Unlimited® credit card offers a better sign up bonus with a lower spending threshold.

The bottom line

The credit card is among the best Chase credit cards. It’s an excellent choice for credit card users who want the simplest rewards program with the highest flat rewards rate across all spending categories. It’s non-existent annual fee and easy-to-get intro bonus make it a great choice among rewards credit cards.

Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view a list of partners, click here. Opinions expressed here are the author's alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser's page for terms & conditions.

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The Oven in Winter: Simple Inexpensive Recipes to Keep Your Belly and Kitchen Warm

At our home in the winter, we usually keep the temperature low enough so that we’re all pretty comfortable if we’re wearing comfortable hoodies and slippers around the house. If someone wants the temperature a little higher, they’re free to adjust it, but most of us actually like sitting around in our hoodies, maybe with a warm blanket on our laps and a cup of coffee nearby. We’re comfortable and our energy bill is fairly low, so things are good all around.

Still, it’s kind of nice to walk into a warm room, where there’s a wonderful aroma of something finishing up or freshly pulled out of the oven. It’s a little winter perk that I love so much.

When you make something delicious at home during the winter and that oven is running, the heat is working in your favor, making that room a little warmer than the rest of the house. That heat stays there for a while and gradually dissipates throughout the rest of your home, slightly cutting back on how much your furnace needs to run to keep your home toasty.

That warm room and those wonderful smells don’t cost much at all, with the heat produced actually working in your favor. Making things in the oven is one of the best parts of winter at home, in my opinion.

Yet many people leave their ovens dormant during the winter months. Cooking at home can be intimidating, particularly for people who aren’t yet handy around the kitchen, and many people view recipes as time-consuming and require a lot of equipment.

What follows are six of my favorite super-simple things to make in the oven during the winter months. All of these things will make your kitchen warm, fill your home with nice aromas, and put a smile on your face during cold weather without much cost or effort at all.

A super-simple loaf of no-knead homemade bread.

Making bread is about as simple as getting a bowl, putting some flour and water and yeast and salt in it, stirring that mixture up, letting it sit for a while, putting that dough ball in a pan, and baking it. It smells absolutely delicious as it finishes cooking and fills your kitchen with warmth.

My favorite simple bread recipe is this no-knead bread recipe from Serious Eats. You simply mix the four ingredients in a bowl, let it sit out for twelve hours, put it in the fridge (covered) for five days, pull it out again and let it warm up to room temperature, then bake it. Although that article talks about a Dutch oven, this bread works just fine in a loaf pan. No kneading required at all — just mix it once, let it sit for a while, then make it into a ball and toss it in a greased loaf pan to bake. Utterly delicious.

Four-ingredient peanut butter — or chocolate chip peanut butter — cookies.

I absolutely love the smell of baking cookies, and I adore the taste of peanut butter. You can make amazing peanut butter cookies with just four ingredients, a bowl, a spoon, and a cookie sheet — make it five if you want to add chocolate chips to the dough.

I’m really partial to this four-ingredient peanut butter cookie recipe from Averie Cooks. You can add a cup of chocolate chips right to the cookie dough if you want — I find that the result tastes a lot like a peanut butter cup in cookie form. It also contributes this warm peanut butter aroma to your kitchen as they’re cooking (and afterward) that’s simply delightful.

Note that those are eggless cookies — they’re kind of thick and really soft. Here’s a slightly more complicated (meaning you mix a few more ingredients in the bowl) peanut butter cookie recipe that’s similarly delicious that produces a more traditional cookie.

A “spaghetti bake” for a simple dinner that will fill your kitchen with the scent of herbs and spices.

All you need for this is 2 cups shredded mozzarella cheese, a box of spaghetti and a jar of your favorite pasta sauce. You can also pick up some frozen meatballs.

Preheat the oven to 350º Fahrenheit.

Cook the spaghetti according to package directions (but break the dry pasta in half first before you put it in the boiling water) and drain it. Put the pasta back in the pan, then dump in the whole jar of pasta sauce and mix it thoroughly. Take a 9-by-13-inch baking dish and coat it very very lightly with oil to minimize sticking (you can use sprayable canola oil if you prefer).

Make layers, alternating the pasta and mozzarella, making sure to spread the layers to the edge of the pan. That’s it.

Pop it in the oven for 35 – 40 minutes. The longer you cook it, the browner the cheese on top will get, so just bake it until the cheese on top looks amazing to you. Serve.

As it’s baking, your kitchen will fill with the scents of herbs and spices, and it’s so simple. Plus, with a 9-by-13-inch pan, you’ll have great leftovers, as this stuff reheats incredibly well.

Mouth-watering banana bread loaf.

Banana bread smells absolutely wonderful when it’s baking and it’s incredibly soft and moist and warm when you eat a slice when it’s freshly out of the oven, with just a bit of butter on it. I want to go bake a loaf of banana bread right now.

Banana bread is also really easy to make. All you need is a greased loaf pan and some common dry and wet ingredients: bananas, sugar, an egg, butter, flour, baking soda and salt. That’s all you need for basic banana bread, and you can add a small amount of whatever you like for additional flavor, such as chopped nuts, chocolate chips, cinnamon, or vanilla — it’s all good.

Here’s the basic banana bread recipe I use. You basically mix the wet ingredients in a bowl — bananas, eggs, and butter — and then add the dry ingredients, starting with sugar and then with the other items (including any extra items you like, such as some chopped nuts or chocolate chips). It turns into a thick batter, which you then put in a loaf pan and bake. Easy as can be! It smells wonderful and is a fantastic little sweet treat.

Scones, both for now and for tomorrow’s breakfast.

Scones are just about as easy as banana bread and use a very similar ingredient list, but you don’t even need a loaf pan for these, just a baking sheet. Scone dough is really thick, so you just make a big ball of it, slice it into eight thick wedges, separate them a bit and bake them. It smells fantastic, depending of course on what flavors you add, but that’s part of the beauty of it. Scones can basically be whatever flavor you want.

This basic scone recipe from King Arthur Flour is a good one to work from. Even that recipe says to fill in the blank with whatever dried fruit, sweet chips or other items you want to add to the scones. I love blueberry scones and chocolate and peanut butter scones, myself.

King Arthur Flour’s recipe says to mix together the dry ingredients, mix together the wet ingredients in another bowl and add the wet to the dry ingredients while stirring before separating and baking. That’s it. It smells so good, too.

Get up early and make a really easy breakfast casserole.

All you need for a really good breakfast casserole is eggs, bread, shredded cheese, a bit of cooked chopped meat like bacon or sausage, some savory vegetables like chopped onions and peppers (which you can buy frozen at the store, already chopped, at a nice price), a tiny bit of milk and some garlic and black pepper for flavor. It cooks together in a greased baking dish and smells incredible as it starts to finish, and it reheats wonderfully too.

I like this simple version from AllRecipes as a starting point. Our actual home recipe is tweaked pretty heavily to take into account everyone’s various taste preferences.

If you want, you can literally make it the night before. Just cover it and put it in the fridge. You’ll want to add just a bit more to the baking time, maybe five minutes or so, but you can just get up in the morning, turn on the oven, and pop it in there. It’ll smell wonderful by the time you get out of the shower and be ready to pull out when you’re just about ready to go for the day.

Warmth from the oven makes a home more inviting and comfortable in the winter.

The items cooking inside fill your home with wonderful aromas. The heat actually works in your favor (as you want to heat your home in the winter) rather than working against you. All of it works together to create a sense of coziness that’s hard to replicate any other time of the year.

Enjoy your oven this winter. Put some simple recipes in there to bake, often. Your home and your belly and your heart will be glad you did.

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Five contentious personal finance policies the Tories could pursue with their huge majority

Five contentious personal finance policies the Tories could pursue with their huge majority

With the biggest majority since 2005, and the highest number of Tory MPs since the 1980s, Boris Johnson could use the next five years to push through some radical, and not necessarily popular, policies

Edmund Greaves Fri, 12/13/2019 - 11:09

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With a “stonking” majority secured, Boris Johnson’s government now has five years in which it could pursue some controversial policies that might be unpalatable to some voters.

1. Individuals could pay more towards social care

The funding of social care for the elderly is a growing issue. As the population of the UK continues to age, there will be increasing demand for older-age care. However, governments have so far failed to tackle the issue and provide any clarity on what the state can and will provide and what individuals will be expected to stump up for their own care. 

The issue is politically toxic, particularly even the suggestion that people may have to sell their homes to pay for later-life care. 

Former Conservative prime minister Theresa May attempted to address the issue in her 2017 manifesto. However, the solution she put forward was quickly labelled a "dementia tax" and dealt a huge blow to her election hopes. 

Only a government with a strong majority could risk tackling the issue again. Now in this position, Boris Johnson may feel emboldened to take it on. 

This time around the Tories have been much more vague about social care. The party has committed to £1 billion extra in social care funding per year. But beyond that not much detail.

The government could now take the opportunity to administer some tough medicine – namely that people with assets should be expected to contribute to their own social care.

2. Pensions tax relief could be cut

Tax relief on pensions was worth as much as £40 billion this year. Successive cash-strapped Chancellors have eyed up that growing sum and questioned whether or not it still represented good value for money. 

The current system of tax relief means that the highest earners are the greatest beneficiaries. Basic rate taxpayers see their pensions topped up with an extra 20% from the government, whereas higher rate and additional rate receive 40% and 45% top ups respectively. 

For years, governments have considered replacing this system with a flat rate of pensions tax relief. It would mean a lower tax bill overall, but would likely benefit lower earners, especially if, for example, the flat rate was set at 25% or 30%. 

No government has yet felt able to take this on, and risk upsetting higher earners by removing one of the few - and most generous - tax breaks they receive. 

However, with a strong majority - and new supporters in what were once Labour heartlands - the Conservatives may feel able to revisit it. 

3. Tax could be simplified

The UK tax code is the largest in the world and has tripled in size since the 1990s. A government with a strong majority could take strides to remove some of this complexity. 

The government already commissioned a study into simplifying Inheritance Tax (IHT), one of the least popular taxes. While the recommendations that followed were fairly tame, this was during Theresa May’s hung parliament tenure.

Having a big majority could create an opportunity to make greater changes.

However, promises made in the Conservative party manifesto could end up having the opposite effect. The government has once again pledged not to increase income tax, national insurance or VAT. These taxes combined provide the vast majority of funds to the public coffers.

Should the government wish to increase its income, it will have to look at less-straightforward ways of doing so. Governments in this position often target more complicated or lesser-known taxes hoping that there will be less scrutiny and public anger. Therefore, having tied its hands on its three main taxes, other taxes may rise or gain in complexity. 

4. Bring in the "Everything Isa"

Isas are meant to be so simple. Put up to £20,000 a year into one and you’ll get no tax implications on any of the deposit or growth inside.

But they’ve grown more complex over time and there is now retinue of Isas to choose from, leaving normal savers frequently confused. There is now a:

• Cash Isa
• Innovative Finance Isa
• Help to Buy Isas (now defunct)
• Junior Isas
• Lifetime Isa
• Stocks and Shares Isa

The Help to Buy Isa has now gone, but plenty of people still hold them. The government could act to create the fabled “Everything Isa.” This would be one simple Isa allowance of £20,000 pots to be spread over whichever and however many Isas an individual chooses. 

Savers could choose how to spread their money depending on whether they had the time frame and appetite to invest, were planning to buy a home, or wanted to keep their money in cash. 

5. Reform house building policies and stamp duty 

Housing is one of the most politically-contentious issue the country faces, although it appears to have been forced down the list of priorities in this election.

The Tories have made a number of proposals for helping more people to own homes, but a lot of it is just tinkering. A more radical approach could do any one of the following:

- Build a lot more houses. This one is controversial though because individuals often resist having additional housing built near their own homes, but also don't want housing built on the green belt. 

A recent Bank of England study claimed that the high cost of housing was down to low interest rates rather than a supply issue. In essence, because property is an asset not a consumable item, low interest rates encourage more people to own and horde property because the long-term returns are much more guaranteed than putting your money into a savings account.

- Get rid of stamp duty for good. Many argue that stamp duty gums up the market because it disincentivises people from moving, it's unfair because it offers a tax break to one segment of the population but not others, and it discourages efficient use of properties. Empty nesters are sitting on big properties because they don’t want to pay out stamp duty when they downsize, and others stay in homes they have outgrown for the same reason and because there is not the supply of larger homes required. 

- Bring back 100% mortgages. The single biggest barrier for many young people isn’t whether they earn enough money to pay a mortgage, it's that deposit requirements combined with high house prices keeps huge numbers of people out of the housing market.

Bringing back deposit-free mortgages wouldn’t be without risks, but interest rates are incredibly low at the moment. A Tory government would have to repatriate some powers from the Bank of England to do it, but this isn't beyond possibility and would fit with a wider narrative of a post-Brexit government determined to reshape the country. 

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Can my husband get maternity allowance?

Can my husband get maternity allowance?

I am self-employed and pregnant. I earn £36,000 a year, but if I take maternity leave and the statutory maternity allowance, my monthly income will fall from £3,000 to £595. I earn more than my husband, so we think perhaps he should look after the baby. Can he take ‘maternity’ leave instead of me?

David Samson Fri, 12/13/2019 - 00:03

From

AP/Grantham

Assuming your husband is working as an employee, he may be able to claim statutory shared parental pay. This is available if you are entitled to statutory maternity pay, maternity allowance or statutory adoption pay. To claim these benefits, you must have worked for the same employer for more than 26 weeks by the time your baby is due. You also need to earn at least £118 a week before tax. If this is the case, then you can share some of your leave or pay period with your partner.

To qualify, he will have to have been working for his employer for at least 26 weeks at the date 15 weeks before the baby is due. He also must have been earning at least £118 a week on average. Please be aware that even if your husband takes parental leave, as the mother you will need to take at least two weeks of maternity allowance.

David Samson, welfare specialist at debt charity Turn2u

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If you have been treated unfairly by a firm send the details to Moneywise’s Fight for your Rights and we could take up the fight for you.

Email fightback@moneywise.co.uk

If you have a question about your investments or investing in general, put it to our Investment Doctor.

Email editor@moneywise.co.uk

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What the new Conservative government means for your pension

What the new Conservative government means for your pension

Boris Johnson has pledged that the new Conservative parliament will not curtail existing retirement benefits, but he’s offered no reassurance to Waspi women

 

Rachel Lacey Fri, 12/13/2019 - 09:59

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The Conservative party promised to preserve the triple lock on the state pension in its general election manifesto. This means that the state pension will continue to increase each year by the greater of wage growth, inflation or 2.5%.

It means that in April next year, state pension payments should increase by 3.9% of £343 a year.

Controversial winter fuel payments – which pay all eligible retirees between £100 and £300 once a year, irrespective of income – will also be protected alongside free bus passes and other pensioner benefits.

As part of ongoing reforms to auto-enrolment, the Conservatives will also review the tax treatment of pension contributions of the lowest paid workers, usually women. This will target those earning between £10,000 and £12,500 a year who often miss out on tax relief on their pension contributions.

The result of the election, however will come as a blow to older Waspi women. Jeremy Corbyn had pledged that if Labour won the election it would fully compensate women who have missed out on years’ worth of state pension following increases to the state pension age which they claim were not sufficiently communicated. Compensation for the four million affected women born in the 1950s was estimated to cost £58 billion with individual payments reaching as much as £31,300.

Boris Johnson has not made any pledges to support or help these women in any way.

While Brexit will undoubtedly be at the top of the new government’s to-do list, Tom McPhail, head of policy at Hargreaves Lansdown says, pensions minister Guy Opperman’s ‘oven-ready’ pensions bill should be passed quickly, following time constraints in the last parliament. “This Bill will strengthen protections for occupational scheme members, pave the way for pensions dashboards to be developed and open up the option of a new type of shared-risk pension scheme.”

He adds: “In addition we expect to see pension tax reform back in the table. This is for a couple of reasons. Firstly, the Conservatives have already acknowledged the problems with the Annual Allowance Taper and its impact on higher earners such as doctors; they had also acknowledged the problem of lower earners missing out on tax relief because of the way their employer operates their scheme. They have to fix these problems. Tinkering will only make the pensions system more dysfunctional than it already is; the best answer would be a fundamental reform of the tax treatment of pensions across the board.

“The pressure is on the Chancellor to be positive and ambitious, the spending taps will be turned on and we expect a big Budget in February. The Conservatives have also promised not to raise income tax, National Insurance or VAT so at the margins they will look for fiscal savings; pensions cost tens of billions of pounds and there is the opportunity to save money here. Finally, the new government has the political capital to tackle knotty domestic issues such as pensions and social care which would otherwise have been too difficult to even attempt.

 “We believe there is a way the UK’s pension system could be made simpler, fairer and more efficient, with proper incentives to save for all; there is now the opportunity to pursue this reform.”

Jon Greer, head of retirement policy at Quilter took a similar view and said that it was now time for issues like pension and social care to come back to the fore. “With the political posturing over hopefully these policy areas will get the attention they deserve. And with a Queen’s Speech just a week away we could get clarity sooner rather than later. However, the dreaded B word will likely mean we still have some time to wait for any meaningful change,” he says.

 

 

 

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