Amazon Prime Rewards Visa Signature Card Review – 5% Cash Back at Amazon

Today we review the Amazon Prime Rewards Visa Signature Card. For those who frequently buy from Amazon, it’s hands down the best rewards card available. As you’ll see, you can earn up to 5% cash back with no annual fee.

Every month I spend a few minutes reviewing the monthly credit card purchases my wife and I make. Seventy-five percent of that time is invested in looking at our Amazon transactions. It seems like we have a couple Amazon boxes delivered to us by our postal carrier every day. By the end of the month, we’ve accumulated a few pages’ worth of Amazon statements.

Luckily for us, Chase has launched a new credit card specifically designed for people like me–those addicted to online Amazon shopping.

Amazon Prime Rewards Visa Signature Card Rewards Review

Earlier this year, Chase opened up applications on its new Amazon Prime Rewards Visa Signature Card. All Amazon prime members will receive the following benefits when using their Amazon Prime Rewards Visa Signature Card:

  • 5% cash back at Amazon on all purchases.
  • 2% cash back at gas stations, drugstores and at restaurants
  • 1% cash back on all other purchases
  • $70 Amazon gift card immediately after approval
  • No annual fee / No foreign transaction fees

First, let me be blunt about the value of the Amazon Prime Rewards Visa Signature Card. It comes from shopping at Amazon.com, nothing more. There are better cash back percentages out there for your everyday spending, including the 2% offered at gas stations, drugstores, and restaurants (the Blue Cash Preferred Card® from American Express is a good start).

And while the $70 up front Amazon gift card is nice, a few other cards on the market today offer much better up-front bonuses. For example, the Barclaycard CashForward™ World Mastercard® opens with a $200 bonus for new cardmembers.

The standard purchase and balance transfer APR is 15.24% – 23.24% variable, and the cash advance APR is 25.74% variable. There are over-limit and late payment fees of up to $37, and there are no balance transfer promos associated with the Amazon Prime Rewards Visa Signature Card. The balance transfer fee is $5 or 5% of the transfer, whichever is greater.

So it definitely has some drawbacks. But if you’re a frequent Amazon Prime shopper, read on.

Prime Member 5% Cash Back Savings

The Amazon Prime memberships that qualify for 5% cash back are currently as follows:

  • Annual and monthly Amazon Prime subscriptions and members of their Amazon Household (excluding Amazon Prime video subscriptions)
  • Members who share Prime benefits via an Amazon Household
  • Amazon Prime Fresh
  • Amazon Family
  • Amazon Prime Student
  • Trial memberships of annual and monthly Amazon Prime subscriptions, Amazon Prime Fresh, and Amazon Prime Student (excluding Amazon Prime video subscriptions)

How much can you save by owning this credit card? Let me do my best to apply my family’s personal spending habits and how much we hope to save annually by using the card for every purchase we make on Amazon.

Amazon Credit Card Savings Example

Every month, my wife and I attempt to budget $400 in spending at Amazon. We buy just about everything other than groceries at Amazon. And we have a Siberian husky and two kids, a 3-year old and a 6-month old, to take care of. That means dog food, diapers, toys, books, and a variety of cleaners and gadgets that keep the smells in this house pleasant. When you factor in the occasional gift or tech gadget, we’re usually well past our $400 budget target.

In 2016, we spent a total of $6,293 at Amazon.com. Had we had access to the Amazon Prime Rewards Visa Signature Card, our cash back savings would have been $314.65. Instead, we used our Citi DoubleCash Card for nine months of the year, which earned 2% cash back. Then we used our Chase Freedom Visa, which earned 5% cash back, in the fourth  quarter.

In total, our cash back savings in 2016 on Amazon.com purchases was $167.35. In other words, we missed out on a savings of $147.30.

Editors Note – If you are not a member of Amazon Prime, your cash back savings at Amazon.com using the Amazon Prime Rewards Visa Signature Card is 3%.

Future Amazon Savings

Are there families that spend more than we do at Amazon who will be able to save even more? Yes, but the majority of people likely won’t be spending as much, so the savings won’t be as large. Even so, consider that Amazon is still a growing company, looking to expand into other verticals on a daily basis. Prime members saving on groceries today could be saving on auto parts, medicine, and a host of other products tomorrow if and when Amazon opens more marketplaces.

Our $6,000 Amazon annual spending amount could continue to grow, too. Owning the Amazon Prime Rewards Visa Signature Card and its 5% cash back rate at Amazon is a must for our family. Even for the casual Prime Amazon spender, there’s little harm and good benefit to owning this card, applying it to your Amazon account, and earning the high rewards rebate.

  • Alternative Option – The Discover it 18-Month Balance Transfer Offer gives cardholders a 5% cash back rewards rate on all Amazon.com purchases in the fourth quarter of 2017, and Discover will double the cash back earned in the first full year of card ownership. This means cardholders will earn 10% cash back on Amazon purchases (up to $1,500 spent) for three full months–just in time for holiday shopping!

5 Ways to Build Credit Without a Credit Card

Building good credit has many benefits. It helps you get low rate loans and approved for an apartment rental, just to name two. It can be a challenge, though, to build credit without a credit card. Here are five ways to do it.

Americans’ credit scores are on the rise. Not everyone is necessarily cheering this news. In fact, this news might make you a little bit nervous if you’re afraid your score isn’t keeping up.

The advice you’re undoubtedly getting from friends and financial blogs is that a credit card is the fastest way to build up your credit. What if you don’t have a credit card? You might be thinking that you’re out of luck when it comes to building your credit if you don’t have any plastic in your wallet.

Some people prefer to live the cash-only lifestyle and forgo plastic payments. Others shy away from credit cards because of past credit issues. Not having a credit card with your name on it can pose problems when it’s time to apply for a mortgage, get a car loan, or try to secure cash to start your own business.

While it’s true that credit cards make it easier to build your credit legacy quickly, you actually have a few other options. You can do some things to make the payments you make for everyday things boost your credit history. Take a look at five ways to build credit without a credit card.

Be Consistent With Your Student Loans

Student loans can help you build credit. While you may not like making the payments every month, consistent on-time payments will help your FICO score.

Federal student lenders report student loans to credit bureaus. Your credit score will definitely benefit if you’re making your payments on time and taking measures to ensure that you never miss a payment. While it’s never a good idea to take out student loans solely for the sake of padding your credit, if you do need them, you can use them to your advantage. And if you find yourself paying a high interest rates on your current student loans, you can always consolidate them through a loan with SoFi.

Apply for a Bank Loan

A loan can give your credit a big boost. Applying for a small loan from your local bank or credit union can be a smart move if you have a very lean credit history. Some banks and credit unions actually offer loans that are designed to boost credit. You can often borrow as little as $1,000 and pay off your loan over the course of a year.

We do not recommend borrowing just to build credit. If you need a loan, however, a small short-term loan can help your credit profile. In addition to banks, you could consider a loan from LendingClub or Prosper.

Get Your Rent Reported

Your monthly rent payments could be paving the way to good credit. You can actually take steps to add your good rental payment history to your credit report. The good news is that many corporate landlords automatically report rent payments to credit agencies.

Independent landlords aren’t as likely to bother with reporting your payments. However, you can actually register with a service like Rental Kharma or Rent Reporters to get your positive payments reported. You will simply need to arrange with your landlord to have your payments verified each month.

Become an Authorized User

Becoming an authorized user on someone else’s credit card is the easiest way to improve your credit.

The first step is finding someone willing to let you do this. A parent, spouse, or other family member is usually the best option. This plan probably won’t be as effective if you choose someone who has only owned a credit card for a few years. Joining someone with a long history of carrying a card and paying every bill on time is your best bet.

Step two is . . . well, there is no step two. You don’t have to use the card. In fact, you don’t even need to carry the card. Just being an authorized user can help improve your score.

One word of caution: If the account holder maxes out the card, this could hurt your score. Your score could also go down with late payments on the account. So be sure to work with a family member who is good managing their money.

Get a Secured Credit Card

Yes, this article is about building credit without a credit card. A secured credit card, however, is different than a traditional card.

A secured credit card is backed by a cash deposit you make to credit card company. Your credit limit typically will equal the amount of your security deposit. If you close the account, the credit card issuer refunds your security deposit. The key is to understand that you must still make monthly payments on the outstanding balance. The security deposit is there to protect the card issuer in the event you fail to make a payment. But a late payment will still hurt your credit score.

One benefit of a secured card is that they don’t require a solid credit history. As a result, they offer a good way to build credit if you are starting from scratch. And because the credit limit is tied to your deposit, there’s a limit to how much debt you can go into.

Finally, if you don’t know your credit score, you can check it for free. In fact, there are several free ways to get your FICO score.


How to Find the Best Car Insurance for Teens

Adding a teenager to a car insurance policy is costly. If done correctly, however, there are ways to reduce those costs. Here are 5 ways to find the best car insurance for teens.

Having a teen who can drive is a big adjustment. There’s helping them learn to drive and the worrying when they are on the road. And then there’s the rise in auto insurance rates, which you’ll notice immediately.

It’s no secret that teen drivers are pricey to insure. Research from AAA shows that teen drivers are three times more likely than adults to be involved in a fatal crash. Insurance companies know that teens are riskier to insure than older drivers.

The good news is that there are some steps you can take to keep rates under control.

The Basics of Buying Car Insurance for Your Teen

Every driver is required to be covered by a car insurance policy. A teen won’t automatically be covered under your policy just because they are a dependent. You have to add them to your policy.

It’s going to be cheaper in almost every case to add a teenager to your existing policy than it would be to purchase a separate policy. However, you’ll still want to do a little bit of research.

The first step is reaching out to your current insurance company or agent. It may be a good idea to reach out as soon as your teen gets a permit. You may not be required to add them to your policy until they have their license, but this varies from one insurance company to another.

Here are the steps to take to make sure your teenager has insurance waiting as soon as a driver’s license is issued:

  • Get a quote from your insurance company for adding your child to your existing policy
  • Get a quote from at least one other agency to see if you could get a better rate than what you’d pay with your current company
  • Add your teen to your policy once a driver’s license has been issued (or earlier if required)

It may be possible for your teen to purchase a car and obtain insurance alone. However, state laws will determine whether or not this is a possibility in your case. Minors generally can’t own property or sign insurance contracts without at least the consent of a parent.

Comparing Auto Rates

Adding a young driver to your policy is a perfect time to compare insurance rates. Here are several of the best auto insurance options for teens:

USAA: For those in the military or with qualifying family members who serve, USAA offers excellent rates. It also offers a good student discount for high school and college students.

GEICO: Best known for its commercials, GEICO offers low rates by selling direct to consumers. Unlike most other insurance companies, it doesn’t have an army of agents.

Progressive: If your teen driver is particularly safe on the road, Progressive’s Snapshot may be a real money saver. It tracks the operation of the car for a period and may offer discounts based on the results.

State Farm: They offer significant discount opportunities for young drivers. These include safe driving discounts, good student discounts, and driver safety discounts.

Allstate: Finally, Allstate offers a good grades discount. It also offers what it calls a teenSMART discount. According to Allstate, you can save “up to 10% when your young [driver] successfully completes the teenSMART driver education program.”

Getting Insurance When a Teen Belongs to Two Households

The parent with primary custody is typically responsible for adding a minor driver to a policy. However, some laws or insurance policies may require both parents to provide insurance for a teen driver. Talk to your insurance agent to make sure you understand the rules.

The Car Your Teen Drives Will Help to Determine Your Rate

Parents can expect to pay an additional $671 annually once they add a teen driver to an auto policy. One way to get the best rate possible is to assign your teen to the cheapest vehicle you own. You can also shop around for vehicle models with low auto insurance losses if your teen needs to purchase a new car. Vehicles with low losses are far less expensive to insure.

The 100 Mile Rule

For college students, they can save by leaving the car at home. If your student goes to school more than 100 miles from home but leaves the car at home, most insurance companies discount your premiums.

Don’t Forget to Get Discounts

While you may be dreading paying more to have a teen driver in your household, there are many opportunities to get discounts. Here are some of the more common discounts offered by many insurance companies:

  • Good student discounts (typically requires a ‘B’ average or better);
  • Snapshot or other driver evaluation technology
  • Multiple car discounts (one reason it’s usually best to add a teen to your policy)
  • Completion of Driver Safety Programs
  • 100 Mile Away discount (for college students)

Your auto insurance agency may even offer a discount if your teen signs a driving contract and promises to always wear a seatbelt, call for a ride when impaired, practice good car maintenance, and never text or eat while driving.


The Pros and Cons of Investing in Peer-to-Peer Loans

Peer-to-peer (P2P) investing offers the potential for high returns. With those higher returns, however, comes higher risk. Here we cover the pros and cons of investing in peer-to-peer loans.

peer to peer lending pros and cons

P2P investing has been growing in popularity in recent years. Some estimate that the market will near $900 billion by 2024. But should you join the party?

You might want to consider it, once you understand the benefits and drawbacks of investing in these types of loans. Here’s a rundown of exactly what to expect and what you should keep in mind before investing.

The Benefits of Investing in Peer-to-Peer Loans

Investing in P2P loans can be a great opportunity for you and your money. Here’s why:

Fast, easy online experience

The entire process of P2P investing takes place online. That’s everything from completing the paperwork to investing, to receiving income payments.

There’s no need to go to a physical location, or even to make lengthy phone calls. You simply sign up on the P2P platform, transfer funds to the account, select your investments, and begin receiving monthly payments.

Related: Tips for Lending Club Investors

Easy diversification with a small investment

P2P platforms offer what is commonly referred to as “notes.” These represent small slivers of whole loans. On most sites, you also have the option to invest in an entire loan. But the more common method of P2P investing is to invest in notes.

Each note can be purchased for as little as $25. This means that with a total investment of $1,000, you can purchase shares in as many as 40 individual loans. With $10,000, you can invest in as many as 400 individual loans.

What’s more, some P2P platforms let you establish criteria for the notes that you will invest in. For example, you can choose to invest primarily in higher grade loans, where your investment is at less risk. Alternatively, you could select lower grade loans that offer higher interest rates.

Much higher rates than bank investments

It’s common knowledge that savings accounts typically pay no more than 1% per year right now. You can earn a bit more if you are prepared to tie up your money for several years (such as with CDs). By contrast, it’s easily possible to earn high single digit returns on P2P investments. You can even earn low double digits if you’re prepared to take on additional risk.

Investing just part of your fixed income holdings in P2P lending can help to increase the overall rate of return on that part of your portfolio.

Related: 5 Shrewd Ways to Adjust Your Portfolio As You Near Retirement

Regular monthly income payments

When you invest in a certificate of deposit, you don’t receive any interest income until the certificate matures. If you invest in a bond, your interest income will be credited quarterly or semiannually. But when you invest in P2P loans, you will receive payments every month.

This makes them perfect for generating a regular income.

There is one aspect of the monthly income situation that you do need to consider. Since each payment includes both interest and principal, the notes are self-amortizing.

Let’s say you have a portfolio of five-year notes and you take the monthly payments as income each month. At the end of the term, your account will amortize down to zero.

That means that you have to continually reinvest at least a portion of your investment income.

The Drawbacks of Investing in Peer-to-Peer Loans

There are some downsides to using this investment vehicle to grow your money. Here are a few we think you need to note.

You need to be an accredited investor

Not just anyone can invest in P2P loans. State and federal laws often require that you be a more seasoned investor and have greater financial strength. For this reason, P2P lending platforms generally require that you qualify as an accredited investor.

The SEC defines an accredited investor as:

”…a natural person…who (has) earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).”

Individual states often impose additional restrictions. The reason for these requirements is that P2P investing is relatively new and includes a level of risk that has not yet been fully measured.

Learn More: Investing 101 for first-time investors

The history of P2P lending isn’t that deep

This gets down to the risk factor with P2P lending. This investment activity only got started around the time of the financial meltdown. The vast majority of the experience has been in the years since that event. That includes the two largest P2P lender platforms, Lending Club and Prosper.

How investments with these lenders will perform in the next recession — given that they now have large, mature portfolios — cannot be known at this point in time. But what we do know is that when recessions hit, credit quality declines across the board.

Most P2P loans are for debt consolidation

Debt consolidation loans tend to be riskier than other types of loans. They represent the process of replacing one debt with another. But more specifically, debt consolidation opens the possibility of a borrower incurring even more debt.

For example, once the borrower’s credit cards have been consolidated in a new personal loan, there’s an excellent chance that the borrower will run up those credit cards again. If he does, the debt consolidation loan may become even riskier.

Resource: 5 tips for better success when investing in P2P loans

Loans are unsecured

Loans made on P2P platforms are usually unsecured. That means that in the event that a borrower defaults, there is no collateral waiting to be seized to satisfy the debt. The borrower could default, with no recourse for investors.

There’s generally no secondary market to sell your investments

This situation is gradually being addressed by some of the larger P2P lenders, but only very slowly and on a limited basis. The problem is that once you buy a note, you’re expected to hold onto it until it is fully paid. That can take up to five years. If you need the cash out of your investment, you may not be able to sell the note to another buyer.

Where secondary markets do exist — usually through a third-party contract provider — you often have to sell your notes at a deeply discounted price.

Related: Five Unusual “Investments” You May Not Have Considered

When all is said and done, P2P investing can be an excellent way to increase the rate of return on the fixed income portion of your portfolio. As long as you know what the risks are and invest accordingly, it could be a winning addition to your investment lineup.


What is the Best First Credit Card for Young People

Picking your first credit card can be a challenge. You want a card with great rates and features, and one you can actually get. Here are some options for finding the best first credit card.

Best First Credit Card

When you’re just starting out without much credit history, finding the right credit card can be tough. Limited credit can limit your options. If you have credit, companies may be flooding you with flashy mail offers for credit cards.

Either way, we’ve sorted through the options on the market today to figure out which is the best first credit card for young people. But before we give you our picks, let’s talk about some general credit card advice.

Types of Cards

It pays to know some basic credit card terminology. If you have at least a small credit history, you may qualify for a regular credit card, albeit likely one with a low limit. But if you have no credit history at all, you may need to opt for a secured credit card.

A secured credit card has a deposit behind it. For example, if you have a $200 limit, you’ll have to place a $200 security deposit with the card issuer. If you miss a payment, they’ll take your payment (and any applicable fees) out of that deposit account.

Secured credit cards are a way to get a line of credit even if you have no credit history or are repairing bad credit. These cards don’t usually come with the extra perks you can get with a regular credit card. But after several on-time payments, you may be able to convert your card to a regular rewards credit card.

Credit card issuers also have cards designed specifically for students. These cards are easier to get if you have no credit history. We’ll look at some of these in a moment.

Should You Check Your Credit Before Getting Your First Card?

You may be unsure of where your credit stands. Knowing your credit score can help you decide on the best option. Unless you’ve checked your credit score recently, however, you probably don’t know your score.

Luckily, there are plenty of ways to figure out your credit score for free. Some of these options give you an approximation, but it’s a fairly accurate one. And let’s be honest, you’re not applying for a mortgage here. There’s no reason to go out and spend $50 pulling your FICO credit score from each of the credit bureaus. Just get a ballpark idea of your score’s range. This will help you figure out which credit cards to apply for.

Some options for checking your score for free include:

  • Credit Karma: A credit-estimating site that also makes credit card recommendations based on your store.
  • Quizzle: Also gives you an approximate credit score and makes recommendations based on it.
  • Discover: Their Credit Scorecard site is available to even non-Discover customers.

Bonus: These sites will tell you specific ways you can improve your credit score, too.

Once you know your general score range, you can use the sites above, specifically Credit Karma and Quizzle, to search for cards by average approval score. Applying for a card for those with excellent credit when your score is in the 650 range won’t do you much good. So be sure to find a card that’s likely to match your score.

What Should You Look for in a First Credit Card?

So what criteria, exactly, are we using to figure out which is the best first credit card for young people? Here’s what’s on our list:

  • Credit Score Requirements: We’re looking for cards that those with low-to-average credit will qualify for. (We’ll also look at a couple of secured cards for those with very low or no credit.)
  • Late Payment Forgiveness: Many cards will forgive your first late payment or up to one late payment per year. This is a great perk if you’re just getting into the swing of paying your own bills.
  • No Annual Fee: With your first credit card, you won’t likely qualify for a sky-high credit limit. This puts a damper on your ability to earn enough rewards to out-earn an annual fee. So we’ll only be looking at cards without an annual fee.
  • Limits That Aren’t Too Low: If your goal is to open a card for most of your everyday spending, a $250 limit probably won’t cut it. So we’re looking for cards that generally extend $500+ in a credit line to first-time card users.
  • A Rewards Program: Rewards programs are the icing on the cake here. Your first goal is likely to build your credit by using a credit card responsibly. But there are plenty of excellent options available, so you should look for some sort of rewards.
  • Low-Ish Interest Rate: The bottom line here is that credit cards will always have a fairly high interest rate, especially compared with secured loans. But yours doesn’t have to be through the roof, either. Of course, pay your card in full each month, and you won’t have to worry about the interest rate.

This is the criteria we used to narrow down our list, and then to choose the best credit card for new credit card users.

The 5 Best First Credit Cards

1. Discover it® for Students

If you’re still in school, snap up this card before you graduate. It’s great for those with a very limited credit history, and it has some excellent perks, including:

  • No annual fee
  • $20 cash back bonus each school year your GPA is 3.0 or higher, for up to 5 years
  • 5% cash back rewards on categories that rotate quarterly
  • Unlimited 1% cash back on other purchases
  • Dollar-for-dollar cash back match on all rewards in the first year
  • No late fee on first late payment
  • No over limit or foreign transaction fees
  • Late payment won’t raise your APR
  • Free FICO score each month

2. Capital One® Platinum Credit Card

This card is for those with low to average credit, so if you’re somewhat established, you may qualify. Its benefits include:

  • No annual fee
  • Access to Capital One Creditwise
  • Access to a higher credit line after 5 on-time monthly payments
  • Pick your own monthly due date and payment method

3. Discover it® Secured Card – No Annual Fee

This is a good secured credit card offer that even comes with a cash back program! It offers:

  • Choose your security deposit ($200 minimum)
  • Earn 2% cash back at restaurants and gas stations on up to $1,000 each quarter
  • Earn 1% cash back on other purchases
  • Automatic match on first year’s worth of cash back rewards
  • No annual fee
  • Free FICO score each month
  • Automatic monthly credit reviews after seven months to determine if you can convert to a non-secured credit card

4. Blue Cash Everyday® Card from American Express

If good management of your student loans or other debts has left you with slightly higher credit, you may be able to qualify for this card. It’s a great option, as it offers:

  • 0% introductory APR on purchases and balance transfers for 12 months
  • Variable APR of 13.99% to 24.99%
  • No annual fee
  • $100 cash back bonus when you spend $1,000 within three months of opening the card
  • 3% cash back on supermarket purchases, up to $6,000 per year
  • 2% cash back at gas stations and select department stores
  • 1% cash back on other purchases
  • Learn more n other cash back credit cards by visiting CardRatings.com

5. Digital Credit Union Visa Platinum Secured Credit Card

This secured card offers a really low APR, so it’s a good option if you’re looking to finance a larger purchase. You can also borrow against money held in a DCU savings account. Its benefits include:

  • No annual fee
  • No fees or rate hikes for cash advances and balance transfers
  • 12.5% APR
  • No over limit fees

The Best First Credit Card for Young People

So which of these cards do we think is best? When it comes to introductory credit cards, especially secured cards, you really can’t beat Discover right now.

If you need a secured credit card, the Discover it® Secured Card – No Annual Fee has pretty much everything you need–no fee, flexible deposit options, and a great rewards program. Plus, Discover makes it easy to convert your card into a regular rewards credit card in a relatively short amount of time.

What if you do have a decent credit history or your history is just limited? If you still qualify as a student, the Discover it® for Students is an excellent card to start with. If not, you might see if you’ll qualify for the regular Discover it card. Those with average credit may qualify, and it offers many of the same benefits, including the cash back rewards matching for the first year.


How to Save Money on Homeowners Insurance

Homeowners insurance is a necessity for those who own a home. It’s also required by mortgage companies. Here are some practical ways to save money on homeowners insurance.

We’ve written in the past about how to save money on health insurance, life insurance, and car insurance.

Today, I’m going to round things out with an article about saving money on your homeowner’s insurance. If you have a mortgage, this is likely a mandatory expense, as your lender will require it. If you own your home outright, it’s simply a smart one.

Just because you have to have homeowner’s insurance, though, doesn’t mean that you are stuck paying an arm and a leg for it. What follows is a list of eight tips for reducing your premiums. Combine them all, and you could be save a ton of money while protecting your home from damage or loss.

1. Focus on your rebuilding costs

When you think of homeowner’s insurance, what’s the first thing that comes to mind? For me, it’s the thought of my house burning down, and my family losing everything that we have. My second thought is of being burglarized (which actually happened in 2009), and all of my valuables taken. Those are my whys.

Now, how do you determine how much insurance you actually need? Is it dependent on your home’s current value, if you were to sell today? The added value of everything inside the walls?

While you absolutely need to insure your home and its contents against destruction, there’s usually no need to insure the land that it’s built on. Thus, it’s important to think of your actual rebuilding costs (as well as the cost to replace your stuff) when buying a policy.

This may be wildly different than the current market value of your home, depending on a number of circumstances. However, it’s important to do a bit of research before settling on a coverage amount. If you don’t, you might end up over-insuring and paying too much each month.

2. Increase your deductible

In this way, homeowner’s insurance isn’t any different than other types of insurance. If you’re willing to bear a greater portion of the risk, you can save a significant amount of money.

To save money this way, simply call your agent and ask them to increase your deductible. In turn, your monthly payments should go down, possibly significantly.

It’s important to note that homeowner’s policies are managed a bit differently than car insurance or personal property insurance. Those deductibles are typically much lower, and bumping yours from $250 to $500 or $1,000 might not be a budget breaker.

Resource: Does Raising Your Car Insurance Deductible Also Save You Money?

However, many homeowner’s policies are percentage-based. This means that your deductible is actually contingent on the amount of coverage you hold (the value of your home and its contents).

My own insurance works this way, and the deductible is 1% of the policy coverage ($190,000). This means that every time I make a claim, I’m stuck paying the first $1,900. Were I to bump this deductible to 1.5% or 2%, in order to save on premiums, we would be talking about an increase of either $950 or $1,900. And that would probably sting a bit.

Depending on your policy, raising your deductible can be a great way to save money, month over month. Before you do this, though, just be sure that your emergency fund is large enough to cover your out-of-pocket expenses in the event of a disaster. Raising your deductible from $500 to $1,500 may save you $20 a month, but that’s not worth it if you don’t have that cash lying around in case of an emergency.

3. Upgrade your security

Beef up the protection around your home, and your insurance company will probably rewards you.

Things like deadbolt locks, burglar alarms, fire extinguishers, and smoke detectors can earn you a nice discount. In some cases, these discounts can offset most (if not all) of the additional costs of adding these safeguards, too. So, it’s well worth checking with your insurer for details.

Some home security companies also offer discounts to customers of certain insurance companies, which means you can double up on the savings.

For instance, my policy is through USAA, and I get a safe home discount for having security monitoring services. I also get a discount through my home security company (ADT), for being a USAA customer/member. Wins all around!

4. Bundle multiple policy types together

You will usually get a nice discount for carrying multiple policies with a single company, and it’s rare to find an insurance company that doesn’t offer at least one other insurance product.

Related: The Hidden Savings In a Rent Payment

I actually have two car policies, our homeowner’s policy, a personal articles policy (for jewelry and other valuables), and a life insurance policy all with the same company. The bundle discounts I receive, compounded with the already-lower rates, mean that I pay substantially less that I would if I had these policies spread around amongst multiple companies.

5. Location, location, location

This one is tough to implement if you already own your home. However, if you’re shopping around or plan to buy/build in the near future, it may be worth keeping in mind during your home search.

Your home’s proximity to fire hydrants, fire stations, and the like can (surprisingly) influence your premiums. Not surprisingly: closer is better.

No, it doesn’t make sense to move to reduce your premiums, but it’s worth keeping in mind when buying that new home.

6. Keep your credit report clean

Credit really is at the center of everything financial. It impacts your interest rates; potential employers can pull it when you apply for a job, and it can even mean higher premiums on your insurance policies.

Yes, like it or not, your credit report can influence your insurance rates. Insurance companies have no shame in considering clean credit to be an indicator of reduced risk.

Thus, it’s important that you check your credit report regularly, and fix any errors that you find. Of course, this is something you should be doing anyway – at least, if you ever want to lock in a lower interest rate on your mortgage refi or snag that exciting new rewards credit card.

Learn More: Get a Better Mortgage Rate Without Refinancing

Now, you just have more of a reason to stay on top of it all.

7. Ask about other discounts

The easiest way to get a lower price? Simply ask for one.

You can often get a group discount (e.g., alumni association, senior discount, etc.) just for asking. There are also discounts for home improvements that you might want to make anyway, or you can also let your insurance company know about certain neighborhood features of which they might not be aware (for instance, whether you’re in a gated community).

In the same thread as replacing smoke detectors and adding fire extinguishers, you may want to consider some “big ticket” repairs. Are you looking at replacing that old roof anyway? Ask your insurance company if there’s a discount if you opt for an impact-resistant material. Want to remodel the kitchen? Let your insurance company know you replaced that old electrical wiring, and it might snag you a few extra dollars off.

Related: Renovations That Can Hurt the Value of Your Home

Give your agent a call today and find out if there are any discounts they can apply to reduce your premiums. If you don’t currently qualify, perhaps there is a group that you can join or a home upgrade you can complete to get an additional discount.

The worst they can say is no, so it’s worth asking.

8. Shop around

Assuming you’re doing everything else right, another great way to save money on homeowners insurance is to comparison shop.

You can either call around to local agents or check a homeowners insurance comparison tool. Also ask friends, neighbors, and your credit union (if you’re a member). You may learn about big incentives, discounts, or at the very least, will likely hear a number of pros/cons for certain companies.

Whatever you do, be sure to buy your policy from a reputable company. That way, you won’t run into any problems if and when you file a claim.

Learn More: 10 tips most first-time home buyers don’t consider

So, there you have it. These eight simple tips for saving money on homeowner’s insurance can help you save quite a bit of cash each month.

Implement a few of them over time, and you’ll save even more. Be sure to ask each time you renew your policy whether there are additional discounts you could be getting, and shop around regularly to find the best price.

If you have any further suggestions, please be sure to share them in the comments.


What Happens to My Debt if I Die

Debt is a challenge to many in this life. But what happens to your debt when you die? The answer depends on a number of factors, including where you live, the type of debt, and whether a debt is secured.

what happens to debt if i die

Nobody likes the idea of leaving their loved ones saddled with debt when they pass away. You may wonder if your heirs will be stuck with your bills when you’re gone.

The simple answer is that laws prevent debt collectors, creditors, and other entities from trying to collect money from your relatives once you’ve passed away. Your retirement accounts and life insurance payouts are typically off the table for covering your debts, as well. Whatever is in your estate, however, is technically up for grabs if creditors want to try to collect your debts. They can make claims on the money and assets you’ve left behind.

Joint accounts present another complicating factor. Spouses, children, business partners, and other people you have relationships with could be responsible for a debt that’s left behind on joint accounts or shared possessions.

Your loved ones will also have some extra rules to comply with if you live in a community property state. People in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin have slightly more to worry about when it comes to leaving loved ones saddled with debt.

Are you concerned about what will happen to your unpaid bills and debts if you pass away? It’s important to know who could end up having to pay off your house, car, credit cards, or student loans. Find out what happens to the most common types of debt after death.

Types of Debt

Your Mortgage

A home mortgage is usually one of the largest debts a person could leave behind. If you co-own a house or leave it to an heir, you could leave someone with the responsibility of paying off the rest of your mortgage.

Your executor will have the option to pay off the mortgage using money from your estate. However, the executor can sell the home if there isn’t enough money in your estate to cover the balance of the mortgage. An heir could have a bit of a headache to deal with if you’ve taken an equity loan out against your home, especially if it leaves the home mortgaged for more than it’s worth.

Your Student Loans

Some people like to joke that the only way to avoid paying off a student loan is to die. This is a unique type of debt because it essentially never goes away until you pay it in full or pass away (or, in some cases, become permanently disabled). You can’t get rid of it through bankruptcy.

But it turns out that it can even come back to haunt your loved ones.

Your spouse could actually be responsible for any unpaid private student loans that you obtained during your marriage if you live in a community property state. According to NOLO:

In community property states, most debts incurred by either spouse during the marriage are owed by the “community” (the couple), even if only one spouse signed the paperwork for a debt. The key here is during the marriage. So if you incur a debt, such as a student loan, while you’re single, and then get married, it won’t automatically become a joint debt. (An exception is where a spouse signs on to an account as a joint account holder after getting married.) Some states, like Texas, have a more nuanced way of analyzing who owes what debts by evaluating who incurred the debt, for what purpose, and when.

From this we learn a few things:

  • Laws vary from state to state. What might be true in one state may not be the case in another.
  • In community property states, a spouse may be liable for the other’s debts, not just student loans.
  • This stuff is complicated, and we can’t always let common sense guide us.

One good piece of news is that federal student loans are discharged when you die. In addition, Sallie Mae and Wells Fargo will forgive your debt if you pass away. Some of the newer student loan refinancing companies also allow for discharge upon death.

Your Credit Cards

The average American’s credit card debt is $3,600. That’s a pretty big unpaid bill to leave behind. What happens if you have unpaid credit card bills when you pass away?

A credit card is an unsecured debt. It isn’t secured by assets like a mortgage is. As a result, credit card companies can’t go beyond what’s in your estate when attempting to collect payments. This means your loved ones won’t be on the hook for your unpaid credit card bills.

A joint account holder, however, would be completely responsible for any outstanding balances. The credit card company can’t hold authorized users responsible for the debt in the same way, though.

Your Car

What happens if you’re still making car payments when you pass away? The lender won’t require anyone to finish paying off the debt. However, the executor of your estate can continue to make those payments to keep the car in your estate. There is also the option for the person who inherits the car to simply take over your payments. Your lender can repossess the car, however, if the executor misses payments.

Some Important Things to Remember

Creditors sometimes try to collect debt payments by contacting family members and making inaccurate claims regarding who owes what. Here are four easy tips to help you shield your loved ones from being stuck with your debt or hassled by creditors:

  • Keep the beneficiaries on your life insurance policies updated to ensure that benefits don’t end up going to your estate and getting into the hands of creditors.
  • Your estate’s executor should notify creditors that you are deceased as soon as possible to avoid unintended missed payments.
  • A copy of a death certificate should be sent to the three big reporting agencies to avoid identity theft or other issues that could affect your estate.
  • Authorized users of your credit cards should stop using them right away.

Your finances really do require a lifelong commitment. Unfortunately, the people you leave behind may have to carry on with some of that commitment if you’ve left unpaid debts. The important thing to remember is that creditors can’t go beyond what’s available in your estate when trying to collect personal debts. Your personal debts won’t become a burden for your loved ones to deal with under most circumstances.

You can make it easier on your relatives by keeping your financial papers in order. We call it a Death Dossier.

Finally, keep in mind that laws vary from state to state. It’s important to seek competent legal advice before making any decisions.


9 Reasons Your Credit Score Has Dropped

It’s a common question–Why did my credit score drop? Your score can fall for many reasons. Some drops are insignificant, while others can seriously hurt your finances. We examine nine common reasons your credit score may have fallen.

Why Your Credit Score Has Dropped

So you recently pulled your credit report or got an alert from a monitoring service. Suddenly, your score is lower than it was last month. What gives?

Credit scores are, to say the least, complicated. They’re based on a whole host of factors. Plus, each factor is weighted a little differently. So this means your score can drop for a number of reasons.

Pinpointing the exact reason for your credit score’s decline can be tough. But here are nine common reasons your score could have declined. Once you figure out which is causing your issue, you can take steps to fix it.

9 Reasons Your Credit Score Has Fallen

1. You’re 30 days late on a payment.

Technically, your creditors can report a payment as late as soon as it’s past the due date. In reality, though, this rarely happens. Most creditors won’t report a payment as late until it’s 30 days overdue. But once that happens, your credit is likely to take a big hit.

Solution: If you think you’re up-to-date on all your accounts, check your actual credit report. It will tell you which account has recorded a late payment. You can either bring the account up to date or call the creditor to dispute the late payment record. Another option is to ask for a goodwill adjustment. This can erase the late payment from your records, giving you a boost.

2. An already late payment became even later.

Creditors can report a payment as late at any time, but credit scores account for various levels of late. A 30-days-late payment will drop your score. But once you cross into the 60-days-late category, it’ll drop again. Go 90 days overdue, and you’ll see yet another decrease.

Solution: Again, you’ll find the record of which account is overdue on your credit report. Bring the account up to date as quickly as you can, even if that means working with your creditor on a payment plan.

Many times, lenders are willing to work with you, especially if you’ve recently undergone job loss or other hard times. Again, if you’re not in the habit of letting payments go late, you may be able to get a goodwill adjustment. But you’ll likely have to bring the account current first.

3. You charged up your credit card.

Your credit utilization ratio–how much credit you’ve used versus how much you have available–is an essential piece of your credit score. This is why the best practice is to pay off your credit cards in full each month. This keeps your credit utilization at or near 0%, which is great for your credit score.

What if you recently made a big purchase or just over-relied on your credit card? If you don’t pay down the balance, that will show up on your next credit report. This will cause your score to decrease.

Solution: Pay down your balance as quickly as you can using a balance transfer credit card. And then try to make a habit of never charging more than you can comfortably pay off in a month.

4. An account went to collections, or you are subject to a tax lien.

Having an account go to collections or the government open a tax lien can really tank your score. These things stick around for a long time, too, so try to avoid them whenever possible.

Sometimes there’s a mistake that causes these items to show up on your report. But sometimes it can happen because you missed something in your own financial life. Maybe a missed medical bill went to collections quickly. Or maybe you thought you paid your taxes in full, but didn’t.

Solution: If there’s been a mistake, contact the party reporting the lien or collections account to straighten things out. Otherwise, get the account settled as quickly as possible. It will still show up on your credit report for up to seven years. And it will have a negative effect on your score for a while. But an account showing paid in full will have less of a negative impact.

5. You closed an old account.

Closing old credit card accounts can seem like a good thing. But part of your credit score is based on the average age of your accounts. If you close your oldest credit card, your average age of accounts will drop. This will negatively affect your score.

Plus, closing accounts lowers your overall available credit. This increases your credit utilization ratio if you’re carrying balances on other cards.

Solution: You can’t really undo this problem once you’ve closed the account. Now, your goal is to remember to leave older accounts open. And watch your credit utilization ratio closely. As your accounts age, your credit score will gradually increase again.

6. You opened a new account.

Wait, both closing and opening accounts can negatively affect your credit score? That’s right, though it’s for different reasons.

Opening a new account generally involves having a potential creditor (or possibly several if you’re shopping around) pull your credit report. This results in an inquiry appearing on your report, which can cause a slight drop in your score. Credit inquiries shouldn’t cause a huge dip in your score unless you open a lot of new accounts around the same time.

Solution: Credit inquiries remain on your report for a couple of years. The best way to keep them from affecting your score too much is to shop for credit selectively.

You should also shop around for larger loans, like mortgages, in a two-week period. Credit scores will typically count rate shopping as one single inquiry in this case.

7. A creditor reduced your credit limit.

Depending on your credit card’s terms of use, it’s possible that your creditor can lower your credit limit. This could happen when your creditor sees you as becoming a higher-risk credit user. Exceeding your credit limit or taking out a lot of cash advances can trigger a lowered credit limit. If you’re carrying balances, this will increase your credit utilization ratio.

Solution: You can always call a creditor to ask why they’ve reduced your credit limit and how you can get them to increase it again. Alternatively, focus on paying down your debts as quickly as possible to reduce your credit utilization ratio.

8. There’s inaccurate information on your report.

An FTC report found that one in five consumers have an error on their credit report. Sometimes these errors don’t affect your credit score. But they can.

This is why it’s so important to check your credit report and score consistently. If you notice an unfamiliar account or a mmisreportedlate payment, you’ll need to take steps to correct it.

Solution: Check your credit report at least every few months. When you notice inaccurate information, follow these steps to correct it.

9. You’re looking at a different score.

When you pull your credit score from two different sources, you’re likely to see two different numbers. This can happen even if you pull your scores on the same day! Why is this?

There are a couple of reasons. For one, each credit score is based on one credit report. You have three credit reports from the major credit reporting bureaus, Equifax, Experian, and TransUnion. Each report may contain slightly different information, resulting in a different score.

But what if you’re looking at scores that both say they’re based on your Experian credit report? In this case, you could be running into different scoring formulas. Credit scoring formulas are constantly changing, and there are tons of versions on the market. FICO alone has over nine different scoring algorithms!

When you apply a different algorithm to the same information, you’ll get a different score.

This is why it’s a good idea to look at scores from different sources if you’re trying to build your credit. You may not see exactly the same number a prospective lender will see. But tracking two or three different scores can give you a more holistic picture of your overall credit. (Luckily, there are plenty of ways to track different scores for free!)

If your credit score has recently taken a nosedive, do some digging to find out why. Then, take steps to improve habits, correct inaccuracies, and boost your score again.


How to Rent an Apartment When You Don’t Have a Credit History

Many landlords check a prospective tenant’s credit report. For those with no credit, finding a landlord willing to take a chance on you can be a challenge. Here are some tips to snag that apartment you love, even if you have no credit history.

Rent an apartment no credit history

Apply to units owned by individual landlords

Start by applying for rental units that are owned by individuals, rather than apartment complexes or rentals that are run by management companies. Individual landlords are mostly looking to get a viable tenant into their property. And they may be more flexible on their criteria. If you can show you’re prepared to pay rent on time every month, individuals may overlook your lack of credit history. Managers at larger conglomerates likely have to follow complex corporate rules, which likely require tenant credit histories on file.

Be Prepared to Document Your Previous Rent History

If you’ve been living with family and not paying rent or if you are fresh out of college, this obviously won’t be an option. But if you’ve been living anywhere else and paying rent, you can at least demonstrate a rent history. That’s what a prospective landlord should be most interested in any way.

Some landlords will accept a written rent reference from a previous landlord. But be warned that some are also aware that a previous landlord might give you a good reference – even if you are not a good tenant – to get rid of you. For that reason, they may insist on more tangible verification.

Copies of canceled rent checks for the past 12 months can go a long way toward documenting a good rent history. If you have that good rent history, be prepared to document it for your new landlord.

Make a Larger Security Deposit

Nothing calms the concerns of a nervous prospective landlord more than cash on the barrel! You can provide this by offering to make a larger security deposit. For example, if the landlord generally requires a one-month security deposit, offer two months or even three months.  You can use the extra payments to pay your rent in the final months of the first lease. Just make sure that that provision is written into the lease.

Show a Large Bank Balance

A large bank balance can sometimes be used to offset a lack of credit. For example, a few thousand dollars sitting in a high yield savings account can indicate to a prospective landlord that you have a strong ability to manage your finances. In addition, it can be seen as a cushion in the event that you have cash flow problems in the future. The landlord will know you have resources available to cover any employment weaknesses.

A 401(k) plan with a healthy balance can also help, even if it’s not the type of account that you would access in an emergency. It also demonstrates the ability to properly manage your finances in such a way that you were able to accumulate money.

Emphasize Income over Credit

A strong income can also offset a lack of credit. That doesn’t mean having just enough income to cover the rent payment. It means that your future rent payment won’t exceed 25% or 30% of your monthly income. That will let the landlord know that you at least have an income that will enable you to comfortably pay the rent every month.

Stress that You Have No Debt

This should be an obvious connection, but don’t assume that your future landlord will get it. The fact that you have no credit probably also means that you have no debt. From a landlord’s perspective, this is a major advantage.

Debt payments reduce your monthly cash flow, giving you less money each month to pay your rent. But if you have no substantial recurring obligations, sell this to the landlord as a major positive factor in your favor.

You might also make the case that you simply choose not to use credit. The landlord can also see that as a positive factor.

Get a Cosigner or a Roommate

If none of the above strategies work, or if you don’t have the ability to demonstrate any, consider a cosigner or a roommate.

Between the two, the roommate is probably the stronger selling point. Since that person will be living in the unit with you, they’ll be motivated to pay the rent. A cosigner, on the other hand, might strengthen your application if a roommate is not an option.

Whether you bring in a roommate or a cosigner, make sure that that person has good credit. There’ll be no point bringing in another person if they likewise have no credit history. And it should go without saying that they should also have stable employment and an income that can support the rent payment.

Renting a home or apartment when you don’t have any credit isn’t impossible. Though it will take good financial management in other areas and some creativity. These tips will help you get there.


How to Write a Winning Cover Letter

A cover letter is your 60-second chance to promote yourself. Write a poor cover letter and your resume lands in the rejection pile. Craft a compelling cover letter, however, and you land the coveted interview. Here are five keys to writing a great cover letter.

write a cover letter

Picture this scene. A recruiter at a popular company arrives to work Monday morning to look over applications that have come in over the weekend. These applications are for good opportunities available with her employer. And she has a very busy job sorting through them all.

She receives dozens or even hundreds of applications for each job opening. So how does our recruiter decide which applications she reviews carefully and which will receive an immediate rejection letter?

Many businesses automate some of the processes. A computer program often screens resumes and applications in the first instance for the basic role requirements. This process may knock a few resumes out of the running–mainly where people have hit ‘apply’ to jobs for which they don’t have the required skill set.

The remainder land on our recruiter’s (virtual) desk, and she needs to narrow the field to a smaller shortlist for interviews. This is where your cover letter comes in. Chances are all the resumes that have made it this far are from candidates who can perform the basic functions of the job. But our recruiter wants more. She wants to know you really care about this job. You’re interested in the company and what they stand for. And you’re going to stick around, do a good job, and grow with the business.

Here’s how to grab her attention.

Show some personality

Your cover letter is the best possible way to get your ‘foot in the door’ for a new job. Your resume will contain all the substance that shows why you’re able to perform the job. It’s your cover letter, however, that makes the recruiter actually want to invest time in reviewing your resume. Don’t forget: yours will be one among many. A hiring manager may not even see a many of the resumes submitted for popular jobs. A below par cover letter sees them heading straight for the trash!

The first key to writing a knock out cover letter is to understand that people want to work with people. Producing a cover letter that could have been written by a robot won’t make you stand out in the crowd. You need to show a little spark. That might be telling the reader a little about your (relevant) personal interests, demonstrating your passion for a particular product the company makes, or simply writing in a catchy tone.

It’s a good idea to start your letter with an introduction that sparkles. Of course, precisely what will work depends entirely on the circumstances. You can often get away with a very informal note, with a good dollop of humor, if you’re applying for a creative role or applying to a startup or small business. If you’re looking for a job with a more traditional institution, like a bank, you might want to hold the humor. You can still show a spark elsewhere. Consider these two possible cover letter openers:

“I’m an experienced customer service professional, and have worked in banks and finance for the last ten years”

Or

“I’m passionate about working in customer service. After ten years of looking after my bank’s clients, I still like nothing more than seeing a smile, as I turn a disgruntled customer into a delighted one”

I would rather talk to the person behind the second one! Wouldn’t you?

Connect with the brand

You’ve managed to persuade the reader you’re a real person. You’ve connected on a human level. The next priority is to show that you connect with the brand of the company.

This is really important to recruiters. They’re looking for someone with longevity in the business. If you truly love the company, chances are you’ll stay on for a good length of time. You may even seek internal promotions and professional growth within the business. A good recruiter thinks about not only the job you’ve applied for, but also about more senior positions you might be suited to with a bit of experience under your belt.

Show you connect with the brand by talking a little about the product, service, or mission of the business. How to do this might be obvious. Maybe you’re applying to a company that makes a product you love. Or perhaps you regularly use the company’s services, and as a loyal customer, you’re excited by the chance to work for a brand you love.

Of course, it might not be so obvious–especially if you’re looking to work with a business that does something more abstract or everyday. Think about how you could make this connection if you’re applying for a role with a utility provider, for example. In this case, it’s better to show a connection to the mission of the company–what they stand for rather than what they do. Take, for example, the largest energy company in the USA, PGE. You could say:

“I’d love to work for an energy company”

Or you might go with the following, to reflect their mission statement, and show a degree of excitement about the job:

“I’d love to work for a company that contributes so much to the lives of 15 million Californians. Building a better California is an ambitious mission, and one I’d love to get behind.”

Meet the brief

If you’re writing your cover letter from scratch, then you’ll probably include the first two key points above in the opening paragraph. Introduce yourself and why you’re applying up front, with a nod to your passion for the business.

Then you need to move to the substance of the cover letter. Here you show you meet the requirements of the role being advertised. Don’t forget; your cover letter isn’t a repeat of your resume. But it’s a smart plan to pick out a few key skills and experiences to showcase here. These will motivate the reader to properly review your resume. You’ll also want to make sure it’s built strongly and tailored to the role in hand.

You should focus on the job listing. The skills or experiences that are listed as ‘key’ here are the ones to focus your attention on. Think about how you concisely show you’re able to deliver on these, either through your experiences to date or your qualifications.

If you can, pick a mixture of behavioral and technical competencies to feature. Most roles ask for a skillset which is a mix of these, so you need to be able to use Excel or write reports (technical skills). But you also have to be organized and willing to work in a variety of teams (behavioral skills). By highlighting a couple from each category, you show yourself to be a well-rounded individual–exactly what our recruiter is after.

Sum up your USP

We’re arriving at the last paragraph or so of your cover letter now. You’re aiming to pique the interest of the reader and make sure they actually move onto reviewing your resume. To do this, you have to sum up what’s unique about your personal mix of skills and experience. You’re marketing yourself here, and in marketing talk, this is your USP–unique selling point.

You might need to invest some time thinking about what your USP really is. It should be just a sentence or two, describing what you think you really add to any role you take on.

For ideas, think about the things you have done to drive your own personal development. They don’t have to be strictly work related. Maybe you have contributed your time to an important cause or taken on extra responsibilities while you’re still in school. If the skills and experiences you gained are relevant to the job, you can use them.

It’s safe here to expand your thinking a little to cover the ‘desirable’ skills and experiences which are listed in the job ad. You will have already shown how you meet the core requirements of the role in the paragraphs above, so this is your chance to emphasize the added value you can bring to the business.

End positively

You should round off your letter with a positive note. As an example, ‘I look forward to hearing from you soon’, or a more proactive ‘I would appreciate the opportunity to meet with you to discuss the position in more detail’.

Whatever else you do now, you must proofread your cover letter. Make sure that details (like the name of the person you’re addressing it to) are correct. Even small errors can be costly when a recruiter has only a few seconds to scan each letter.

Your cover letter is an important document. It’s your shop window. It’s the first thing that the recruiter will read about you, and it will help them form their decision about whether or not to read on. No matter how good your resume is, if the reader is put off by a poor cover letter, the work you’ve put into your CV or resume will be wasted.

Often the most difficult thing about writing your cover letter, though, is getting started. Staring at a blank sheet of paper is daunting, but now is no time to procrastinate. Follow these pointers and capture the key messages the recruiter needs to see.

Get writing, and good luck!