Bad credit triggers a 'subprime tax,' Bankrate says — over decades, it can cost borrowers $100,000
Americans with a credit score of 620 or below pay about $3,400 per year for essential financial products in what Bankrate, in a new report, calls a "subprime tax."
The "subprime tax" comes in the form of higher interest rates on products such as mortgages, credit cards, auto and personal loans, and pricier premiums on auto and home insurance.
Borrowers with a score of 620 pay, on average, $1,330 more annually in mortgage loan interest than those with credit scores of 700, Bankrate found. Compared with that group, subprime borrowers also pay $745 more annually in auto loan interest, $514 more in auto insurance premiums, $398 more in home insurance premiums, $328 more in personal loan interest, and $89 more in credit card interest.
If a borrower doesn't improve their score, the subprime tax can snowball over the long run, Bankrate found. Over five years, Bankrate's report said, the subprime tax can cost about $17,016, and over 30 years, the cost is roughly $102,094.
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Bankrate said the insurance premium and debt calculations were based on national average data from Bankrate, Experian and FICO. Bankrate defined a score of 620 and lower as subprime, and a score of 700 and higher as prime.
The subprime tax affects roughly 21% of American adults, Bankrate estimated.
As of April, the average FICO credit score in the U.S. is 715. The score ranges from 300 to 850; the higher the credit score, the better.
The Bankrate report showcases the value of having a good credit score: A good score increases your likelihood of being approved for loans and of receiving better financing terms, experts say.
However, "you don't need a perfect credit score to get the best loan terms," said Ted Rossman, a senior industry analyst at Bankrate.
"Generally speaking, lenders stop distinguishing once you hit the mid-700s and above," he said.
Your credit score is a "prediction of your credit behavior, such as how likely you are to pay a loan back on time, based on information from your credit reports," according to the Consumer Financial Protection Bureau.
"It's like a standardized test score," said Rossman.
If your credit score is low, lenders may think you are more likely to pay late, said John Ulzheimer, a consumer credit expert. To offset that risk, banks and lenders typically charge the borrower higher interest rates.
Lenders have different definitions of what makes a good credit score, Ulzheimer said.
Even so, experts say, once your score gets to a certain point, or somewhere in the mid-700s, you are generally in a good place in terms of risk.
"The odds of you going delinquent at some point are so low that the lender is happy with taking the risk with you," Ulzheimer said.
To improve your credit, first take a look at your credit reports, issued by the three credit reporting bureaus: Experian, TransUnion and Equifax. You can request them for free via annualcreditreport.com. Your credit scores are based on the information in those reports.
Make sure the information in each of the reports is correct, said Matt Schulz, chief credit analyst at LendingTree. If there's a mistake, which can happen, correcting it can help improve your credit.
Otherwise, the "most actionable way" to improve your score is by working toward paying down any credit card debt, said Ulzheimer.
"If you can pay down or pay off credit card debt, your scores are going to improve," he said.
Reducing your debt can improve your credit utilization ratio, or how much you owe relative to how much credit you have available to you.
This factor makes up 30% of your score, according to FICO. Experts typically advise keeping your credit utilization under 30%, but a 2024 LendingTree study found that consumers with the best scores had utilization ratios of around 10%.
Another easy way to boost your score is by making on-time payments. Payment history makes up 35% of your score, according to FICO.
As you increase your credit score, look for ways to benefit. For example, ask your credit card issuers if you can qualify for a lower rate, and see if your insurers will reassess your policy premiums. Gauge whether it's worth refinancing any current loans.
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NBC News
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- NBC News
Live updates: Trump says no deal reached with Putin at Alaska summit on Ukraine war
Putin is not only meeting with Trump in Alaska to address Russia's war in Ukraine, but to also get his country back on the world stage. The Russian president is hoping for economic wins from this summit as his country's economy has become weaker as a result of U.S. and European sanctions that came in response to its invasion of Ukraine.
New York Times
an hour ago
- New York Times
Trump and Putin Put on a Show of Friendship but Come Away Without a Deal
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Neither explained nor took questions from reporters. Mr. Trump said he would follow up by calling fellow NATO leaders and President Volodymyr Zelensky of Ukraine. The meeting was a major diplomatic gamble by Mr. Trump unlike anything his predecessors might have tried and seen as a victory for Mr. Putin, who has not been welcome in the West for years and now has been effectively liberated from the diplomatic isolation he had been consigned to for the past three years. In fact, it would be hard to imagine an event that could have gone better from the point of view of the Russian leader, who made no public commitment to stop his assault on Ukraine and yet was treated as a valued friend. Mr. Trump did not fault Mr. Putin for starting the brutal war in the first place and left without mentioning the sanctions that just hours earlier he had threatened to impose if there were no deal. The images emerging from the Alaska encounter were remarkable in the history of U.S.-Russian summits. Mr. Putin, who has not been to the United States outside of U.N. meetings since 2007 and has been under sanctions since 2022, was invited to a military base that is on the front line of the defense of American territory against possible Russian aggression. Flying overhead as Mr. Putin arrived was a B-2 stealth bomber that is key to the U.S. nuclear deterrent, flanked by the kind of fighter jets that are often deployed to intercept Russian planes in the airspace near Alaska. Standing on the tarmac waiting, Mr. Trump applauded Mr. Putin as the Russian strode toward him and then gave him a warm handshake, patting his arm and hand. Mr. Putin smiled broadly and talked jovially with Mr. Trump like old a reporter asked Mr. Putin if he would stop killing civilians, he smirked and pointed to his ear as if to suggest he could not hear the question. Mr. Trump's invitation to Mr. Putin to join him in the armored presidential limousine for the ride to their meeting location without aides was a highly unusual gesture. Mr. Putin could be seen through the window laughing as the car pulled away. Democrats contended that hosting Mr. Putin under such circumstances sent a dangerous message. 'The photo-op in and of itself essentially legitimizes war crimes, telegraphs to other autocrats or evil men around the world that they can get away with murdering civilians and still get a photo-op with the president of the United States,' Senator Chris Murphy, Democrat of Connecticut, said earlier on Friday on MSNBC's 'Morning Joe.' The hurriedly arranged meeting was meant to break the logjam that has stymied Mr. Trump's peacemaking efforts since he returned to office six months ago with a promise to end the Ukraine war within 24 hours. The rest of the world watched to see whether Mr. Trump would find common ground with Mr. Putin and whether Ukraine's interests would be represented or sacrificed by the leaders of the two major nuclear superpowers. Mr. Trump told reporters on Air Force One on the way to Alaska that he hoped to broker at least a temporary end to hostilities. 'I want to see a cease-fire rapidly,' he said. 'I don't know if it's going to be today. But I'm not going to be happy if it's not today.' He repeated his warning that he would impose 'severe consequences' if Russia balked at a halt to the fighting without specifying what they might be. And he promised to involve Ukraine in any decision over territorial concessions that might accompany a more enduring peace settlement. Mr. Zelensky, who was not invited to the conference called to determine his country's future, sought to influence it from afar by reminding the world that Russia continues to attack civilian targets in hopes of stiffening Mr. Trump's spine against Russian spin. 'On the day of negotiations, the Russians are killing as well,' Mr. Zelensky said in a video posted online before the meeting began. 'And that speaks volumes.' He added: 'Ukraine is ready to work as productively as possible to bring the war to an end, and we count on a strong position from America. Everything will depend on this — the Russians factor in American strength. Make no mistake — strength.' The meeting was the seventh in-person encounter between Mr. Trump and Mr. Putin and the first of the American's second term. Mr. Trump said in the days leading up to the Alaska get-together that it was meant to be a listening session to determine whether peace was possible and that if he decided it was, he would then invite Mr. Zelensky to sit down with Mr. Putin directly. While it was originally scheduled to be a one-on-one meeting with Mr. Putin, along with interpreters, the session was expanded at the last minute to include Secretary of State Marco Rubio and Steve Witkoff, the president's special envoy, who has been negotiating with the Russians. Mr. Putin was joined by Sergey V. Lavrov, his often feisty foreign minister, who sent a pointed message when he arrived in Alaska the previous night wearing a sweatshirt emblazoned with CCCP, the Cyrillic letters for USSR. The two leaders, however, spent less time together than originally scheduled, raising questions about how far they got, and scrapped plans to hold a news conference in favor of the two making back-to-back statements on camera without answering questions. Neither did much to illuminate what happened, and American officials did not brief reporters, as is traditionally done after such meetings. In a rare move for the host of a diplomatic meeting, Mr. Trump deferred to his Russian visitor to speak first at their public appearance. Mr. Putin played to his host's sensibilities by offering validation of his longstanding insistence that Moscow would not have staged its full-scale invasion of Ukraine in 2022 if Mr. Trump had still been president. 'Today we hear President Trump say, 'If I were president, there would be no war,'' Mr. Putin said. 'I think that would actually happen. I confirm this.' He suggested that the two would now succeed at ending that war without saying how. 'I would like to hope that the understanding we have reached will allow us to get closer to that goal,' Mr. Putin said of security for Ukraine, 'and open the way to peace in Ukraine.' But he still insisted that any enduring peace had to address the 'root causes' of the war, a phrase that in the past he has used to insist on conditions unacceptable to the West, including a rollback of NATO and neutralization of Ukraine. And he asserted that Ukraine might throw a wrench in any peace effort by taking provocative action. When it came to his turn, Mr. Trump was equally vague on what if anything they had concurred. 'We had an extremely productive meeting and many points were agreed to, and there are just a very few that are left,' he said. 'We didn't get there, but we have a very good chance of getting there.' But the flattery registered. In an interview with Sean Hannity of Fox News afterward, Mr. Trump said he was 'very happy' to hear Mr. Putin say the invasion would not have happened on his watch and expressed satisfaction with the meeting, declaring that on a scale of 1 to 10, 'the meeting was a 10 in the sense that we got along great.' Mr. Trump, who has long expressed admiration for Mr. Putin, returned to the White House in January expecting to translate their friendly relationship into tangible progress. But after his repeated promise during last year's campaign to end the Ukraine war within 24 hours, Mr. Trump discovered what others had long tried to convince him of: Mr. Putin was not eager to make peace, at least not on terms acceptable to Ukraine. Mr. Putin brought with him a number of business executives in hopes of appealing to Mr. Trump's desire to rekindle economic ties that were all but shattered by the 2022 full-scale invasion. On the plane ride to Alaska, Mr. Trump said that the Ukraine conflict would have to be resolved first. 'They are not doing business until we get the war settled,' he said. Mr. Trump said that he expected that territorial concessions would be part of a more sustained peace agreement that would follow an immediate cease-fire but acknowledged that Kyiv would have to agree. 'I've got to let Ukraine make that decision,' he said. 'I think they'll make a proper decision, but I'm not here to negotiate for Ukraine.' He also said that 'there's a possibility' of security assurances for Ukraine from the United States in conjunction with Europe as part of such an eventual peace deal, but 'not in the form of NATO' membership, which has been a key point of dispute between Moscow and Kyiv. Russia's leader was not the only autocrat Mr. Trump freed from diplomatic isolation on Friday. As he made his way to Alaska, the president called President Aleksandr G. 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During his first term, he sent Mike Pompeo, then his secretary of state, and John R. Bolton, then his national security adviser, to meet with Mr. Lukashenko in Belarus.
Yahoo
an hour ago
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The Returns On Capital At Megachem (Catalist:5DS) Don't Inspire Confidence
Explore Megachem's Fair Values from the Community and select yours What trends should we look for it we want to identify stocks that can multiply in value over the long term? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. However, after briefly looking over the numbers, we don't think Megachem (Catalist:5DS) has the makings of a multi-bagger going forward, but let's have a look at why that may be. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. What Is Return On Capital Employed (ROCE)? Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. Analysts use this formula to calculate it for Megachem: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.039 = S$2.7m ÷ (S$107m - S$38m) (Based on the trailing twelve months to June 2025). Therefore, Megachem has an ROCE of 3.9%. Even though it's in line with the industry average of 4.1%, it's still a low return by itself. View our latest analysis for Megachem Historical performance is a great place to start when researching a stock so above you can see the gauge for Megachem's ROCE against it's prior returns. If you want to delve into the historical earnings , check out these free graphs detailing revenue and cash flow performance of Megachem. What Can We Tell From Megachem's ROCE Trend? In terms of Megachem's historical ROCE movements, the trend isn't fantastic. Around five years ago the returns on capital were 6.4%, but since then they've fallen to 3.9%. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It's worth keeping an eye on the company's earnings from here on to see if these investments do end up contributing to the bottom line. The Key Takeaway In summary, Megachem is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. Although the market must be expecting these trends to improve because the stock has gained 44% over the last five years. But if the trajectory of these underlying trends continue, we think the likelihood of it being a multi-bagger from here isn't high. Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 4 warning signs for Megachem (of which 2 make us uncomfortable!) that you should know about. While Megachem may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
