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Mortgage Rates Thursday, July 20: Rates Lower as Fed Looms

Mortgage rates for 30-year fixed-rate loans and 5/1 ARMs both fell by one basis point today, while 15-year fixed loans remained unchanged, according to a NerdWallet survey of daily mortgage rates published by national lenders Thursday morning.

Both fixed-rate products and 5/1 ARMs haven’t been this low in several weeks.

The Federal Reserve meets again next week, and going by the futures market, the general consensus is that the target range for the federal funds rate will be left as is, especially after Fed Chair Janet Yellen’s remarks last week that low inflation levels merited further observation.

MORTGAGE RATES TODAY, Thursday, JULY 20:

(Change from 7/19)30-year fixed: 4.07% APR (-0.01)15-year fixed: 3.47% APR (NC)5/1 ARM: 3.87% APR (-0.01)

Get personalized mortgage rates

NerdWallet daily mortgage rates are an average of the published annual percentage rate with the lowest points for each loan term offered by a sampling of major national lenders. APR quotes reflect an interest rate plus points, fees and other expenses, providing the most accurate view of the costs a borrower might pay.

Emily Starbuck Crone is a staff writer at NerdWallet, a personal finance website. Email: emily.crone@nerdwallet.com. 

Why Credit Cards Are Serving Big Restaurant Rewards

Finding a credit card that offered big rewards at restaurants used to feel like ordering vegetarian at a barbecue joint: There weren’t many options, and they often weren’t appetizing. But with consumers spending more on dining than ever before, that’s quickly changing.

In recent years, Chase, Citi, Capital One and PNC have all launched cards with an effective rewards rate of at least 3% on dining, a step above the 2% that was once the maximum dining reward on many cards. These are similar to the rewards on gas, groceries and travel that cardholders have enjoyed for years. And for many users, they’re just plain practical.

“Everyone has to eat. You end up with a lot of people who say, ‘Look, I may not go to New York every week, but I certainly go to restaurants every week,’” says Robert Hammer, CEO of R.K. Hammer, a bank card advisory firm.

Spending on dining out is rising

When deciding what credit card rewards to offer, issuers try to determine which perks will entice people to apply for a card — and then use it regularly. So they pay close attention to how potential customers are spending money.

“We’ve heard directly from [our customers] how important mealtime is,” Mark Mattern, vice president of U.S. cards at Capital One, said in an email. That’s how the issuer came up with the Capital One® Premier Dining Rewards Credit Card, introduced in March 2017, which offers unlimited 3% cash back on dining and 2% on groceries. “We know that these are categories that people are spending more in and are passionate about,” he added.

Consumer spending trends reflect that. In 2015, sales at restaurants and bars overtook spending at grocery stores for the first time ever, according to a Bloomberg report citing Commerce Department data. Consumer spending on food services has also been steadily increasing, reaching an all-time high in 2016, according to the most recent data available from the federal Bureau of Economic Analysis. To credit card issuers, these trends present a business opportunity.

“Chase, Capital One, [Bank of America] — they don’t push things that don’t make money. It just doesn’t happen,” Hammer says.

The young and the wealthy are eating out

Issuers don’t offer bonus rewards on dining simply because they want a piece of dining purchases; they also want to appeal to a specific type of consumer. The two groups currently most sought-after by financial institutions — high-income consumers and young adults — happen to be prolific diners.

Among households with incomes in the top 20% nationwide, 49% of food spending went to food away from home, which includes spending at restaurants and fast food joints and on takeout, according to 2015 data from the Bureau of Labor Statistics. That amounts to $6,040 per year, more than 4.5 times what those with incomes in the bottom 20% spent in that category.

Millennials tend to dine out more frequently than other age groups. A December 2016 Gallup poll found that 72% of 18- to 34-year-olds had eaten dinner at a restaurant once in the previous week, the highest rate of any age group surveyed.

These two groups mean big business to credit card companies. High-income shoppers, of course, have more money to spend. That can generate revenue for issuers in the form of transaction fees and interest charges.

Millennials, meanwhile, bring growth potential, a point underscored in Chase’s most recent annual report. “[Millennials’] wealth is expected to grow at the fastest rate of all generations over the next 15 years,” writes Gordon Smith, CEO of consumer and community banking at Chase. The majority of new cardholders with the Chase Sapphire Reserve℠, which features rich dining rewards among several other benefits, were millennials, according to the report.

Would you like rewards with that?

Credit cards with supersized dining rewards benefit issuers, certainly. But if you use yours responsibly and pay the balance in full every month, they can especially benefit you. If you’re deciding which credit card to use for restaurant excursions, and all of your options offer 3% back on dining, look for these features:

  • No annual fee: It generally doesn’t make sense to pay an annual fee just for dining rewards. Many cards these days offer 3% back on dining — and other perks — and don’t charge an annual fee.
  • Unlimited earnings: If you spend big bucks on dining, choose a card without a spending cap. The Capital One® Premier Dining Rewards Credit Card, launched in 2017, and the AARP® Credit Card from Chase, relaunched with dining rewards in 2013, are both good options.
  • Other rewards and benefits: Dining rewards might be your main objective, but many of these cards offer other perks. Choose one with the benefits that best fit your spending habits. If you’re a commuter, find a card that supplements your dining cash back with gas rewards. If you also frequent the supermarket, get your dining rewards with a side of grocery bonuses.

Getting more cash back, points or miles on dining purchases is great, but it doesn’t have to be the only useful benefit your card offers.

Claire Tsosie is a staff writer at NerdWallet, a personal finance website. Email: claire@nerdwallet.com. Twitter: @ideclaire7.

Does Your Spending Personality Match Your Credit Cards?

It’s easy to get caught up in credit card incentives, such as cash back, travel perks and sign-up bonuses. But if your credit cards don’t match your spending personality, you might not get the rewards you expect, or you might end up paying too much in fees.

One in five consumers carries a card that “has fees or rewards not aligned with their actual purchase habits,” according to J.D. Power’s 2016 U.S. Credit Card Satisfaction study.

And circumstances change. Even a credit card that was once compatible with your spending habits might no longer be the best fit. Identify your spending personality to determine whether the cards in your wallet are offering you the most value right now.

The jetsetter

If you travel in style often and want big rewards for your spending, a premium credit card will go further than a regular travel card. Some premium cards offer credits for airlines, hotels or airport security screening programs, as well as airport lounge access. They come with a large annual fee, but you likely spend enough to earn it back in the form of perks and a generous sign-up bonus.

The explorer

Travel is your hobby, but you’re not loyal to airline brands; you’re loyal to the best deals. General travel credit cards offer flexibility in reward redemption. Some charge annual fees, but you can often make up the cost in rewards, and the best cards don’t charge foreign transaction fees. However, travel rewards might lose value if you redeem them for anything other than travel.

The cash-back connoisseur

You like knowing the exact value of your rewards in cash, and you use plastic at every opportunity to earn more. Tiered and bonus-category cash-back credit cards offer higher rates on certain purchases and 1% on everything else. You could get more value by pairing one of these with a flat-rate cash-back card that pays 2% for all purchases. Minimalists should consider a single flat-rate cash-back card.

The balance carrier

Your paychecks aren’t always steady, so sometimes you lean on a credit card, and it’s not always possible for you to pay the balance in full every month. Still, you make sure you never miss a payment. Cash-back credit cards are tempting, but their high interest charges will outweigh your rewards. A low-interest credit card is more likely to save you money over time.

The self-starter

If you have bad credit or no credit, you probably have limited credit card options. Secured credit cards offer an opportunity for credit building. They require a security deposit that you get back after closing the account or upgrading to a regular, unsecured card. The credit limit is often relatively low, equal to the security deposit.

The survivor

You’re struggling to pay off debt, but if you have good or excellent credit, a balance transfer credit card can provide a way out. It allows you to transfer a balance from an existing credit card to take advantage of a lower interest rate. A card with a low balance transfer fee and a 0% annual percentage rate period can give you time to catch up on payments.

The optimizer

You’ll go to great lengths to get a good deal, including managing multiple credit card bills. Mixing and matching cards can be worth it as long as you save money. Just watch out for annual fees or interest.

If your credit card is no longer a match, it might be time to move on. But unless it charges an annual fee, don’t rush to close the account, because that could impact the length of your credit history — and your credit score.

Keep current cards active with the occasional, small purchase and use a new credit card to swipe your way toward your goals.

Melissa Lambarena is a staff writer at NerdWallet, a personal finance website. Email: mlambarena@nerdwallet.com. Twitter: @LissaLambarena.

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