The Biggest Innovations that Actually Save Significant Money

The Biggest Innovations that Actually Save Significant Money, Logic Insurance, -There are countless startups sitting on mountains of venture capital money and promising to change the world. Most journalists have focused on the world of payments, and that focus only increased with the launch of ApplePay.

But ApplePay offers convenience, not value. While it is fun using an iPhone at a checkout (if you are lucky enough to find one that accepts ApplePay), it certainly won't help you prepare for retirement.

The Biggest Innovations that Actually Save Significant Money

Technology is finally being used to transform consumer financial services in a dramatic way. You no longer need to settle for 0.01 percent on your savings account. It has never been easier to shop for cheaper auto insurance. You don't have to pay 25 percent interest on that store credit card. You don't have to pay 1 percent (or more) to have customized financial planning. Even student loans can now be refinanced at dramatically lower rates, thanks to innovative startups, and not traditional banks.

Here are the five biggest innovations that can actually save you significant money and help you retire early.

• Branch-free banks deliver savings accounts with rates 100 times better than traditional banks. The largest banks are paying an average of 0.01 percent on basic savings accounts. If you have $25,000 in an account, you will earn a ridiculously low $2.50 interest over the next 12 months. You could easily earn $280 by switching to an Internet-only savings account paying 1.15 percent. And it is easy to find some of the best interest rates online, by using a comparison site like MagnifyMoney, which I operate. 
• Shopping for the best auto insurance premium is easy and quick. The majority of Americans use an agent to make a decision. But agents are tied to just a handful of auto insurance companies and usually cannot give you a full comparison. A number of new websites offer you the ability to compare auto insurance easily and quickly online. One of the best is TheZebra, which has compared over 1,700 products from more than 200 insurance companies. In just a few minutes, and without giving any personal information, you can very quickly see how much you could save on a quote. Even if you don't want to change providers, it is worth doing a quick test drive and seeing if you qualify. 
• Personal loan companies give you alternatives to obscenely high interest rates on credit cards. Store credit cards regularly charge 25 percent, regardless of your credit quality. And credit cards typically charge 15 percent or more. Historically, the only real way to save money was to surf your debt from one balance transfer to another. However, over the last few years, some dynamic new personal loan companies have been created. LendingClub is the most famous, and borrowers refinancing credit card debt cut their interest rates an average of 31 percent. Even better, you can apply for most of these loans without hurting your credit score. If you are looking to refinance your credit card debt and cut up those cards, shop around for the best deal. Go toMagnifyMoney's personal loan comparison page to find the best rate. 
• Low, flat fees for financial planning boost your return. If you go to a traditional brokerage, you will quickly realize that they make money from commissions on trading. As a result, they have a tendency to encourage frequent trading and more expensive products. The data is clear: consistently beating the stock market with actively managed mutual funds is virtually impossible over time. However, stock brokers still make plenty of money trying and failing to do just that. Many financial planners charge a percentage of assets (typically 1 percent) and provide better advice. All of that is changing with companies like Betterment. They charge a low, flat fee to provide financial planning. If you have $100,000 invested, you could save $55,000 over 20 years, by paying only 0.15 percent of your assets as a fee. 
• Companies can refinance student loan debt at lower rates.Interest rates on student loan debt can be extremely high, and America's student loan debt exceeds credit card debt. It isn't a surprise that innovative companies are looking to help qualified borrowers refinance student loan debt. The leader in this market is SoFi, whose variable rates start as low as 1.9 percent. The savings over a lifetime can be dramatic. 

I lived in the Silicon Valley during the first dot-com boom. Sock puppets were trying to sell us pet food, and financial services were left largely untouched. All five of these new business models present existential threats to the profitability of big, entrenched banks and financial service companies.

That is great news for consumers. Hopefully everyone will be moving their emergency fund to an online bank, refinancing their credit card and student loan debt to low interest rates, slashing their auto insurance premiums and virtually eliminating investment fees. Technology has the power to put more money in our pockets. It is now up to us to use that power. (Logic insurance article source: Daily Finance)

About author

Nick Clements is the co-founder of MagnifyMoney.com, a price comparison website that helps you find the cheapest bank accounts, and the best interest rates on your savings and your debt. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the U.K. You can follow him on Twitter @npclements.

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