what does assignment rate mean

What is an Assignment Rate? Plus other umbrella pay questions

The difference between an assignment rate and worker’s gross pay is one of the most common causes of confusion amongst workers who are new to umbrella employment.

When you contract via a PAYE umbrella company, you are an employee of the umbrella company, and the umbrella company is your employer. All employers must pay employer’s National Insurance Contributions (NICs) on payments made to their employees. This cannot be deducted from worker’s pay and it is therefore built into the assignment rate.

The assignment rate includes employment costs such as employer’s National Insurance, holiday pay, apprenticeship levy, and pensions contributions. Such costs should always be factored into the assignment rate quoted by the agency because, as employers, umbrellas are legally obliged to pay them.

Why is there a difference between a worker’s assignment rate and gross pay?

As with employer’s NICs, the money to cover any employment costs, including wages, all comes from the rate charged by the umbrella company to the agency or end client.

Umbrella companies must also allow for:

• 12.07% Holiday Pay (this can be advanced to you each week, or accrued)
• 0.5% Apprenticeship Levy (when umbrella’s total payroll reaches a certain level)
• 3.0% Employer Pension contribution (this is paid into the workers workplace pension)

This is why an assignment rate is usually much higher when a worker contracts through an umbrella company, as it needs to cover all of these costs.

If a worker was to be employed directly by the agency or end client, his or her PAYE assignment rate would just cover your wages, and the agency or end hirer would pay the other employment costs.

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Umbrella companies – ‘gross contract rate’, ‘umbrella rate’, ‘assignment rate’ – what’s the difference?

By: James Leckie | Last updated: January 27, 2020

I’m confused about the different rates I’m being quoted – what’s the difference?

The biggest issue we have in the industry at the moment is that people are not quite sure what umbrella companies are quoting them. Are you being quoted a contract rate, gross figures, your taxable salary, or a day rate?

This issue has come about with the looming introduction of the IR35 changes to the private sector. The legislation states that employment costs (i.e. Employers NI & Apprenticeship Levy ) cannot be passed down the chain to the contractor – that is the simple bit.

However, this is when confusing terminology comes into play.

The legislation states that if the end client deems a contractor to be inside IR35 (or the intermediary closest to the personal service company), then all employment costs must be deducted at source and the net figure paid directly to the PSC.

At this point, we could state that the rate provided is an inside IR35 Rate; this is in essence a “taxable salary” and would only be subject to Employees’ NI and PAYE tax (again deducted by the agency or end-client).

What is the Assignment / Umbrella rate?

What we are seeing is that many contractors are being quoted an “umbrella rate”, or “assignment rate” which is, and always has been the Gross (Contract) Rate.

If you are quoted an umbrella or assignment rate then this is deemed to meet all employment costs before the taxable salary is arrived at.

To add to the confusion – as you are an employee of an umbrella company, you cannot be a disguised employee and IR35 doesn’t even come into play.

Why should I be paying Employers’ NICs if I use an umbrella company?

An umbrella company is an employer and, as with any other UK employer, they have a legal obligation to pay employers’ national insurance contribu­tions to HMRC. The umbrella company employs you under an over-arching contract of employment and enters into a business-to-business contract with the recruitment agency or client.

An invoice is raised by the umbrella for the hours / days you work; this is then issued to the agency/client. Payment is made to the umbrella for the value of the invoice and they then pay the employer’s national insurance contributions from the contract amount received.

The umbrella will usually retain a margin from that contract rate for processing the payments. The balance is your taxable salary; this is then subject to deductions for income tax and employee’s national insurance as with standard employment.

This model is the same for all compliant umbrella companies, as we all have to comply with the regulations, which surround PAYE. Find out more in our dedicated article on umbrella companies and employers’ NI .

What have some unscrupulous umbrella providers been doing?

Umbrella companies have been in existence since the removal of Managed Service Companies (MSCs) and compliant firms have always primarily operated in the same manner.

An umbrella company was seen as an alternative to running a limited company for many, however as IR35 has evolved, contractors are now having to face the fact that some agencies / end clients will determine their status to the contrary of the manner in which they worked previously.

This all comes down to what facts the contractors are being told, which requires an understanding on the agency’s part and that of the umbrella.

Post-April, if a contractor is looking at a role which is via an umbrella then the figure quoted by the agency should be the Gross Contract Rate .

If they are quoting an inside IR35 rate then this could be misconstrued and would be argued that this should be the taxable salary with the agency/end client covering all employment costs.

In reality, an umbrella company only has one pot of money coming into the business from which all costs have to be met.

What should I look out for on a KID from April?

Post April, this should be made a lot clearer to the contractors. The introduction of the Key Information Documents means that all figures must be clearly disclosed to the contractor before any contractual arrangements are signed and sealed.

It is the agency’s responsibility to provide this to every contractor under the Good Work Review.

Until the 6 th April deadline, there is no requirement for this to be done However it could prove to be useful for those looking to be proactive and assist the contractors with making a decision on whether to accept or even consider an assignment.

The biggest issue at present is for those contractors whose assignments span this April threshold. We are seeing many contractors having their contracts terminated by the end of the March, and transferred inside IR35 by the client / agency.

If the assignment continues in exactly the same manner as before, then it could be argued that the contractors should be quoted a taxable salary which shows the agency / end client accounting for employment costs, in line with IR35 legislation.

Or if they are being forced down the umbrella route, then in theory the rate should be uplifted to cover these additional costs from the gross contract rate.

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Assignment rate unravelled: questions to ask before you accept an off-payroll job

SPECIAL REPORT

If you are starting your contracting journey in 2024 or deciding to take an off-payroll job especially one that the recruitment agency insists you work via an umbrella company, then there are some crucial things you need to understand before accepting a contract : what is included in an assignment rate

When a client determines a role as “Inside IR35” under the off-payroll rules that means two things, the worker contracts through their own limited company or an intermediary (i.e. a partnership much like sports commentator Gary Lineker used) and the nature of the job is “deemed employment.” However, in this article, we are focused on limited company contractors.

In some cases, an advert may describe a job as being ‘Inside IR35’. This means that the engagement isn’t being offered “Outside IR35” and therefore the client (or recruitment agency) may ask you to be employed through an umbrella company.

One of the easiest ways to get your head around all this “inside and outside IR35” job advert lingo is to understand that IR35 and/or Off-Payroll doesn’t even come into the equation if the role is Agency PAYE or Umbrella PAYE. When an advert says a role is “inside IR35” it’s just a clumsy way for an agency to say you will not be paid on a gross payment basis.

The word IR35 can be used in a job advert the following ways, for example:

• “This engagement is considered Inside IR35 for contractors working via limited companies.”
• “This engagement is considered Outside IR35 for contractors working via limited companies.”

Otherwise, the advert should say:

• “This engagement is offered either via agency payroll or umbrella company.”

Despite numerous and continuing cases of tax avoidance schemes linked to unethical umbrella companies, when you find a legitimate umbrella company, it can offer certain benefits. That said, navigating the terms can be tricky and can have inherent risks. One key concept that often throws contractors for a loop is the “assignment rate.”

Contractors should look at an assignment rate like a ball of yarn. Fully unravel it because you don’t get the whole ball of yarn when it comes to the assignment rate. It’s much less.

But here is why things get confusing.

There are many different rates or types of assignments:

• PSC, Outside IR35
• PSC, Inside IR35
• Agency – the rate is a PAYE rate
• Umbrella (assignment rate)
• Umbrella (Professional Employment Organisation/PEO) – the rate is a PAYE rate

To clear the air on what an umbrella assignment rate will include, we’ve posed crucial questions to off-payroll experts and seasoned contractors. Here’s what they have shared.

Employer contribution: Who pays?

The short answer: It’s not quite as straightforward. All employers must pay employers national insurance, and it is unlawful to deduct this from a worker’s income. Yet, you will see these costs in an “assignment rate,” which we explain below.

The assignment rate is often the rate that gets the contractor’s initial attention. Then the contractor finds out that they won’t be paid that rate since it includes umbrella company fees and employer’s national insurance costs that are factored in for the end client/hiring company to pay. Even the Apprentice Levy.

If you are working through an umbrella company they are liable to pay the employers’ national insurance (NI), not you the contractor. Umbrella companies need to add these NI costs into their fees to the agency and ultimately the client who effectively would be paying for them if the intermediary, the umbrella company, was not in the equation. The client or agency would also be paying them if the worker continued to use their limited company on an “Inside IR35” basis.

“The “assignment rate” is a made-up work of fiction with no statutory basis,” says Dave Chaplin, an IR35 specialist and CEO of IR35 Shield.

“It’s the route whereby all the schemes, scams, skims, operate, he says. “It would be much easier for the rate quoted to be a standard PAYE rate like the agencies quote when someone is on agency payroll. To highlight the silliness, there’s no such thing as an assignment salary.”

While a very complicated matter, “off-payroll” and “IR35” both deal with deemed employment and use the same tests for assessing status, explains Chaplin. Both mean a personal service company [i.e. limited company] is involved. When a contractor is hired for an “Inside IR35” role, that means using a limited company, but it also means the role is classified as “deemed employment”.

Now, on the other hand, an umbrella worker is an “on-payroll-only worker”.

Chaplin says, “Agencies are using the phrase ‘this is inside IR35 so you must use an umbrella’, which is legally incorrect. “Inside IR35″ does not mean someone must be put on a payroll. On-payroll means employed, either as an employee of a firm, an agency worker or employed via an umbrella.”

Chaplin believes the complication is unnecessary. He suggests a simple solution whereby agencies advertise roles as “on-payroll” only, or “umbrella only”, and never mention the words “because this is inside IR35”. Why? “Because (a) it’s legally untrue, and (b) it opens the door to schemes.”

The assignment rate you agree with your umbrella company is designed to cover all employment costs associated with your contract, including the employer’s National Insurance Contributions (NICs), the Apprenticeship Levy, the 3% pension contribution, and the umbrella’s own margin. This means the employer contribution is already factored into the “assignment” rate.

“The fee that the client pays should have been calculated to include the percentage of employer contribution. So, that percentage has to come out of the rate paid from the client by the recruitment company to the umbrella company,” according to Rebecca Seeley Harris, an expert in Independent Employment Status and Off-payroll working.

She continues, “So, the assignment rate should include all costs and those costs are then deducted. So, if you follow the trail backwards effectively the client is paying.

“The problem seems to occur in the communication of what the assignment rate is for. It is very often used to entice the contractor without proper explanation of the costs that have to be deducted,” says Seeley Harris.

The “assignment rate” is a made-up work of fiction with no statutory basis. Dave Chaplin, IR35 specialist and CEO of IR35 Shield

Key questions to ask before you accept an off-payroll job

Sham Bhangal, a contract developer working in the telecoms and mobile sector says once you ask a few questions when considering an off-payroll job you can determine if the rate is worth it. While the assignment rate is very confusing he explains how it works:

“Everything is deducted from the day rate or doesn’t exist. So, expect NI plus the apprenticeship levy to be deducted. Holiday and employer pension contributions are often ‘optional’ (zero by default, you pay for them out of the day rate if you want them).”

He says this process is “entirely illegal, but easy to query and say ‘no’ when you realise the true rate.”

Fire off those questions in an email. Most recruiters will realise their answer will form part of the contract if it ever comes to a claim down the line. Vagueness equals ‘no thanks’. Sham Bhangal, Contract Developer, React at Vodafone

• Is NI coming out of the day rate?
• How are holidays handled? If I take none, what do you deduct?
• Will you be opening a pension for me during this contract?

“Fire off those questions in an email. Most recruiters will realise their answer will form part of the contract if it ever comes to a claim down the line. Vagueness equals ‘no thanks’, says Bhangal.

Clarifying rates

Compliant umbrella companies understand the difference between the “assignment rate” (a bundled rate including NI, holiday pay, and other employer costs) and the worker’s actual “gross pay.” Clear explanations to umbrella employees are crucial to avoid confusion and ensure awareness of their employment rights and benefits.

Bhangal suggests you make sure you can live day-to-day on £50,000, otherwise, he says, “that first payslip will look emaciated compared to an outside gig or one of the better staff jobs.”

Inherent risks when forced to go through umbrella companies

One would presume if the recruitment company and umbrella company are responsible for organising payments for employer taxes and the 3% pension contribution why would a contractor being paid through an umbrella company ever be penalised for unpaid national insurance employer taxes, i.e., tax avoidance?

According to Seeley Harris, “If the umbrella company scheme is [conducting a form of] tax avoidance they will not be paying the appropriate tax. Sometimes this is down to the umbrella company depending on what the scam is but, in other cases, it is down to the worker to establish whether they are paying appropriate taxes. If it looks too good to be true, it probably is!”

James Brown, a Health and Safety Consultant and Interim Manager says, “The most frustrating thing with all this is that most limited company contractors hired professional chartered accountants to keep them right and to ensure they paid the correct taxes each year – now perversely the 2021 IR35 reforms have forced many into these unregulated “umbrella” arrangements, so they have lost control of their tax affairs and some have unwitting become “tax dodgers” without even knowing it.”

Umbrella red flags for tax avoidance schemes

• If a middleman handles the payment in this transaction
• If the umbrella company promises higher earnings retention compared to other options
• If you’re presented with an agreement like an annuity, loan, or other contract involving a tax-exempt portion of your income

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Sign up for our free newsletters, what’s included in the assignment rate via an umbrella.

Think of the assignment rate as a bundled package covering all your employment costs.

• Your pay after these deductions is your take-home pay (also known as ‘net pay’).
• T he National Insurance and pension contributions taken off your gross pay should always be employee contributions, not employer.

It should include:

• Your day rate:  This is the hourly or daily rate you negotiate for your services. Ensure you can live on this. It will be taxed at the PAYE tax rate based on your gross pay.
• Employer NICs:  The employer’s portion of National Insurance contributions.
• Apprenticeship Levy:  A levy paid by larger employers to fund apprenticeships.
• 3% Employer Pension Contribution:  The minimum legal contribution employers must make to their workplace pension scheme. However, one contractor asked the experts what to do in the case of escalation routes where the stated ER Pension deduction from the “assignment rate” exceeds what the Agency is paying (due to the Government’s Qualifying Earnings max threshold ). Dave Chaplin suggests if you have issues with an employer (i.e. recruitment agency, umbrella company or end client/hiring company) then your first point of call should be ACAS or Employment Agency Standards Inspectorate (EAS)
• Umbrella Company and Recruitment Agency Margin:  The fee the umbrella company charges for its services, typically a percentage of your day rate. The recruitment agency will also need to add their fee to the assignment rate.
• Administration costs (e.g. the margin, which is sometimes charged separately to you by the umbrella company)
• Holiday Pay (if accrued):  If you’re entitled to holiday pay under your contract, it’s also factored into the assignment rate.
• Statutory rights as an umbrella company worker : According to the FCSA: “Contractors working for an umbrella firm are by definition employed by that umbrella firm, and therefore have access to all statutory rights and benefits of employment. This includes annual leave, maternity, paternity, sick pay and pension contributions, and all of these rights are provided for by the umbrella firm.” But unlike most employers, umbrella companies try to include these costs in their fees to end clients through the “assignment rate”. That is what makes working through an umbrella tricky, despite the FCSA saying otherwise.

Umbrellas also retain a small margin to cover their costs for the services they provide. This is also deducted from the assignment income, and the balance is the workers’ gross pay. The Agency Workers Regulations 2010 provide that umbrella employees receive at least equivalent rights to their full time equivalents, including pay. This means that the assignment rate must usually be greater than the rate which the equivalent employees of the recruitment agency or hirer receive in order to achieve that. FCSA

What does an off-payroll assignment rate include?

Contractors that work off-payroll and “inside IR35” under the new rules for a medium or large company and bill through their limited company (their personal service company or “intermediary”) are working through “ deemed employment “. This means they and the end client they work for pay the same tax on the gross invoice paid to the PSC as if the contractor were an employee. Yet the contractor does not get benefits, such as sick pay, holiday or pension contributions.

The effect of putting the contractor into an umbrella is to revert back to the old rules, where the contractor is paying the client’s NI bill.” Dave Chaplin, CEO IR35 Shield

“The money paid to the contractor’s limited company must be treated as earnings from employment,” explains Chaplin. “This means it is taxed just like a salary. The deemed employer then pays the employment taxes on top – they cannot be deducted.”

He adds, “It is worth noting that under the old rules, the calculation was different, whereby the contractor did pay the client’s NI bill, but under the new rules, the NI is paid on top. The effect of putting the contractor into an umbrella is to revert back to the old rules, where the contractor is paying the client’s NI bill.”

Who foots the bill?

Ultimately, you, the contractor, could end up bearing the cost of the 3% employer contribution if you do not ask the recruitment agency to negotiate with the client to increase the “contractor rate” to absorb these costs. Remember, the assignment rate you agree to is designed to cover all employment expenses, including the 3%.

However, the umbrella company’s responsibility is to take care of calculating and deducting these costs from your pay and handles all the admin associated with payroll and taxes. This can be a significant benefit for contractors who want to avoid the complexities of self-employment accounting. You just have to keep on top of this. If you start to see discrepancies on your payslips bring this up immediately to the umbrella company. If they are vague in any way, bring your concerns up with HMRC so they can go to the umbrella company directly if they suspect they are pocketing your national insurance contributions or skimming in any way your gross pay rather than paying HMRC.

The HMRC guidance unequivocally states that agencies must accurately calculate and convey pay rates to reflect actual costs and margins. All too often, agencies only advertise the basic salary rate to workers rather than the full rate, leaving employees confused about their take-home pay. Crawford Temple, CEO of Professional Passport

Information is power

The assignment rate might seem confusing at first, but understanding its components empowers you as a contractor. Contractors have however asked for higher day rates through their agencies so they are not out of pocket. Will you always get what you ask? That will depend on how much in demand your experience and skill levels are. If you don’t negotiate then you will never know. Before you even negotiate, however, ask your recruitment agency and umbrella company for a clear breakdown of your assignment rate to ensure transparency and make informed decisions.

Bonus Tip: Before committing to an umbrella company, research and compare rates and services offered by different providers. Use this as a bargaining chip. If you are being forced to go through an umbrella company and you already feel comfortable with another, then ask the agency if they will reconsider. Ensure you’re comfortable with the fees and the level of service you’ll receive. Ask around on social media and news archives to see what real contractors have to say.

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Crawford Temple, CEO of Professional Passport says “The [HMRC] guidance unequivocally states that agencies must accurately calculate and convey pay rates to reflect actual costs and margins. All too often, agencies only advertise the basic salary rate to workers rather than the full rate, leaving employees confused about their take-home pay. Going forward, agencies must clearly spell out the gross salary, employment expenses, umbrella fees, and ultimate net wage the worker will receive through the Key Information Document. The total gross rate remitted to the umbrella company is dubbed the “assignment rate” and must form the basis for pay discussions with workers.”

No KIDs? No Thank you

Temple says Key Information Documents (KIDs) have been a legal requirement since April 2020 and were intended to be an important step towards greater transparency on the working terms between the contractor and hirer. Contractors should always insist on receiving a KID from any agency before the start of an assignment so all employment and pay parameters are completely clear.

“The legally required Key Information Document (KID) must offer clear specifics around proposed wages, fees, deductions, taxes and net pay, not boilerplate templates,” he says.

“Firstly, at registration, the agency should furnish a worker with sample KIDs using a generic rate so contractors understand all potential payment scenarios. Additionally, once an assignment is confirmed, an updated KID must spell out vital details:

• The Contract Rate – The exact specifics for that particular assignment
• Deductions – The KID must list any statutory deductions like income tax plus any non-statutory deductions and fees like the umbrella margin. Either the precise amounts or the formula used to calculate deductions should be shown. 
• Holiday Pay – Exactly how holiday pay entitlements are determined and calculated.
• Representative Example – A sample payslip with realistic numbers demonstrating the application of the listed deductions.
• Updates – Whenever a ‘Material Change’ occurs an updated KID must be issued to the contractor within 5 working days. A change in rate is not considered a material change but where new deductions are applying, such as Pension Auto Enrolment, an update is merited.

You can learn more about what HMRC has recently issued on new guidance along with other points on working through an umbrella  

So complicated! Even in Germany it is much easier.

This article shows just how poor the whole experience is for most contractors and agencies. Here’s what we do. We take the charge rate (to us, the agency) and work backwards. Charge (what we get) Umbrella Rate (what we will pay to the Umbrella) the Umbrella and then the individual contractors rate. The umbrella then creates a detailed KID which we issue to the contractor which gives them a complete breakdown including his/her gross and net rates illustrations and what all the “upper charges” are coming out of the umbrella rate. It’s not rocket science but it is a pain in the arse for everyone. Keep IR35 out of it. It’s the blanket ban on using PSC’s that HMRC said there was no evidence of. Strange how there is never a CEST or IR35 status test of any sort delivered with the role.

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Katherine Steiner-Dicks is an Editorial Consultant and Founder of BuzzVestor Media, a B2B investment news-analysis and media services company that serves startups, publishers, investors, targeted clients and high-net-worth families on how to to create and sustain amazing content, businesses, wealth and lifestyles.

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• Apr 16, 2023

Understanding the Difference Between Assignment Rate and Gross Rate of Pay

As a contractor, it's important to understand the different rates of pay that you may encounter when working on assignments. Two of the most common rates are the assignment rate and the gross rate of pay. While these rates may sound similar, they actually refer to different aspects of your pay, and it's important to understand the difference between them.

What is an Assignment Rate?

An assignment rate is the amount of money that a client or agency agrees to pay you for a specific assignment or project. This rate is usually agreed upon before you start work, and it may be negotiable depending on the nature of the project, your experience, and other factors.

The assignment rate typically includes all the costs associated with your work, including your salary, any expenses you incur, and any other fees that are part of your contract. It's important to note that the assignment rate is not the same as your take-home pay, as you may have to pay taxes and other expenses out of your earnings.

What is Gross Rate of Pay?

The gross rate of pay is the total amount of money that you earn before any deductions are made, such as income tax and national insurance contributions. This rate includes all the money that you earn from your work, including your basic salary, any bonuses, and any overtime or other additional pay that you receive.

The gross rate of pay is important because it determines the amount of tax and other deductions that you will have to pay on your earnings. It's important to note that the gross rate of pay is not the same as your assignment rate, as your assignment rate may include other costs and fees that are not included in your gross rate of pay.

What's the Difference Between Assignment Rate and Gross Rate of Pay?

The main difference between assignment rate and gross rate of pay is that the assignment rate is the amount that you are paid for a specific assignment or project, while the gross rate of pay is the total amount that you earn before any deductions are made.

The assignment rate is often negotiable, and it may include a range of costs and fees that are associated with your work. On the other hand, the gross rate of pay is determined by your contract and your earnings, and it does not include any other costs or fees.

It's important to understand the difference between these rates so that you can accurately calculate your take-home pay and plan your finances accordingly. By understanding how these rates work, you can ensure that you are being paid fairly for your work, and that you are meeting all of your tax and other financial obligations.

In conclusion, as a contractor, it's important to understand the difference between assignment rate and gross rate of pay. The assignment rate is the amount that you are paid for a specific assignment or project, while the gross rate of pay is the total amount that you earn before any deductions are made. By understanding how these rates work and how they impact your earnings, you can ensure that you are being paid fairly and that you are meeting all of your financial obligations as a contractor.

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What is the difference between your assignment rate and gross rate of pay?

• Take Home Pay
• What is the difference between…

The difference between a contractor’s assignment rate and gross rate of pay is an area that often causes a lot of confusion – especially if you are new to contracting. Continue reading to discover the difference and why the two pay rates are displayed on your payslip.

What is the assignment rate?

The assignment rate is made up of the actual wages payable to you (your gross pay), the recruitment agency’s and the umbrella company’s fees (or margin), and the employment costs. As employers, umbrella companies are legally required to pay employment taxes on any income paid to their employees. However, as umbrella companies only charge a small margin (typically between £15-30 per week) and have no financial gain from your work, they would be operating at a loss if they paid it themselves. Therefore, the assignment rate paid to the umbrella company by the recruitment agency or end client is different from the rate you are due to be paid, as it includes additional employment costs for the umbrella company. The employment costs include:

• Employer National Insurance Contributions
• Employer Workplace Pension Contributions
• Holiday Pay
• Administration costs (e.g. the margin, which are sometimes charged separately to you by the umbrella company)

Please visit the government’s website for more information about how you will be paid when working via an umbrella company.

What is the gross rate of pay?

The gross rate of pay (also sometimes referred to as the contract rate) is the actual wages payable to you (before tax deductions) by the umbrella company for the work you have completed. The umbrella company will deduct Income Tax and Employee National Insurance Contributions through their PAYE system and pay these to HMRC. Other deductions, such as workplace pension contributions and student loan repayments (if applicable), will also be taken. The remaining amount is your net pay, and this is the amount that will be paid to you.

How to understand deductions to your pay

It is possible to see a breakdown of the deductions that will be made to your pay before you register with an umbrella company. You will also receive a payslip for each payment made to you by the umbrella company.

Key Information Document

A Key Information Document (KID) will be provided to you by your recruitment agency before you accept an assignment. The KID is intended to improve the transparency of the information supplied to temporary workers, particularly regarding pay and the deductions that will be made. The KID provides an overview of the fees and deductions concerning the assignment rate and contract rate (gross rate of pay) and how this affects your net pay. The KID will outline what the recruitment agency will pay your umbrella company and what your umbrella company will pay you.

When the umbrella company pays you, you will receive a payslip with each payment listing the deductions that have been made to your gross pay. It is a legal requirement for your payslip to show the following:

• Your gross rate of pay before and after deductions
• The amount deducted for each tax deduction – for example, the amount of Employee National Insurance Contributions and Income Tax , which will change depending on the hours you work each week/month
• The number of hours/days you have worked

The assignment rate paid to the umbrella company and the deductions for the employment costs will also be listed in a separate section to show the umbrella company is making the correct employer tax deductions.

Contact us today for a free and impartial take home pay illustration

If you have any questions regarding the tax deductions made to your pay. In that case , our expert Sales Consultants can explain everything you need to know to ensure you understand how you get paid when working via an umbrella company. Please call us on 01707 871622 or request a callback for a time that suits you. We look forward to speaking with you!

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About churchill knight.

Founded by an IT Contractor in 1998, Churchill Knight has become one of the most respected contractor accountants in the UK. We’ve helped over 20,000 contractors with their accountancy requirements. As well as our accountancy services, we also have an industry-leading PAYE umbrella company and dedicated in-house personal tax department . Whichever service you choose, you can move forward with complete peace of mind. We are proud of the reputation we’ve built over the years, and our FCSA accreditation proves how committed we are to compliance within our sector. Keep reading…

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• Working, jobs and pensions
• Contracts and working hours

Working through an umbrella company

Find out about how and what you’ll be paid and how to check your pay when you’re employed by an umbrella company as a temporary worker.

How an umbrella company works

An umbrella company is a business often used by recruitment agencies to pay temporary workers.

In most cases, the umbrella company employs you and pays your wages through PAYE. It does not find temporary work for you, this is done by the recruitment agency (also known as an employment business).

Although the umbrella company is your employer and will pay you, the work you carry out will be for one of the recruitment agency’s clients. This work is often on a short-term basis.

What happens after you contact a new recruitment agency

The first time you contact a recruitment agency the steps to set up temporary work and employ you begin. The process may involve:

• a client — the business that needs temporary workers
• a recruitment agency — that finds temporary workers for a client
• an umbrella company — your employer for temporary work from that recruitment agency
• you (the worker) — who contacts the agency about temporary work

Each plays a role in the supply chain and has a contract for the temporary work but with different responsibilities. The supply chain often works in the following way.

The client needs temporary workers

The client is the business that needs temporary workers. It sets up a contract with a recruitment agency to find and engage temporary workers.

The recruitment agency searches for workers

The agency finds a suitable candidate from its contacts or advertises the role, stating the pay rate (weekly, daily, or hourly). You may not get paid this rate, because it usually includes the umbrella company’s operating costs.

Some clients may assess whether the off-payroll working rules apply to the role. These rules apply where workers contract though their own limited company or an intermediary . The  check employment status for tax tool can help them assess this.

If the client decides that off-payroll working rules would apply to the role, the job advert may describe it as being ‘inside IR35’. This may mean you are deemed to be an employee or the client (or recruitment agency) may ask you to be employed through an umbrella company.

You become an umbrella company employee

Before the recruitment agency can offer you a temporary role (assignment) they may ask you to be employed by one of their preferred umbrella companies. You may be able to choose your own.

The agency must give you a Key Information Document which should include:

• the umbrella company for all temporary work from this agency
• the minimum assignment rate paid to the umbrella company
• what the umbrella company will deduct
• your minimum gross pay

The recruitment agency agrees terms with the umbrella company

The agency sets up a contract with the umbrella company. This outlines that the umbrella company is responsible for:

• employing you and paying your wages in line with the Key Information Document
• invoicing the agency for the time you’ve worked

The recruitment agency discusses the role with you

For each new temporary role, the recruitment agency must give you new assignment details to confirm:

• who you’re working for
• your job title
• what you’re going to do
• the notice period to end the assignment
• where you’ll work
• any health and safety issues (for example, if you need personal protective equipment)

Your employment rights

As an employee of an umbrella company, you have the same employment rights as other employees .

You have a right to a written employment contract. An Acas guide to employment contracts explains how they work and what must be written in them.

You have the right to be paid at least the National Minimum Wage or National Living Wage , on time and in full at the agreed intervals as set out in the Key Information Document.

Unless you have opted out, you must be auto-enrolled on to a workplace pension scheme if you are eligible, and the deductions for this should appear on your payslip.

Holiday entitlement

You are entitled to paid holidays. Check your holiday entitlement with your employer. Your holiday pay must be deducted from the assignment rate for your job and then paid back to you when you take holiday and claim paid leave.

How you get paid

When you send your timesheet to the recruitment agency, it charges the client.

The recruitment agency then pays the umbrella company the agreed rate. This should be the assignment rate multiplied by the time you have worked.

The umbrella company is responsible for paying you as your employer .

Some umbrella companies may choose to pay the National Minimum Wage rate for all hours worked and then make up your full rate with an additional payment, like a bonus. You must still pay tax on this additional payment and your payslip must show this and all the hours you’ve worked.

Understanding how your gross pay is calculated

You have a right to a payslip that shows your pay.

You may also receive a ‘reconciliation statement’ from the umbrella company which shows you how your gross pay is worked out from the assignment rate.

How an umbrella company works out your gross pay from the assignment rate

The recruitment agency pays the umbrella company the assignment rate, then the umbrella company makes several deductions to work out your gross pay.

The reconciliation statement shows the breakdown of deductions. You should normally see the following deductions on the statement:

• umbrella company operating costs (sometimes called ‘margin’)
• employer National Insurance contribution
• employer workplace pension contribution
• holiday pay
• Apprenticeship Levy (if applicable)

The amount after these deductions have been taken off is your gross pay.

If you do not understand the deductions, or if you are not given a breakdown of them, you should speak to your umbrella company.

Checking your payslip

Your umbrella company will deduct the following from your gross pay:

• employee National Insurance contributions
• employee workplace pension contribution
• student loan repayments (if applicable)
• other deductions that you have agreed to or are legally required to pay

Your pay after these deductions is your take home pay (also known as ‘net pay’).

The National Insurance and pension contributions taken off your gross pay should always be employee contributions, not employer.

If you have issues with your pay, you should speak to your umbrella company first to try to sort out the problem.

If you think deductions for Income Tax and National Insurance from your gross pay are incorrect, you can estimate your Income Tax for the current year .

You can check what to look for on your payslips to see what a payslip should look like.

If your pay is not what you expected

If you have been promised higher pay by your umbrella company.

You are responsible for paying the correct amount of tax and National Insurance, even if you are employed.

Some umbrella companies promote tax avoidance which involves bending the rules of the tax system to pay less tax.

What to look out for

Your umbrella company could be involving you in a tax avoidance scheme if you get:

• a separate payment which you are told is not taxable, such as a loan
• more money paid into your bank account than is shown on your payslip
• a payment from someone other than your umbrella company, which has not been taxed
• asked to sign another agreement in addition to your employment contract

Check what to look for on your payslips and the tax avoidance arrangements used by some umbrella companies .

If you’re concerned you may be involved in tax avoidance

If the umbrella company makes you an offer that sounds too good to be true, take time to consider it and ask for full details. Read personal stories from those who have been caught up in tax avoidance schemes .

You can check if you may be involved in a tax avoidance scheme by using the check if you are at risk of tax avoidance tool . This will tell you how to report the umbrella company and get help to sort out your tax.

You can contact HMRC for help to get out of a tax avoidance scheme and put your tax affairs right.

Ways to protect yourself

Make sure you have access to your payslips, review them when you receive them and keep copies for reference.

Look for signs that your umbrella company might be operating fraudulently as this can have an impact on you.

Signs of fraudulent activity such as mini-umbrella company fraud can include frequent changes to your umbrella company that you have not asked for. You may be able to spot this if your umbrella company’s name or its PAYE reference number is on your payslips and they often change. Frequent changes in employer can affect your employment history and ability to secure loans such as a mortgage.

You should check that the umbrella company is correctly paying your Income Tax and National Insurance contributions, pension contributions and any student loan repayments. Check the deduction amounts on your payslip match the amounts shown in your:

• personal tax account
• student loan repayment account
• pension accounts

You can check your personal tax account online or download the HMRC app .

If an umbrella company says they are accredited or approved by another organisation check with the accrediting body to make sure.

Get help with your pay and rights

You should discuss your pay and employment rights with your umbrella company first.

If you still have concerns after this you can contact:

• Acas (Advisory, Conciliation and Arbitration Service)
• Citizens Advice (‘Contact us’ page)
• your trade union representative

Acas provide free and impartial advice to employers, employees and their representatives on their rights and obligations.

Report concerns

You can  report tax fraud and avoidance by a person or business to HMRC online  or call the HMRC fraud hotline.

You can  report concerns about pay and work rights  including National Minimum Wage, employment agencies, gang masters, or working hours.

Added information on checking to see if you have paid the correct amount of tax and National Insurance, and protecting yourself when working through an umbrella company.

Guidance about who is responsible for paying you in the 'How you get paid' section has been updated, and the 'Checking your payslip' 'section has been updated to mention the umbrella company will make deductions that you are legally required to pay from your gross pay.

This guidance has been updated to show how umbrella company workers are engaged. It has new sections to help workers understand their pay and employment rights and check that their tax and National Insurance is correct.

The section 'Check how you're being paid' has been added.

A link to 'Check your payslip if you work through an umbrella company' has been added to the 'If you think you are using an avoidance scheme' section.

First published.

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10 Essential Things to Know About Real Estate Assignment Sales (for Sellers)

— We take our content seriously. This article was written by a real person at BREL.

What’s an assignment?

An assignment is when a Seller sells their interest in a property before they take possession – in other words, they sell the contract they have with the Builder to a new purchaser. When a Seller assigns a property, they aren’t actually selling the property (because they don’t own it yet) – they are selling their promise to purchase it, along with the rights and obligations of their Agreement of Purchase and Sale contract.  The Buyer of an assignment is essentially stepping into the shoes of the original purchaser.

The original purchaser is considered to be the Assignor; the new Buyer is the Assignee. The Assignee is the one who will complete the final sale with the Builder.

Do assignments only happen with pre-construction condos?

It’s possible to assign any type of property, pre-construction or resale, provided there aren’t restrictions against assignment in the original contract. An assignment allows a Buyer of a any kind of home to sell their interest in that property before they take possession of it.

Why would someone want to assign a condo?

Often with pre-construction sales, there’s a long time lag between when the original contract is entered into, when the Buyer can move in (the interim occupancy period) and the final closing. It’s not uncommon for a Buyer’s circumstances to change during that time…new job out of the city, new husband or wife, new set of twins, etc. What worked for a Buyer’s lifestyle 4 years ago doesn’t always work come closing time.

Another common reason why people want to assign a contract is financial. Sometimes, the original purchaser doesn’t have the funds or can’t get the financing to complete the sale, and it’s cheaper to assign the contract to a new purchaser, than it is to renege on the sale.

Lastly, assignment sales are also common with speculative investors who buy pre-construction properties with no intention of closing on them. In these cases, the investors are banking on quick price appreciation and are eager to lock in a profit now, vs. waiting for the original closing date.

What can be negotiated in an assignment sale?

Because the Assignee is taking over the original purchaser’s contract, they can’t renegotiate the price or terms of the contract with the Builder – they are simply taking over the contract as it already exists, and as you negotiated it.

In most cases, the Assignee will mirror the deposit that you made to the Builder…so if you made a 20% deposit, you can expect the new purchaser to do the same.

Most Sellers of assignments are looking to make a profit, and part of an assignment sale negotiation is agreeing on price. Your real estate agent can guide you on price, which will determine your profit (or loss).

Builder Approval and Fees

Remember that huge legal document you signed when you made an offer to buy a pre-construction condo? It’s time to take it out and actually read it.

Your Agreement of Purchase & Sale stipulated your rights to assign the contract. While most builders allow assignments, there is usually an assignment fee that must be paid to the Builder (we’ve seen everything from $750 to $7,000).

There may be additional requirements as well, the most common being that the Builder has to approve the assignment.

Marketing Restrictions

Most pre-construction Agreements of Purchase & Sale from Toronto Builders do not allow the marketing of an assignment…so while the Builder may give you the right to assign your contract, they restrict you from posting it to the MLS or advertising it online. This makes selling an assignment extremely difficult…if people don’t know it’s available for sale, how they can possibly buy it?

While it may be very tempting to flout the no-marketing rule, BE VERY CAREFUL. Buyers guilty of marketing an assignment against the rules can be considered to have breached the Agreement, and the Builder can cancel your contract and keep your deposit.

We don’t recommend advertising an assignment for sale if it’s against the rules in your contract.

So how the heck can I find a Buyer?

There are REALTORS who specialize in assignment sales and have a database of potential Buyers and investors looking for assignments. If you want to be connected with an agent who knows the ins and outs of assignment sales, get in touch…we know some of the best assignment agents in Toronto.

What are the tax implications of real estate assignment?

Always get tax advice from a certified accountant, not from the internet (lol).

But in general, any profit made from an assignment is taxable (and any loss can be written off). The new Buyer or Assignee will be responsible for paying land transfer taxes and any HST that might be due.

How much does it cost to assign a pre-construction condo?

In addition to the Builder assignment fees, you will likely have to pay a real estate commission (unless you find the Buyer yourself) and legal fees. Because assignments are more complicated, you can expect to pay higher legal fees than you would for a resale property.

How does the closing of an assignment work?

With assignment sales, there are essentially 2 closings: the closing between the Assignor and the Assignee, and the closing between the Assignee and the Builder. With the first closing (the assignment closing) the original purchaser receives their deposit + any profit (or their deposit less any loss) from the Assignee. On the second closing (between the Builder and the Assignee), the Assignee pays the remaining amount to the Builder (usually with the help of a mortgage), and pays land transfer taxes. Title of the property transfers from the Builder to the Assignee at this point.

I suppose it could be said that there is a third closing too, when the Buyer takes possession of the property but doesn’t yet own it…this is known as the interim occupancy period. The interim occupancy occurs when the unit is ready to be occupied, but not ready to be registered with the city. Interim occupancy periods in Toronto range from a few months to a few years. During the interim occupancy period, the Buyer occupies the unit and pays the Builder an amount roughly equal to what their mortgage payment + condo fees + taxes would be. The timing of the assignment will dictate who completes the interim occupancy.

Assignments vs. Resale: Which is Better?

We often get calls from people who are debating whether they should assign a condo they bought, or wait for the building to register and then sell it as a typical resale condo.

Pros of Assigning vs. Waiting

• Get your deposit back and lock in your profit sooner
• Avoid paying land transfer taxes
• Avoid paying HST
• Maximize your return if prices are declining and you expect them to continue to decline
• Lifestyle – sometimes it just makes sense to move on

Cons of Assigning vs Waiting

• The pool of Buyers for assignment sales is much smaller than the pool of Buyers for resale properties, which could result in the sale taking a long time, getting a lower price than you would if you waited, or both.
• Marketing restrictions are annoying and reduce the chances of finding a Buyer
• Price – What is market value? If the condo building hasn’t registered and there haven’t been any resales yet, it can be difficult to determine how much the property is now worth. Assignment sales tend to sell for less than resale.
• Assignment sales can be complicated, so you want to make sure that you’re working with an agent who is experienced with assignment sales, and a good lawyer.

Still thinking of assignment your condo or house ? Get in touch and we’ll connect you with someone who specializes in assignment sales and can take you through the process.

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Raj Singh says:

What can be things to look for, especially determining market value for an assigned condo? I’m the assignee.

Sydonia Moton says:

Y would u need a lawyer when u buy a assignment property

Gideon Gyohannes says:

Good clear information!

Who pays the assignment fee to the developer? Assignor or Assignee?

Thanks Gideon 416 4591919

Melanie Piche says:

It’s almost always the Seller (though I suppose could be a point of negotiation).

Fiona Rourke says:

If there are 2 names on the agreement and 1 wants to leave and the other wants to remain… does the removing of 1 purchaser constitute an assignment

Brendan Powell says:

An assignment is one way to add or remove people from a contract, but not the only way…and not the simplest. Speak to your lawyer for advice on what makes the most sense for your specific situation. For a straightforward resale purchase you could probably just do an amendment signed by all parties. If it’s a preconstruction purchase with various deposits paid, etc it could be more complicated.

Katerina says:

Depends on the Developer. Some of them remove names via assignments only.

Haroon says:

Is there any difference in transaction process If assigner or seller of a pre constructio condo is a non resident ? Is seller required to get a clearance certificate from cRA to complete the transaction ?

Nathalie says:

Hello , i would like to know the exact steps for reassignment property please.

Amazing info. Thanks team. I may just touch base with you when my property in Stoney Creek is completed in. 2020. I may need to reassign it to someone Thanks

Victoria Bachlowa says:

If an assignor renegs on the deal and refuses to close because they figured out they could get more money and the assignment was already approved by the builder and all conditions fulfilled what can the Assignee do. I have $33,000 dollars in trust in the real estate’s trust fund. They sent me a mutual release which I have not signed. The interim occupancy is Feb. 1 and the closing is schedule for Mar. 1, 2019. I have financing in place, was ready to move in Feb. 1 and I have no where to live.

Definitely talk to your lawyer right away. They’ll want to look at your agreement of purchase and sale and will be able to advise you.

With assignment sales, there are essentially 2 closings: the closing between the Assignor and the Assignee, and the closing between the Assignee and the Builder. With the first closing (the assignment closing) the original purchaser receives their deposit + any profit (or their deposit less any loss) from the Assignee. Can I assume that these closing happen at the same time? I’m not sure how and when I would be paid as the Assignor.

What happens to the deposits or any profits already paid if the developer cancels the project after an assignment?

Hi, Did you get answer to this? I did an assignment sale last year and now the builder is not completing apparently and they are asking for their money back. Can they do that? After legal transactions, the lawyer simply said “the deal didn’t go through”. Apparently builder and the person who assumed the assignment agreed on taking out the deal. What do I have to pay back after it was done a year ago

This is definitely a question for your lawyer – as realtors we are not involved in that part of the transaction. I would expect that just as the builder would have to refund your deposits, you would likely need to do the same…but talk to your lawyer. As to whether the builder can cancel a project, yes they always reserve that right (but the details of how and under what circumstances would be in your original purchase agreement). It’s one of the annoying risks in buying preconstruction!

I completed the sale of my assignment in Dec 2015 however the CRA says I should be reporting the capital income in 2016 when the assignee closed his deal with the developer in July 2016. That makes no sense to me since I got all my money in Dec 2015. Can you supply any clarification on that CRA policy please?

You’d have to talk to the CRA or an accountant – we’re real estate agents,so we can’t give tax advice.

Hassan says:

Hello, You said that there are two closings. The first one between the assignor and the assignee and the second one between the builder and the new buyer (assignee). My question is that in the first closing does the assignee have to pay the assignor the deposit they have paid and any profit in cash or will the bank add this to the assignee’s mortgage?

The person doing the assigning usually gets their money at the first closing.

Kathy says:

What is the typical real estate free to assign your contract with the builder ?

Hi Kathy While we do few assignments (as they are rarely successful, and builders do not make it easy), in past we have charged more or less the same as we do for a typical resale listing. While there are elements to assignments that should be easier than a resale (eg staging), many other aspects of assignments are much MORE time-consuming, and the risk much higher since attempts to find a buyer for assignments are often unsuccessful. It’s also important to note that due to the extra complication, lawyer’s fees to assign are typically higher than resale as well–although more $ for the purchase side vs the sale side.

Mitul Patel says:

If assignee has paid small amount of deposit plus the original 25% deposit that the assignor has paid to the builder and gets the Keys to the unit since interim possession has been completed, when the condo registration is done and assignee is getting mortgage from the Bank or Pays the remaining balance to the Builder using his savings and decides not to pay the Balance of the Profit amount to Assignor, what are the possibilities in this kind of scenario?

You’d need to talk to a lawyer to find out the options.

David says:

How much exactly do brokers get paid at sale of Assignment? i.e. Would the broker’s fee be a % of your assignment selling price or your home’s selling price? I’m really looking for a clear answer.

I am using this website’s calculator associated with selling your home in Ontario. But there is no information on selling assignments. https://wowa.ca/calculators/commission-calculator-ontario

Realtors set their own commission, so there is no set fee- that website is likely the commission that that agent offers. We often see commissions of 4-5% for assignments. The fee is a % of the price of the assignment – for example, you originally bought for $500K; you’re now assigning for $600K – commission would be payable on the $600K.

Candace says:

Question: if i bought a pre construction condo, can i sell it as soon as it closes or do i have to live in it for 1 year after closing in order to avoid capital gains taxes?

Or does the 1 year start as soon as you move in?

I would suggest you talk to your accountant re: HST credit implications and capital gains, but if you sell it for more than you paid for it, capital gains usually apply.

You mention avoid paying HST when you assign your property. What is the HST based on? It’s not a commercial property that you would pay HST. Explain. Thanks.

HST and assignments are complex and this question is best answered specific to your situation by your accountant and real estate lawyer. In some cases HST is applicable on assignment profits – more details can be found on the CRA website here:

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/gi-120/assignment-a-purchase-sale-agreement-a-new-house-condominium-unit.html

If you are a podcast listener, the true condos podcast is also a great resource.

https://truecondos.com/cra-cracking-down-on-assignments/

heres one for your comment, purchase pre construction from builder beginning of 2021, to be finished end of 2021, (semi detached) here we are end of 2022, both units are now ready. Had one assigned but because builder didnt accept within certain time frame(they also had a 90 day clause wherein we couldnt assign prior to 90 less firm closing date (WHICH MOVED 4 TIMES). Anyrate now we have a new assinor but the builder says we are in default from the first one and wants 50k to do the assignment (the agreement lists the possibility of assigning for 12k) Also this deal would include us loosing our whole deposit and paying the 12k(plus fees) would be in addition too the 130k we are already loosing. The second property we are trying to close but interest rates are riducous, together with closing costs(currently mortgage company is asking that my wife be added to that one, afraid to even ask this builder. Any advice on how to deal with this asshole greedy builder? We are simply asking for assignment as per contract and a small extension for the new buyer(week or two) Appreciate any advice. Thank you

Dealing with builders/developers can be extremely painful, much worse than resale transactions in our experience. Their contracts are written to protect THEM. Unfortunately all I can say is follow the advice of your lawyer.

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What Is Wage Assignment?

Definition and example of wage assignment, how wage assignment works, wage assignment vs. wage garnishment.

10’000 Hours / Getty Images

A wage assignment is when creditors can take money directly from an employee’s paycheck to repay a debt.

Key Takeaways

• A wage assignment happens when money is taken from your paycheck by a creditor to repay a debt.
• Unlike a wage garnishment, a wage assignment can take place without a court order, and you have the right to cancel it at any time.
• Creditors can only take a portion of your earnings. The laws in your state will dictate how much of your take-home pay your lender can take.

A wage assignment is a voluntary agreement to let a lender take a portion of your paycheck each month to repay a debt. This process allows lenders to take a portion of your wages without taking you to court first.

Borrowers may agree to allow a lender to use wage assignments, for example, when they take out payday loans . The wage assignment can begin without a court order, although the laws about how much they can take from your paycheck vary by state.

For example, in West Virginia, wage assignments are only valid for one year and must be renewed annually. Creditors can only deduct up to 25% of an employee’s take-home pay, and the remaining 75% is exempt, including for an employee’s final paycheck.

If you agree to a wage assignment, that means you voluntarily agree to have money taken out of your paycheck each month to repay a debt.

State laws govern how soon a wage assignment can take place and how much of your paycheck a lender can take. For example, in Illinois, you must be at least 40 days behind on your loan payments before your lender can start a wage assignment. Under Illinois law, your creditor can only take up to 15% of your paycheck. The wage assignment is valid for up to three years after you signed the agreement.

Your creditor typically will send a Notice of Intent to Assign Wages by certified mail to you and your employer. From there, the creditor will send a demand letter to your employer with the total amount that’s in default.

You have the right to stop a wage assignment at any time, and you aren’t required to provide a reason why. If you don’t want the deduction, you can send your employer and creditor a written notice that you want to stop the wage assignment. You will still owe the money, but your lender must use other methods to collect the funds.

Research the laws in your state to see what percentage of your income your lender can take and for how long the agreement is valid.

Wage assignment and wage garnishment are often used interchangeably, but they aren’t the same thing. The main difference between the two is that wage assignments are voluntary while wage garnishments are involuntary. Here are some key differences:

Once you agree to a wage assignment, your lender can automatically take money from your paycheck. No court order is required first, but since the wage assignment is voluntary, you have the right to cancel it at any point.

Wage garnishments are the results of court orders, no matter whether you agree to them or not. If you want to reverse a wage garnishment, you typically have to go through a legal process to reverse the court judgment.

You can also stop many wage garnishments by filing for bankruptcy. And creditors aren’t usually allowed to garnish income from Social Security, disability, child support , or alimony. Ultimately, the laws in your state will dictate how much of your income you’re able to keep under a wage garnishment.

Creditors can’t garnish all of the money in your paycheck. Federal law limits the amount that can be garnished to 25% of the debtor’s disposable income. State laws may further limit how much of your income lenders can seize.

Illinois Legal Aid Online. “ Understanding Wage Assignment .” Accessed Feb. 8, 2022.

West Virginia Division of Labor. “ Wage Assignments / Authorized Payroll Deductions .” Accessed Feb. 8, 2022.

U.S. Department of Labor. “ Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA) .” Accessed Feb. 8, 2022.

Sacramento County Public Law Library. “ Exemptions from Enforcement of Judgments in California .” Accessed Feb. 8, 2022.

District Court of Maryland. “ Wage Garnishment .” Accessed Feb. 8, 2022.

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Medicare Assignment: Everything You Need to Know

Medicare assignment.

• Providers Accepting Assignment
• Providers Who Do Not
• Billing Options
• Assignment of Benefits
• How to Choose

Frequently Asked Questions

Medicare assignment is an agreement between Medicare and medical providers (doctors, hospitals, medical equipment suppliers, etc.) in which the provider agrees to accept Medicare’s fee schedule as payment in full when Medicare patients are treated.

This article will explain how Medicare assignment works, and what you need to know in order to ensure that you won’t receive unexpected bills.

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There are 35 million Americans who have Original Medicare. Medicare is a federal program and most medical providers throughout the country accept assignment with Medicare. As a result, these enrollees have a lot more options for medical providers than most of the rest of the population.

They can see any provider who accepts assignment, anywhere in the country. They can be assured that they will only have to pay their expected Medicare cost-sharing (deductible and coinsurance, some or all of which may be paid by a Medigap plan , Medicaid, or supplemental coverage provided by an employer or former employer).

It’s important to note here that the rules are different for the 29 million Americans who have Medicare Advantage plans. These beneficiaries cannot simply use any medical provider who accepts Medicare assignment.

Instead, each Medicare Advantage plan has its own network of providers —much like the health insurance plans that many Americans are accustomed to obtaining from employers or purchasing in the exchange/marketplace .

A provider who accepts assignment with Medicare may or may not be in-network with some or all of the Medicare Advantage plans that offer coverage in a given area. Some Medicare Advantage plans— health maintenance organizations (HMOs) , in particular—will only cover an enrollee’s claims if they use providers who are in the plan's network.

Other Medicare Advantage plans— preferred provider organizations (PPOs) , in particular—will cover out-of-network care but the enrollee will pay more than they would have paid had they seen an in-network provider.

Original Medicare

The bottom line is that Medicare assignment only determines provider accessibility and costs for people who have Original Medicare. People with Medicare Advantage need to understand their own plan’s provider network and coverage rules.

When discussing Medicare assignment and access to providers in this article, keep in mind that it is referring to people who have Original Medicare.

How to Make Sure Your Provider Accepts Assignment

Most doctors, hospitals, and other medical providers in the United States do accept Medicare assignment.

Provider Participation Stats

According to the Centers for Medicare and Medicaid Services, 98% of providers participate in Medicare, which means they accept assignment.

You can ask the provider directly about their participation with Medicare. But Medicare also has a tool that you can use to find participating doctors, hospitals, home health care services, and other providers.

There’s a filter on that tool labeled “Medicare-approved payment.” If you turn on that filter, you will only see providers who accept Medicare assignment. Under each provider’s information, it will say “Charges the Medicare-approved amount (so you pay less out-of-pocket).”

What If Your Provider Doesn’t Accept Assignment?

If your medical provider or equipment supplier doesn’t accept assignment, it means they haven’t agreed to accept Medicare’s approved amounts as payment in full for all of the services.

These providers can still choose to accept assignment on a case-by-case basis. But because they haven’t agreed to accept Medicare assignment for all services, they are considered nonparticipating providers.

Note that "nonparticipating" does not mean that a provider has opted out of Medicare altogether. Medicare will still pay claims for services received from a nonparticipating provider (i.e., one who does not accept Medicare assignment), whereas Medicare does not cover any of the cost of services obtained from a provider who has officially opted out of Medicare.

If a Medicare beneficiary uses a provider who has opted out of Medicare, that person will pay the provider directly and Medicare will not be involved in any way.

Physicians Who Have Opted Out

Only about 1% of all non-pediatric physicians have opted out of Medicare.

For providers who have not opted out of Medicare but who also don’t accept assignment, Medicare will still pay nearly as much as it would have paid if you had used a provider who accepts assignment. Here’s how it works:

• Medicare will pay the provider 95% of the amount they would pay if the provider accepted assignment.
• The provider can charge the person receiving care more than the Medicare-approved amount, but only up to 15% more (some states limit this further). This extra amount, which the patient has to pay out-of-pocket, is known as the limiting charge . But the 15% cap does not apply to medical equipment suppliers; if they do not accept assignment with Medicare, there is no limit on how much they can charge the person receiving care. This is why it’s particularly important to make sure that the supplier accepts Medicare assignment if you need medical equipment.
• The nonparticipating provider may require the person receiving care to pay the entire bill up front and seek reimbursement from Medicare (using Form CMS 1490-S ). Alternatively, they may submit a claim to Medicare on behalf of the person receiving care (using Form CMS-1500 ).
• A nonparticipating provider can choose to accept assignment on a case-by-case basis. They can indicate this on Form CMS-1500 in box 27. The vast majority of nonparticipating providers who bill Medicare choose to accept assignment for the claim being billed.
• Nonparticipating providers do not have to bill your Medigap plan on your behalf.

Billing Options for Providers Who Accept Medicare

When a medical provider accepts assignment with Medicare, part of the agreement is that they will submit bills to Medicare on behalf of the person receiving care. So if you only see providers who accept assignment, you will never need to submit your own bills to Medicare for reimbursement.

If you have a Medigap plan that supplements your Original Medicare coverage, you should present the Medigap coverage information to the provider at the time of service. Medicare will forward the claim information to your Medigap insurer, reducing administrative work on your part.

Depending on the Medigap plan you have, the services that you receive, and the amount you’ve already spent in out-of-pocket costs, the Medigap plan may pay some or all of the out-of-pocket costs that you would otherwise have after Medicare pays its share.

(Note that if you have a type of Medigap plan called Medicare SELECT, you will have to stay within the plan’s network of providers in order to receive benefits. But this is not the case with other Medigap plans.)

After the claim is processed, you’ll be able to see details in your MyMedicare.gov account . Medicare will also send you a Medicare Summary Notice. This is Medicare’s version of an explanation of benefits (EOB) , which is sent out every three months.

If you have a Medigap plan, it should also send you an EOB or something similar, explaining the claim and whether the policy paid any part of it.

What Is Medicare Assignment of Benefits?

For Medicare beneficiaries, assignment of benefits means that the person receiving care agrees to allow a nonparticipating provider to bill Medicare directly (as opposed to having the person receiving care pay the bill up front and seek reimbursement from Medicare). Assignment of benefits is authorized by the person receiving care in Box 13 of Form CMS-1500 .

If the person receiving care refuses to assign benefits, Medicare can only reimburse the person receiving care instead of paying the nonparticipating provider directly.

Things to Consider Before Choosing a Provider

If you’re enrolled in Original Medicare, you have a wide range of options in terms of the providers you can use—far more than most other Americans. In most cases, your preferred doctor and other medical providers will accept assignment with Medicare, keeping your out-of-pocket costs lower than they would otherwise be, and reducing administrative hassle.

There may be circumstances, however, when the best option is a nonparticipating provider or even a provider who has opted out of Medicare altogether. If you choose one of these options, be sure you discuss the details with the provider before proceeding with the treatment.

You’ll want to understand how much is going to be billed and whether the provider will bill Medicare on your behalf if you agree to assign benefits (note that this is not possible if the provider has opted out of Medicare).

If you have supplemental coverage, you’ll also want to check with that plan to see whether it will still pick up some of the cost and, if so, how much you should expect to pay out of your own pocket.

A medical provider who accepts Medicare assignment is considered a participating provider. These providers have agreed to accept Medicare’s fee schedule as payment in full for services they provide to Medicare beneficiaries. Most doctors, hospitals, and other medical providers do accept Medicare assignment.

Nonparticipating providers are those who have not signed an agreement with Medicare to accept Medicare’s rates as payment in full. However, they can agree to accept assignment on a case-by-case basis, as long as they haven’t opted out of Medicare altogether. If they do not accept assignment, they can bill the patient up to 15% more than the Medicare-approved rate.

Providers who opt out of Medicare cannot bill Medicare and Medicare will not pay them or reimburse beneficiaries for their services. But there is no limit on how much they can bill for their services.

A Word From Verywell

It’s in your best interest to choose a provider who accepts Medicare assignment. This will keep your costs as low as possible, streamline the billing and claims process, and ensure that your Medigap plan picks up its share of the costs.

If you feel like you need help navigating the provider options or seeking care from a provider who doesn’t accept assignment, the Medicare State Health Insurance Assistance Program (SHIP) in your state may be able to help.

A doctor who does not accept Medicare assignment has not agreed to accept Medicare’s fee schedule as payment in full for their services. These doctors are considered nonparticipating with Medicare and can bill Medicare beneficiaries up to 15% more than the Medicare-approved amount.

They also have the option to accept assignment (i.e., accept Medicare’s rate as payment in full) on a case-by-case basis.

There are certain circumstances in which a provider is required by law to accept assignment. This includes situations in which the person receiving care has both Medicare and Medicaid. And it also applies to certain medical services, including lab tests, ambulance services, and drugs that are covered under Medicare Part B (as opposed to Part D).

In 2021, 98% of American physicians had participation agreements with Medicare, leaving only about 2% who did not accept assignment (either as a nonparticipating provider, or a provider who had opted out of Medicare altogether).

Accepting assignment is something that the medical provider does, whereas assignment of benefits is something that the patient (the Medicare beneficiary) does. To accept assignment means that the medical provider has agreed to accept Medicare’s approved fee as payment in full for services they provide.

Assignment of benefits means that the person receiving care agrees to allow a medical provider to bill Medicare directly, as opposed to having the person receiving care pay the provider and then seek reimbursement from Medicare.

Centers for Medicare and Medicaid Services. Medicare monthly enrollment .

Centers for Medicare and Medicaid Services. Annual Medicare participation announcement .

Centers for Medicare and Medicaid Services. Lower costs with assignment .

Centers for Medicare and Medicaid Services. Find providers who have opted out of Medicare .

Kaiser Family Foundation. How many physicians have opted-out of the Medicare program ?

Center for Medicare Advocacy. Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) updates .

Centers for Medicare and Medicaid Services. Check the status of a claim .

Centers for Medicare and Medicaid Services. Medicare claims processing manual. Chapter 26 - completing and processing form CMS-1500 data set .

Centers for Medicare and Medicaid Services. Ambulance fee schedule .

Centers for Medicare and Medicaid Services. Prescription drugs (outpatient) .

By Louise Norris Norris is a licensed health insurance agent, book author, and freelance writer. She graduated magna cum laude from Colorado State University.

(404) 738-5471

Ultimate Checklist for Understanding Contract Assignment Rules

• February 28, 2024
• Moton Legal Group

In contracts, understanding assignment is key. Simply put, an assignment in contract law is when one party (the assignor) transfers their rights and responsibilities under a contract to another party (the assignee). This can include anything from leasing agreements to business operations. But why is this important? It’s because it allows for flexibility in business and personal dealings, a critical component in our world.

Here’s a quick rundown: – Contract Basics: The foundational agreements between parties. – Assignment Importance: Allowing the transfer of obligations and benefits to keep up with life’s changes.

Contracts are a staple in both personal and business worlds, acting as the backbone to many transactions and agreements encountered daily. Understanding the nuances, like assignments, can empower you to navigate these waters with confidence and ease. Whether you’re a business owner in the Southeast looking to expand or an individual managing personal agreements, grasp these basics, and you’re on the right path.

Understanding Contract Assignment

Contract Assignment sounds complicated, right? But, let’s break it down into simple terms. In contracts and legal agreements, knowing about assignment can save you a lot of headaches down the road. Whether you’re a business owner, a landlord, or just someone who deals with contracts, this is for you.

Legal Definition

At its core, contract assignment is about transferring rights or obligations under a contract from one party to another. Think of it as passing a baton in a relay race. The original party (the assignor) hands off their responsibilities or benefits to someone else (the assignee). But, there’s a twist – the race keeps going with the new runner without starting over.

Contract Law

In contract law, assignment comes into play in various ways. For example, if you’re a freelancer and you’ve agreed to complete a project but suddenly find yourself overbooked, you might assign that contract to another freelancer. This way, the job gets done, and your client is happy. However, not all contracts can be freely assigned. Some require the other party’s consent, and others can’t be assigned at all, especially if they involve personal skills or confidential trust.

Property Law

When it comes to property law, assignment often surfaces in landlord-tenant relationships. Say you’re renting a shop for your business, but you decide to move. If your lease allows it, you might assign your lease to another business. This means they take over your lease, stepping into your shoes, with all the rights and obligations that come with it.

The concept might seem straightforward, but there are important legal requirements and potential pitfalls to be aware of. For instance, an assignment could be prohibited by the contract itself, or it may significantly change the original deal’s terms in a way that’s not allowed. Plus, when you’re dealing with something that requires a unique skill set, like an artist or a consultant, those services typically can’t be passed on to someone else without agreement from all parties involved.

To navigate these complexities, understanding the fundamentals of assignment in contract law and property law is crucial. It ensures that when you’re ready to pass that baton, you’re doing it in a way that’s legal, effective, and doesn’t leave you tripping up before you reach the finish line.

The goal here is to make sure everyone involved understands what’s happening and agrees to it. That way, assignments can be a useful tool to manage your contracts and property agreements, keeping things moving smoothly even when changes come up.

For more detailed exploration on this topic, consider checking the comprehensive guide on Assignment (law)). This resource dives deeper into the nuances of contract assignment, offering insights and examples that can help clarify this complex area of law.

By grasping these basics, you’re well on your way to mastering the art of contract assignment. Whether you’re dealing with leases, business deals, or any agreement in between, knowing how to effectively assign a contract can be a game-changer.

Key Differences Between Assignment and Novation

When diving into contracts, two terms that often cause confusion are assignment and novation . While both deal with transferring obligations and rights under a contract, they are fundamentally different in several key aspects. Understanding these differences is crucial for anyone involved in contract management or negotiation.

Rights Transfer

Assignment involves the transfer of benefits or rights from one party (the assignor) to another (the assignee). However, it’s important to note that only the benefits of the contract can be assigned, not the burdens. For instance, if someone has the right to receive payments under a contract, they can assign this right to someone else.

Novation , on the other hand, is more comprehensive. It involves transferring both the rights and obligations under a contract from one party to a new party. With novation, the original party is completely released from the contract, and a new contractual relationship is formed between the remaining and the new party. This is a key distinction because, in novation, all parties must agree to this new arrangement.

Obligations Transfer

Assignment doesn’t transfer the original party’s obligations under the contract. The assignor (the original party who had the rights under the contract) might still be liable if the assignee fails to fulfill the contract terms.

In contrast, novation transfers all obligations to the new party. Once a novation is complete, the new party takes over all rights and obligations, leaving the original party with no further legal liabilities or rights under the contract.

Written Agreement

While assignments can sometimes be informal or even verbal, novation almost always requires a written agreement. This is because novation affects more parties’ rights and obligations and has a more significant impact on the contractual relationship. A written agreement ensures that all parties are clear about the terms of the novation and their respective responsibilities.

In practice, the need for a written agreement in novation serves as a protection for all parties involved. It ensures that the transfer of obligations is clearly documented and legally enforceable.

For example, let’s say Alex agrees to paint Bailey’s house for $1,000. Later, Alex decides they can’t complete the job and wants Chris to take over. If Bailey agrees, they can sign a novation agreement where Chris agrees to paint the house under the same conditions. Alex is then relieved from the original contract, and Chris becomes responsible for completing the painting job.

Understanding the difference between assignment and novation is critical for anyone dealing with contracts. While both processes allow for the transfer of rights or obligations, they do so in different ways and with varying implications for all parties involved. Knowing when and how to use each can help ensure that your contractual relationships are managed effectively and legally sound.

For further in-depth information and real-life case examples on assignment in contract law, you can explore detailed resources such as Assignment (law) on Wikipedia).

Next, we’ll delve into the legal requirements for a valid assignment, touching on express prohibition, material change, future rights, and the rare skill requirement. Understanding these will further equip you to navigate the complexities of contract assignments successfully.

Legal Requirements for a Valid Assignment

When dealing with assignment in contract law , it’s crucial to understand the legal backbone that supports a valid assignment. This ensures that the assignment stands up in a court of law if disputes arise. Let’s break down the must-know legal requirements: express prohibition, material change, future rights, and rare skill requirement.

Express Prohibition

The first stop on our checklist is to look for an express prohibition against assignment in the contract. This is a clause that outright states assignments are not allowed without the other party’s consent. If such language exists and you proceed with an assignment, you could be breaching the contract. Always read the fine print or have a legal expert review the contract for you.

Material Change

Next up is the material change requirement. The law states that an assignment cannot significantly alter the duties, increase the burdens, or impair the chances of the other party receiving due performance under the contract. For instance, if the contract involves personal services tailored to the specific party, assigning it to someone else might change the expected outcome, making such an assignment invalid.

Future Rights

Another important aspect is future rights . The rule here is straightforward: you can’t assign what you don’t have. This means that a promise to assign rights you may acquire in the future is generally not enforceable at present. An effective assignment requires that the rights exist at the time of the assignment.

Rare Skill Requirement

Lastly, let’s talk about the rare skill requirement . Some contracts are so specialized that they cannot be assigned to another party without compromising the contract’s integrity. This is often the case with contracts that rely on an individual’s unique skills or trust. Think of an artist commissioned for a portrait or a lawyer hired for their specialized legal expertise. In these scenarios, assignments are not feasible as they could severely impact the contract’s intended outcome.

Understanding these legal requirements is pivotal for navigating the complexities of assignment in contract law. By ensuring compliance with these principles, you can effectively manage contract assignments, safeguarding your interests and those of the other contracting party.

For anyone looking to delve deeper into the intricacies of contract law, you can explore detailed resources such as Assignment (law) on Wikipedia).

Moving forward, we’ll explore the common types of contract assignments, from landlord-tenant agreements to business contracts and intellectual property transfers. This will give you a clearer picture of how assignments work across different legal landscapes.

Common Types of Contract Assignments

When we dive into assignment in contract law , we find it touches nearly every aspect of our business and personal lives. Let’s simplify this complex topic by looking at some of the most common types of contract assignments you might encounter.

Landlord-Tenant Agreements

Imagine you’re renting a fantastic apartment but have to move because of a new job. Instead of breaking your lease, you can assign your lease to someone else. This means the new tenant takes over your lease, including rent payments and maintenance responsibilities. However, it’s crucial that the landlord agrees to this switch. If done right, it’s a win-win for everyone involved.

Business Contracts

In the business world, contract assignments are a daily occurrence. For example, if a company agrees to provide services but then realizes it’s overbooked, it can assign the contract to another company that can fulfill the obligations. This way, the project is completed on time, and the client remains happy. It’s a common practice that ensures flexibility and efficiency in business operations.

Intellectual Property

Intellectual property (IP) assignments are fascinating and complex. If an inventor creates a new product, they can assign their patent rights to a company in exchange for a lump sum or royalties. This transfer allows the company to produce and sell the invention, while the inventor benefits financially. However, it’s critical to note that with trademarks, the goodwill associated with the mark must also be transferred to maintain its value.

Understanding these types of assignments helps clarify the vast landscape of contract law. Whether it’s a cozy apartment, a crucial business deal, or a groundbreaking invention, assignments play a pivotal role in ensuring these transitions happen smoothly.

As we navigate through the realm of contract assignments, each type has its own set of rules and best practices. The key is to ensure all parties are on the same page and that the assignment is executed properly to avoid any legal pitfalls.

Diving deeper into the subject, next, we will explore how to execute a contract assignment effectively, ensuring all legal requirements are met and the process runs as smoothly as possible.

How to Execute a Contract Assignment Effectively

Executing a contract assignment effectively is crucial to ensure that all legal requirements are met and the process runs smoothly. Here’s a straightforward guide to help you navigate this process without any hiccups.

Written Consent

First and foremost, get written consent . This might seem like a no-brainer, but it’s surprising how often this step is overlooked. If the original contract requires the consent of the other party for an assignment to be valid, make sure you have this in black and white. Not just a handshake or a verbal agreement. This ensures clarity and avoids any ambiguity or disputes down the line.

Notice of Assignment

Next up, provide a notice of assignment to all relevant parties. This is not just common courtesy; it’s often a legal requirement. It informs all parties involved about the change in the assignment of rights or obligations under the contract. Think of it as updating your address with the post office; everyone needs to know where to send the mail now.

Privity of Estate

Understanding privity of estate is key in real estate transactions and leases. It refers to the legal relationship that exists between parties under a contract. When you assign a contract, the assignee steps into your shoes, but the original terms of the contract still apply. This means the assignee needs to be aware of and comply with the original agreement’s requirements.

Secondary Liability

Lastly, let’s talk about secondary liability . Just because you’ve assigned a contract doesn’t always mean you’re off the hook. In some cases, the original party (the assignor) may still hold some liability if the assignee fails to perform under the contract. It’s essential to understand the terms of your assignment agreement and whether it includes a release from liability for the assignor.

Executing a contract assignment effectively is all about dotting the I’s and crossing the T’s . By following these steps—securing written consent, issuing a notice of assignment, understanding privity of estate, and clarifying secondary liability—you’re setting yourself up for a seamless transition.

The goal is to ensure all parties are fully informed and agreeable to the changes being made. This not only helps in maintaining good relationships but also in avoiding potential legal issues down the line.

We’ll dive into some of the frequently asked questions about contract assignment to clear any lingering doubts.

Frequently Asked Questions about Contract Assignment

When navigating contracts, questions often arise, particularly about the concepts of assignment and novation. Let’s break these down into simpler terms.

What does assignment of a contract mean?

In the realm of assignment in contract law , think of assignment as passing the baton in a relay race. It’s where one party (the assignor) transfers their rights and benefits under a contract to another party (the assignee). However, unlike a relay race, the original party might still be on the hook for obligations unless the contract says otherwise. It’s like handing off the baton but still running alongside the new runner just in case.

Is an assignment legally binding?

Absolutely, an assignment is as binding as a pinky promise in the playground – but with legal muscle behind it. Once an assignment meets the necessary legal criteria (like not significantly changing the obligor’s duties or having express consent if required), it’s set in stone. This means both the assignee and the assignor must honor this transfer of rights or face potential legal actions. It’s a serious commitment, not just a casual exchange.

What is the difference between assignment and novation?

Now, this is where it gets a bit more intricate. If assignment is passing the baton, novation is forming a new team mid-race. It involves replacing an old obligation with a new one or adding a new party to take over an old one’s duties. Crucially, novation extinguishes the old contract and requires all original and new parties to agree. It’s a clean slate – the original party walks away, and the new party steps in, no strings attached.

While both assignment and novation change the playing field of a contract, novation requires a unanimous thumbs up from everyone involved, completely freeing the original party from their obligations. On the other hand, an assignment might leave the original party watching from the sidelines, ready to jump back in if needed.

Understanding these facets of assignment in contract law is crucial, whether you’re diving into a new agreement or navigating an existing one. Knowledge is power – especially when it comes to contracts.

As we wrap up these FAQs, the legal world of contracts is vast and sometimes complex, but breaking it down into bite-sized pieces can help demystify the process and empower you in your legal undertakings.

Here’s a helpful resource for further reading on the difference between assignment and cession.

Now, let’s continue on to the conclusion to tie all these insights together.

Navigating assignment in contract law can seem like a daunting task at first glance. However, with the right information and guidance, it becomes an invaluable tool in ensuring that your rights and obligations are protected and effectively managed in any contractual relationship.

At Moton Legal Group, we understand the intricacies of contract law and are dedicated to providing you with the expertise and support you need to navigate these waters. Whether you’re dealing with a straightforward contract assignment or facing more complex legal challenges, our team is here to help. We pride ourselves on our ability to demystify legal processes and make them accessible to everyone.

The key to successfully managing any contract assignment lies in understanding your rights, the obligations involved, and the potential impacts on all parties. It’s about ensuring that the assignment is executed in a way that is legally sound and aligns with your interests.

If you’re in need of assistance with a contract review, looking to understand more about how contract assignments work, or simply seeking legal advice on your contractual rights and responsibilities, Moton Legal Group is here for you. Our team of experienced attorneys is committed to providing the clarity, insight, and support you need to navigate the complexities of contract law with confidence.

For more information on how we can assist you with your contract review and other legal needs, visit our contract review service page .

In the constantly evolving landscape of contract law, having a trusted legal partner can make all the difference. Let Moton Legal Group be your guide, ensuring that your contractual dealings are handled with the utmost care, professionalism, and expertise. Together, we can navigate the complexities of contract law and secure the best possible outcomes for your legal matters.

Thank you for joining us on this journey through the fundamentals of assignment in contract law. We hope you found this information helpful and feel more empowered to handle your contractual affairs with confidence.

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Does your provider accept Medicare as full payment?

You can get the lowest cost if your doctor or other health care provider accepts the Medicare-approved amount  as full payment for a covered service. This is called “accepting assignment.” If a provider accepts assignment, it’s for all Medicare-covered Part A and Part B services.

Using a provider that accepts assignment

Most doctors, providers, and suppliers accept assignment, but always check to make sure that yours do.

If your doctor, provider, or supplier accepts assignment:

• Your out-of-pocket costs may be less.
• They agree to charge you only the Medicare deductible and coinsurance amount, and usually wait for Medicare to pay its share before asking you to pay your share.
• They have to submit your claim directly to Medicare and can't charge you for submitting the claim.

How does assignment impact my drug coverage?

Using a provider that doesn't accept Medicare as full payment

Some providers who don’t accept assignment still choose to accept the Medicare-approved amount for services on a case-by-case basis. These providers are called "non-participating."

If your doctor, provider, or supplier doesn't accept assignment:

• You might have to pay the full amount at the time of service.
• They should submit a claim to Medicare for any Medicare-covered services they give you, and they can’t charge you for submitting a claim. If they refuse to submit a Medicare claim, you can submit your own claim to Medicare. Get the Medicare claim form .
• They can charge up to 15% over the Medicare-approved amount for a service, but no more than that. This is called "the limiting charge."  

Does the limiting charge apply to all Medicare-covered services?

Using a provider that "opts-out" of Medicare

• Doctors and other providers who don’t want to work with the Medicare program may "opt out" of Medicare.
• Medicare won’t pay for items or services you get from provider that opts out, except in emergencies.
• Providers opt out for a minimum of 2 years. Every 2 years, the provider can choose to keep their opt-out status, accept Medicare-approved amounts on a case-by-case basis ("non-participating"), or accept assignment.

Find providers that opted out of Medicare.

Private contracts with doctors or providers who opt out

• If you choose to get services from an opt-out doctor or provider you may need to pay upfront, or set up a payment plan with the provider through a private contract.
• Medicare won’t pay for any service you get from this doctor, even if it’s a Medicare-covered service.

What are the rules for private contracts?

You may want to contact your  State Health Insurance Assistance Program (SHIP) for help before signing a private contract with any doctor or other health care provider.

What do you want to do next?

• Next step: Get help with costs
• Take action: Find a provider
• Get details: How to get Medicare services

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What is Medicare assignment and how does it work?

Kimberly Lankford,

​Because Medicare decides how much to pay providers for covered services, if the provider agrees to the Medicare-approved amount, even if it is less than they usually charge, they’re accepting assignment.

A doctor who accepts assignment agrees to charge you no more than the amount Medicare has approved for that service. By comparison, a doctor who participates in Medicare but doesn’t accept assignment can potentially charge you up to 15 percent more than the Medicare-approved amount.

That’s why it’s important to ask if a provider accepts assignment before you receive care, even if they accept Medicare patients. If a doctor doesn’t accept assignment, you will pay more for that physician’s services compared with one who does.

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How much do I pay if my doctor accepts assignment?

If your doctor accepts assignment, you will usually pay 20 percent of the Medicare-approved amount for the service, called coinsurance, after you’ve paid the annual deductible. Because Medicare Part B covers doctor and outpatient services, your $240 deductible for Part B in 2024 applies before most coverage begins.

All providers who accept assignment must submit claims directly to Medicare, which pays 80 percent of the approved cost for the service and will bill you the remaining 20 percent. You can get some preventive services and screenings, such as mammograms and colonoscopies , without paying a deductible or coinsurance if the provider accepts assignment. 

What if my doctor doesn’t accept assignment?

A doctor who takes Medicare but doesn’t accept assignment can still treat Medicare patients but won’t always accept the Medicare-approved amount as payment in full.

This means they can charge you up to a maximum of 15 percent more than Medicare pays for the service you receive, called “balance billing.” In this case, you’re responsible for the additional charge, plus the regular 20 percent coinsurance, as your share of the cost.

How to cover the extra cost? If you have a Medicare supplement policy , better known as Medigap, it may cover the extra 15 percent, called Medicare Part B excess charges.

All Medigap policies cover Part B’s 20 percent coinsurance in full or in part. The F and G policies cover the 15 percent excess charges from doctors who don’t accept assignment, but Plan F is no longer available to new enrollees, only those eligible for Medicare before Jan. 1, 2020, even if they haven’t enrolled in Medicare yet. However, anyone who is enrolled in original Medicare can apply for Plan G.

Remember that Medigap policies only cover excess charges for doctors who accept Medicare but don’t accept assignment, and they won’t cover costs for doctors who opt out of Medicare entirely.

Good to know. A few states limit the amount of excess fees a doctor can charge Medicare patients. For example, Massachusetts and Ohio prohibit balance billing, requiring doctors who accept Medicare to take the Medicare-approved amount. New York limits excess charges to 5 percent over the Medicare-approved amount for most services, rather than 15 percent.

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How do I find doctors who accept assignment?

Before you start working with a new doctor, ask whether he or she accepts assignment. About 98 percent of providers billing Medicare are participating providers, which means they accept assignment on all Medicare claims, according to KFF.

You can get help finding doctors and other providers in your area who accept assignment by zip code using Medicare’s Physician Compare tool .

Those who accept assignment have this note under the name: “Charges the Medicare-approved amount (so you pay less out of pocket).” However, not all doctors who accept assignment are accepting new Medicare patients.

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What does it mean if a doctor opts out of Medicare?

Doctors who opt out of Medicare can’t bill Medicare for services you receive. They also aren’t bound by Medicare’s limitations on charges.

In this case, you enter into a private contract with the provider and agree to pay the full bill. Be aware that neither Medicare nor your Medigap plan will reimburse you for these charges.

In 2023, only 1 percent of physicians who aren’t pediatricians opted out of the Medicare program, according to KFF. The percentage is larger for some specialties — 7.7 percent of psychiatrists and 4.2 percent of plastic and reconstructive surgeons have opted out of Medicare.

Keep in mind

These rules apply to original Medicare. Other factors determine costs if you choose to get coverage through a private Medicare Advantage plan . Most Medicare Advantage plans have provider networks, and they may charge more or not cover services from out-of-network providers.

Before choosing a Medicare Advantage plan, find out whether your chosen doctor or provider is covered and identify how much you’ll pay. You can use the Medicare Plan Finder to compare the Medicare Advantage plans and their out-of-pocket costs in your area.

Return to Medicare Q&A main page

Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at  Kiplinger’s Personal Finance  and has written for  The Washington Post  and  Boston Globe . She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State Society of CPAs’ excellence in financial journalism award for her guide to Medicare.

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Understanding the Assignment of Mortgages: What You Need To Know

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A mortgage is a legally binding agreement between a home buyer and a lender that dictates a borrower's ability to pay off a loan. Every mortgage has an interest rate, a term length, and specific fees attached to it.

Written by Attorney Todd Carney .  Updated November 26, 2021

If you’re like most people who want to purchase a home, you’ll start by going to a bank or other lender to get a mortgage loan. Though you can choose your lender, after the mortgage loan is processed, your mortgage may be transferred to a different mortgage servicer . A transfer is also called an assignment of the mortgage. 

No matter what it’s called, this change of hands may also change who you’re supposed to make your house payments to and how the foreclosure process works if you default on your loan. That’s why if you’re a homeowner, it’s important to know how this process works. This article will provide an in-depth look at what an assignment of a mortgage entails and what impact it can have on homeownership.

Assignment of Mortgage – The Basics

When your original lender transfers your mortgage account and their interests in it to a new lender, that’s called an assignment of mortgage. To do this, your lender must use an assignment of mortgage document. This document ensures the loan is legally transferred to the new owner. It’s common for mortgage lenders to sell the mortgages to other lenders. Most lenders assign the mortgages they originate to other lenders or mortgage buyers.

Home Loan Documents

When you get a loan for a home or real estate, there will usually be two mortgage documents. The first is a mortgage or, less commonly, a deed of trust . The other is a promissory note. The mortgage or deed of trust will state that the mortgaged property provides the security interest for the loan. This basically means that your home is serving as collateral for the loan. It also gives the loan servicer the right to foreclose if you don’t make your monthly payments. The promissory note provides proof of the debt and your promise to pay it.

When a lender assigns your mortgage, your interests as the mortgagor are given to another mortgagee or servicer. Mortgages and deeds of trust are usually recorded in the county recorder’s office. This office also keeps a record of any transfers. When a mortgage is transferred so is the promissory note. The note will be endorsed or signed over to the loan’s new owner. In some situations, a note will be endorsed in blank, which turns it into a bearer instrument. This means whoever holds the note is the presumed owner.

Using MERS To Track Transfers

Banks have collectively established the Mortgage Electronic Registration System , Inc. (MERS), which keeps track of who owns which loans. With MERS, lenders are no longer required to do a separate assignment every time a loan is transferred. That’s because MERS keeps track of the transfers. It’s crucial for MERS to maintain a record of assignments and endorsements because these land records can tell who actually owns the debt and has a legal right to start the foreclosure process.

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Assignment of Mortgage Requirements and Effects

The assignment of mortgage needs to include the following:

The original information regarding the mortgage. Alternatively, it can include the county recorder office’s identification numbers. 

The borrower’s name.

The mortgage loan’s original amount.

The date of the mortgage and when it was recorded.

Usually, there will also need to be a legal description of the real property the mortgage secures, but this is determined by state law and differs by state.

Notice Requirements

The original lender doesn’t need to provide notice to or get permission from the homeowner prior to assigning the mortgage. But the new lender (sometimes called the assignee) has to send the homeowner some form of notice of the loan assignment. The document will typically provide a disclaimer about who the new lender is, the lender’s contact information, and information about how to make your mortgage payment. You should make sure you have this information so you can avoid foreclosure.

Mortgage Terms

When an assignment occurs your loan is transferred, but the initial terms of your mortgage will stay the same. This means you’ll have the same interest rate, overall loan amount, monthly payment, and payment due date. If there are changes or adjustments to the escrow account, the new lender must do them under the terms of the original escrow agreement. The new lender can make some changes if you request them and the lender approves. For example, you may request your new lender to provide more payment methods.

Taxes and Insurance

If you have an escrow account and your mortgage is transferred, you may be worried about making sure your property taxes and homeowners insurance get paid. Though you can always verify the information, the original loan servicer is responsible for giving your local tax authority the new loan servicer’s address for tax billing purposes. The original lender is required to do this after the assignment is recorded. The servicer will also reach out to your property insurance company for this reason.  

If you’ve received notice that your mortgage loan has been assigned, it’s a good idea to reach out to your loan servicer and verify this information. Verifying that all your mortgage information is correct, that you know who to contact if you have questions about your mortgage, and that you know how to make payments to the new servicer will help you avoid being scammed or making payments incorrectly.

Let's Summarize…

In a mortgage assignment, your original lender or servicer transfers your mortgage account to another loan servicer. When this occurs, the original mortgagee or lender’s interests go to the next lender. Even if your mortgage gets transferred or assigned, your mortgage’s terms should remain the same. Your interest rate, loan amount, monthly payment, and payment schedule shouldn’t change. 

Your original lender isn’t required to notify you or get your permission prior to assigning your mortgage. But you should receive correspondence from the new lender after the assignment. It’s important to verify any change in assignment with your original loan servicer before you make your next mortgage payment, so you don’t fall victim to a scam.

Attorney Todd Carney

Attorney Todd Carney is a writer and graduate of Harvard Law School. While in law school, Todd worked in a clinic that helped pro-bono clients file for bankruptcy. Todd also studied several aspects of how the law impacts consumers. Todd has written over 40 articles for sites such... read more about Attorney Todd Carney

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The Fed indicated rates will remain higher for longer. What does that mean for you?

The Federal Reserve’s decision Wednesday to keep its benchmark rate at a two-decade high should have ripple effects across the economy

NEW YORK -- NEW YORK (AP) — Mortgage rates, credit card rates, auto loan rates, and business loans with variable rates will all likely maintain their highs, with consequences for consumer spending, after the Federal Reserve indicated Wednesday that it doesn’t plan to cut interest rates until it has “greater confidence” that price increases at the consumer level are slowing to its 2% target.

The central bank kept its key rate at a two-decade high of roughly 5.3%, where it has been since last August.

Here's what to know:

Credit card rates are at or near all-time peaks, and mortgage rates have more than doubled in recent years.

According to LendingTree, the average credit card interest rate in America today is 24.66%, unchanged from last month, though that rate has risen for 24 of the last 26 months.

“That isn’t likely to fall anytime soon, despite the Fed taking its foot off the gas,” said LendingTree Credit Analyst Matt Schultz. “That’s likely the unfortunate reality for the next several months.”

In the battle against credit card debt, 0% balance transfer cards “are still your best weapon,” according to Schultz, but “they’re getting harder to get and their fees are rising.”

With delinquencies and debt totals also increasing for consumers, some banks are becoming more hesitant about taking on transferred balances, he said, meaning consumers will need good credit to get approval.

Yields on savings accounts and certificates of deposit (CDs) have been hovering at high levels, thanks to the Fed's increased interest rates, according to Ken Tumin, banking expert and founder of DepositAccounts.com. That said, “several banks have been lowering deposit rates (with the) expectation that the Fed will start cutting rates at some point this year.”

Certificate of deposit rates have been the first to fall, and a few online banks have also started lowering online savings account rates. Ally Bank dropped its rate to 4.25% from 4.35% and Discover to 4.25% from 4.30%.

Even so, most online banks held their online savings account rates steady in 2024, and several online banks still offer yields of 5.25%. The highest online yield is currently 5.55%, with the average online 1-year CD yield 4.94% as of April 1st, according to DepositAccounts.com.

Tumin notes that “brick-and-mortar bank deposit rates continue to be slow in their movement higher,” saying that while their average rates have gone up sharply in the last year, "they are still very low compared to online rates.”

The average savings account yield for all banks and credit unions, of which the vast majority are brick-and-mortar, is 0.52% as of April 24th.

The Fed doesn’t directly set mortgage rates, but it does influence them. The bond market, inflation, and other factors all contribute to the high mortgage rates currently facing consumers.

The average rate on a 30-year, fixed-rate mortgage recently rose to above 7% for the first time since November. LendingTree Senior Economist Jacob Channel notes that mortgage rates can shift even as the Fed holds its benchmark rate steady, and that consumers should consider many economic data points before deciding to take on a mortgage.

“Even in the face of relatively steep mortgage rates and high prices, now could still be a good time to buy a home,” he said. “Timing the market is virtually impossible... In that same vein, there are a lot of people who won’t be able to buy until the market becomes cheaper."

High shelter and rent costs have contributed to steep inflation in recent months.

A Bankrate study found that renting is cheaper than buying a typical home in all 50 of the largest U.S. metro areas. As of February, the typical monthly mortgage payment on a median-priced home in the U.S. was $2,703, while the typical national monthly rent was $1,979. That's a nearly 37% gap between the costs of renting and buying a home.

“While it would be nice if the Fed could fix everything on its own, it probably can’t, at least not without causing a great deal of weeping and gnashing of teeth,” said Channel.

While vehicle prices have steadied through late 2023 and early 2024, Bankrate Chief Financial Analyst Greg McBride predicts that high interest rates on auto loans will linger for those with weak credit profiles. Borrowers with stronger credit may see more competitive rates, but the Fed's decision will continue to make auto loans expensive, even if vehicle prices decline. The average car loan hasn't been this pricey since 2008.

McBride predicts five-year new car loan rates will reach an average of 7.0% and four-year used car loans, 7.5% by the end of 2024.

In the past year, borrowers have f aced especially expensive monthly payments due to high interest rates, and auto loan delinquency reached its highest rate in nearly thirty years. The average monthly car loan payment was $738 for new vehicles and $532 for used ones in the fourth quarter of 2023, according to credit reporting agency Experian.

New vehicles cost an average of $47,218 in March 2024, according to Kelley Blue Book, a price that, combined with high interest rates, pushes many buyers out of the market for new cars.

Not as quickly as it would like.

Several recent reports on prices and economic growth have undercut the Fed’s belief that inflation was steadily easing.

“Inflation has shown a lack of further progress toward our 2% objective," said Chair Jerome Powell.

While inflation has cooled from a peak of 7.1% to 2.7%, average prices remain well above pre-pandemic levels, and the costs of services continue to grow — including for rents, health care, restaurant meals, and auto insurance.

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Assignment Definition

Investing Strategy , Jargon, Legal, Terminology, Title

Table of Contents

• What Is an Assignment?
• What is an Assignment in Real Estate?
• What Does it Mean to Assign a Contract in Real Estate?
• How Does a Contract Assignment Work?
• Pros and Cons of Assigning Contracts

REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.

An assignment or assignment of contract is a way to profit from a real estate transaction without becoming the owner of the property.

The assignment method is a standard tool in a real estate wholesaler’s kit and lowers the barrier to entry for a real estate investor because it does not require the wholesaler to use much (or any) of their own money to profit from a deal.

Contract assignment is a common wholesaling strategy where the seller and the wholesaler (acting as a middleman in this case) sign an agreement giving the wholesaler the sole right to buy a property at a specified price, within a certain period of time.

The wholesaler then finds another buyer and assigns the contract to him or her. The wholesaler isn’t selling the property to the end buyer because the wholesaler never takes title to the property during the process. The wholesaler is simply selling the contract, which gives the end buyer the right to buy the property in accordance with the original purchase agreement.

In doing this, the wholesaler can earn an assignment fee for putting the deal together.

Some states require a real estate wholesaler to be a licensed real estate agent, and the assignment strategy can’t be used for HUD homes and REOs.

The process for assigning a contract follows some common steps. In summary, it looks like this:

• Find the right property.
• Get a purchase agreement signed.
• Find an end buyer.
• Assign the contract.
• Close the transaction and collect your assignment fee.

We describe each step in the process below.

1. Find the Right Property

This is where the heavy lifting happens—investors use many different marketing tactics to find leads and identify properties that work with their investing strategy. Typically, for wholesaling to work, a wholesaler needs a motivated seller who wants to unload the property as soon as possible. That sense of urgency works to the wholesaler’s advantage in negotiating a price that will attract buyers and cover their assignment fee.

RELATED: What is “Driving for Dollars” and How Does It Work?

2. Get a Purchase Agreement Signed

Once a motivated seller has agreed to sell their property at a discounted price, they will sign a purchase agreement with the wholesaler. The purchase agreement needs to contain specific, clear language that allows the wholesaler (for example, you) to assign their rights in the agreement to a third party.

Note that most standard purchase agreements do not include this language by default. If you plan to assign this contract, make sure this language is included. You can consult an attorney to cover the correct verbiage in a way that the seller understands it.

RELATED: Wholesaling Made Simple! A Comprehensive Guide to Assigning Contracts

This can’t be stressed enough: It’s extremely important for a wholesaler to communicate with their seller about their intent to assign the contract. Many sellers are not familiar with the assignment process, so if the role of the buyer is going to change along the way, the seller needs to be aware of this on or before they sign the original purchase agreement.

3. Find an End Buyer

This is the other half of a wholesaler’s job—marketing to find buyers. Once they find an end buyer, the wholesaler can assign the contract to the new party and work with the original seller and the end buyer to schedule a closing date.

4. Assign the Contract

Assigning the contract works through a simple assignment agreement. This agreement allows the end buyer to step into the wholesaler’s shoes as the buyer in the original contract.

In other words, this document “replaces” the wholesaler with the new end buyer.

Most assignment contracts include language for a nonrefundable deposit from the end buyer, which protects the wholesaler if the buyer backs out. While you can download assignment contract templates online, most experts recommend having an attorney review your contracts. The assignment wording has to be precise and comply with applicable local laws to protect you from issues down the road.

5. Close the Transaction and Collect the Assignment Fee

Finally, you will receive your assignment fee (or wholesale fee) when the end buyer closes the deal.

The assignment fee is often the difference between the original purchase price (the price that the seller agreed with the wholesaler) and the end buyer’s purchase price (the price the wholesaler agreed with the end buyer), but it can also be a percentage of it or even a flat amount.

According to UpCounsel, most contract assignments are done for about $5,000, although depending on the property and the market, it could be higher or lower.

IMPORTANT: the end buyer will see precisely how much the assignment fee is. This is because they must sign two documents that show the original price and the assignment fee: the closing statement and the assignment agreement, respectively, to close the transaction.

In many cases, if the assignment fee is a reasonable amount relative to the purchase price, most buyers won’t take any issue with the wholesaler taking their fee—after all, the wholesaler made the deal happen, and it’s compensation for their efforts. However, if the assignment fee is too big (such as the wholesaler taking $20,000 from an original purchase price of $10,000, while the end buyer buys it for $50,000), it may ruffle some feathers and lead to uncomfortable questions.

In these instances where the wholesaler has a substantially higher profit margin, a wholesaler can instead do a double closing . In a double closing, the wholesaler closes two separate deals (one with the seller and another with the buyer) on the same day, but the seller and buyer cannot see the numbers and overall profit margin the wholesaler makes between the two transactions. This makes a double closing a much safer way to conclude a transaction.

Assigning contracts is a way to lower the barrier to entry for many new real estate investors; because they don’t need to put up their own money to buy a property or assume any risk in financing a deal.

The wholesaler isn’t part of the title chain, which streamlines the process and avoids the hassle of closing two times. Compared to the double-close strategy, assignment contracts require less paperwork and are usually less costly (because there is only one closing occurring, rather than two separate transactions).

On the downside, the wholesaler has to sell the property as-is, because they don’t own it at any point and they cannot make repairs or renovations to make the property look more attractive to a potential buyer. Financing may be much more difficult for the end buyer because many mortgage lenders won’t work with assigned contracts. Purchase Agreements also have expiration dates, which means the wholesaler has a limited window of time to find an end buyer and get the deal done.

Being successful with assignment contracts usually comes down to excellent marketing, networking, and communication between all parties involved. It’s all about developing strategies to find the right properties and having a solid network of investors you can assign them to quickly.

It’s also critical to be aware of any applicable laws in the jurisdiction where the wholesaler is working and holding any licenses required for these kinds of real estate transactions.

Related terms

Double closing, wholesaling (real estate wholesaling), transactional funding.

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• ABBREVIATIONS
• BIOGRAPHIES
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• CONVERSIONS
• DEFINITIONS

  Vocabulary      

What does assignment mean?

Definitions for assignment əˈsaɪn mənt as·sign·ment, this dictionary definitions page includes all the possible meanings, example usage and translations of the word assignment ., princeton's wordnet rate this definition: 4.0 / 1 vote.

assignment, duty assignment noun

a duty that you are assigned to perform (especially in the armed forces)

"hazardous duty"

• assignment noun

the instrument by which a claim or right or interest or property is transferred from one person to another

assignment, assigning noun

the act of distributing something to designated places or persons

"the first task is the assignment of an address to each datum"

grant, assignment noun

(law) a transfer of property by deed of conveyance

an undertaking that you have been assigned to do (as by an instructor)

appointment, assignment, designation, naming noun

the act of putting a person into a non-elective position

"the appointment had to be approved by the whole committee"

Wiktionary Rate this definition: 1.0 / 1 vote

the act of assigning, or an assigned task

a position to which someone is assigned

a task given to students, homework or coursework

a transfer of something from one person to another, especially property, or a claim or right; the document that effects this transfer

an operation that assigns a value to a variable

Etymology: assignement

Samuel Johnson's Dictionary Rate this definition: 0.0 / 0 votes

Assignment noun

Appointment of one thing with regard to another thing or person.

Etymology: from assign.

The only thing which maketh any place publick, is the publick assignment thereof unto such duties. Richard Hooker , b. v. § 12.

This institution, which assigns it to a person, whom we have no rule to know, is just as good as an assignment to no body at all. John Locke.

Webster Dictionary Rate this definition: 4.0 / 1 vote

an allotting or an appointment to a particular person or use; or for a particular time, as of a cause or causes in court

a transfer of title or interest by writing, as of lease, bond, note, or bill of exchange; a transfer of the whole of some particular estate or interest in lands

the writing by which an interest is transferred

the transfer of the property of a bankrupt to certain persons called assignees, in whom it is vested for the benefit of creditors

Etymology: [LL. assignamentum: cf. OF. assenement.]

Wikidata Rate this definition: 0.0 / 0 votes

In computer programming, an assignment statement sets and/or re-sets the value stored in the storage location denoted by a variable name, in other words, it copies the value into the variable. In most imperative programming languages, the assignment statement is a fundamental construct. Today, the most commonly used notation for this basic operation has come to be x = expr followed by x := expr, although there are many other notations in use. In some languages the symbol used is regarded as an operator while others define the assignment as a statement. Assignments typically allow a variable to hold different values at different times during its life-span and scope. However, some languages does not allow that kind of "destructive" re-assignment, as it might imply changes of non-local state. The purpose is to enforce referential transparency, i.e. functions that do not depend on the state of some variable, but produce the same results for a given set of parametric inputs at any point in time. Modern programs in other languages also often use similar strategies, although less strict, and only in certain parts, in order to reduce complexity, normally in conjunction with complementing methodologies such as data structuring, structured programming and object orientation.

Military Dictionary and Gazetteer Rate this definition: 0.0 / 0 votes

If, upon marches, guards, or in quarters, different corps of the army shall happen to join or do duty together, the officer highest in rank of the line of the army, marine corps, or militia, by commission, there on duty or in quarters, shall command the whole, and give orders for what is needful to the service, unless otherwise specially directed by the President of the United States, according to the nature of the case. See Appendix, Articles of War, 122.

Editors Contribution Rate this definition: 0.0 / 0 votes

A specific task or goal assigned to a person or team to achieve.

The assignment is easy and simple to complete.

Submitted by MaryC on March 13, 2020  

Suggested Resources Rate this definition: 0.0 / 0 votes

Song lyrics by assignment -- Explore a large variety of song lyrics performed by assignment on the Lyrics.com website.

Matched Categories

• Legal Document
• Transferred Property
• Undertaking

British National Corpus

Written Corpus Frequency

Rank popularity for the word 'assignment' in Written Corpus Frequency: #3553

Nouns Frequency

Rank popularity for the word 'assignment' in Nouns Frequency: #2041

How to pronounce assignment?

Alex US English David US English Mark US English Daniel British Libby British Mia British Karen Australian Hayley Australian Natasha Australian Veena Indian Priya Indian Neerja Indian Zira US English Oliver British Wendy British Fred US English Tessa South African

How to say assignment in sign language?

Chaldean Numerology

The numerical value of assignment in Chaldean Numerology is: 7

Pythagorean Numerology

The numerical value of assignment in Pythagorean Numerology is: 4

Examples of assignment in a Sentence

Jeremy Wright :

For the members of Chardonnay Antifa, here is your assignment with a copy of the First Amendment attached, i'm going to leave this here and I hope you learn something.

Angelica Varela :

As conservation work, I mean were doing this so that eventually we dont have to keep doing it. Angelica Varela drove up from Phoenix with Angelica Varela friend, Brandi Kapos, who is an Olive Garden waitress and an Arizona State Univerisity conservation biology graduate. Shes looking to return to school to get a masters degree in Geographic Information Systems. Before Angelica Varela and Brandi Kapos got their assignment from Jennifer Cordova for the night, they said they had energy drinks and candy. Angelica Varela said Angelica Varela was pumped. With freezing temperates on the first night of the search, around 10 of the volunteers showed up, including Arizona State Univerisity biology graduates Angelica Varela and Brandi Kapos. ( Fox News) Jennifer Cordova said the goal is to get the black-footed ferret off the endangered species list. Fox News important because wildlife dont have a say -- theydont have a voice out there, Holly Hicks said. So, its people like us who manage and try to keep that voice out there and people aware. Our passion comes from a lot of places. We love animals. We want to see wildlife in the future for future generations. Only found in North America, this wild animal differs from the European pet ferrets that are domesticated. The black-footed ferret was once thought extinct until 18 were found in 1981. Since then, recovery and breeding efforts have helped the black-footed ferret population grow. I kind of feel like its our duty.

Roger Bennet Adler :

I have a sense of professional disappointment, i was not able to conclude my assignment as originally planned.

Rodrigo Heng-Lehtinen :

[ PREA is ] still not enforced consistently enough, we need clearer and more detailed policy about exactly how to determine the housing assignment and it needs to be reevaluated periodically because circumstances change.

Lloyd Austin :

These include the ability of commanders to consider, as appropriate, the individual immunization status of personnel in making deployment, assignment , and other operational decisions, including when vaccination is required for travel to, or entry into, a foreign nation.

Popularity rank by frequency of use

• ^  Princeton's WordNet http://wordnetweb.princeton.edu/perl/webwn?s=assignment
• ^  Wiktionary https://en.wiktionary.org/wiki/Assignment
• ^  Samuel Johnson's Dictionary https://johnsonsdictionaryonline.com/views/search.php?term=assignment
• ^  Webster Dictionary https://www.merriam-webster.com/dictionary/assignment
• ^  Wikidata https://www.wikidata.org/w/index.php?search=assignment
• ^  Military Dictionary and Gazetteer https://www.gutenberg.org/cache/epub/59563/pg59563-images.html

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The Fed indicated rates will remain higher for longer. What does that mean for you?

N EW YORK (AP) — Mortgage rates, credit card rates, auto loan rates, and business loans with variable rates will all likely maintain their highs, with consequences for consumer spending, after the  Federal Reserve indicated  Wednesday that it doesn’t plan to cut interest rates until it has “greater confidence” that price increases at the consumer level are slowing to its 2% target.

The central bank kept its key rate at a two-decade high of roughly 5.3%, where it has been since last August.

Here’s what to know:

WHAT DOES THIS MEAN FOR BORROWERS?

Credit card rates are at or near all-time peaks, and mortgage rates have more than doubled in recent years.

According to LendingTree, the average credit card interest rate in America today is 24.66%, unchanged from last month, though that rate has risen for 24 of the last 26 months.

“That isn’t likely to fall anytime soon, despite the Fed taking its foot off the gas,” said LendingTree Credit Analyst Matt Schultz. “That’s likely the unfortunate reality for the next several months.”

In the battle against credit card debt, 0% balance transfer cards “are still your best weapon,” according to Schultz, but “they’re getting harder to get and their fees are rising.”

With delinquencies and debt totals also increasing for consumers, some banks are becoming more hesitant about taking on transferred balances, he said, meaning consumers will need good credit to get approval.

WHAT’S IN STORE FOR SAVERS?

Yields on savings accounts  and  certificates of deposit (CDs)  have been hovering at high levels, thanks to the Fed’s increased interest rates, according to Ken Tumin, banking expert and founder of DepositAccounts.com. That said, “several banks have been lowering deposit rates (with the) expectation that the Fed will start cutting rates at some point this year.”

Certificate of deposit rates have been the first to fall, and a few online banks have also started lowering online savings account rates. Ally Bank dropped its rate to 4.25% from 4.35% and Discover to 4.25% from 4.30%.

Even so, most online banks held their online savings account rates steady in 2024, and several online banks still offer yields of 5.25%. The highest online yield is currently 5.55%, with the average online 1-year CD yield 4.94% as of April 1st, according to DepositAccounts.com.

Tumin notes that “brick-and-mortar bank deposit rates continue to be slow in their movement higher,” saying that while their average rates have gone up sharply in the last year, “they are still very low compared to online rates.”

The average savings account yield for all banks and credit unions, of which the vast majority are brick-and-mortar, is 0.52% as of April 24th.

WHAT ABOUT MORTGAGES?

The Fed doesn’t directly set mortgage rates, but it does influence them. The bond market, inflation, and other factors all contribute to the high mortgage rates currently facing consumers.

The average rate on a 30-year, fixed-rate mortgage recently rose to above 7% for the first time since November. LendingTree Senior Economist Jacob Channel notes that mortgage rates can shift even as the Fed holds its benchmark rate steady, and that consumers should consider many economic data points before deciding to take on a mortgage.

“Even in the face of relatively steep mortgage rates and high prices, now could still be a good time to buy a home,” he said. “Timing the market is virtually impossible… In that same vein, there are a lot of people who won’t be able to buy until the market becomes cheaper.”

High shelter and rent costs have contributed to steep inflation in recent months.

A Bankrate study found that renting is cheaper than buying a typical home in all 50 of the largest U.S. metro areas. As of February, the typical monthly mortgage payment on a median-priced home in the U.S. was $2,703, while the typical national monthly rent was $1,979. That’s a nearly 37% gap between the costs of renting and buying a home.

“While it would be nice if the Fed could fix everything on its own, it probably can’t, at least not without causing a great deal of weeping and gnashing of teeth,” said Channel.

I NEED TO BUY A CAR. WHAT’S THE OUTLOOK FOR AUTO LOANS?

While vehicle prices have steadied through late 2023 and early 2024, Bankrate Chief Financial Analyst Greg McBride predicts that high interest rates on auto loans will linger for those with weak credit profiles. Borrowers with stronger credit may see more competitive rates, but the Fed’s decision will continue to make auto loans expensive, even if vehicle prices decline. The average car loan hasn’t been this pricey since 2008.

McBride predicts five-year new car loan rates will reach an average of 7.0% and four-year used car loans, 7.5% by the end of 2024.

In the past year, borrowers have faced especially expensive monthly payments due to high interest rates, and auto loan delinquency reached its highest rate in nearly thirty years. The average monthly car loan payment was $738 for new vehicles and $532 for used ones in the fourth quarter of 2023, according to credit reporting agency Experian.

New vehicles cost an average of $47,218 in March 2024, according to  Kelley Blue Book , a price that, combined with high interest rates, pushes many buyers out of the market for new cars.

IS THE FED MAKING PROGRESS ON SLOWING INFLATION?

Not as quickly as it would like.

Several recent reports on prices and economic growth have undercut the Fed’s belief that inflation was steadily easing.

“Inflation has shown a lack of further progress toward our 2% objective,” said Chair Jerome Powell.

While inflation has cooled from a peak of 7.1% to 2.7%, average prices remain well above pre-pandemic levels, and the costs of services continue to grow — including for rents, health care, restaurant meals, and auto insurance.

“The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.”

For the latest news, weather, sports, and streaming video, head to KGET 17.

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Watch CBS News

Federal Reserve holds rates steady. Here's what that means for your money.

By Aimee Picchi

Edited By Anne Marie Lee

Updated on: May 1, 2024 / 4:24 PM EDT / CBS News

Federal Reserve officials said they are leaving their benchmark rate untouched, noting that progress in taming U.S. inflation has stalled. 

The Fed on Wednesday said it is keeping the federal funds rate in a range of 5.25% to 5.5%, the same level it has held since the central bank's  July 2023 meeting , which is its highest level in more than 20 years. Economists had largely expected the decision given that inflation had ticked upward in the first three months of 2024.

Fed Chairman Jerome Powell has repeatedly said the central bank prefers to keep rates high until inflation retreats to about 2% on an annual basis, rather than risking cutting too early and fueling another round of price spikes. Despite the Fed's flurry of interest rate hikes, inflation remains stubbornly high, with March prices rising 3.5% from a year earlier, fueled by higher housing and gasoline prices. 

In a press conference to discuss the central bank's decision, Powell stressed that he's confident inflation will recede to the Fed's target of 2%, although the economy is taking longer to reach that point than policy makers previously expected. Powell also sought to tamp down any concerns the Fed could reverse course in response to persistent inflation, saying it is "unlikely the next policy rate move will be a hike. "

Fewer interest rate cuts?

Powell demurred when asked if the Fed continues to cut rates three times in 2024, as it had indicated earlier this year . Instead, he responded that Fed officials need to feel more confident before they move to ease borrowing costs.  

"We said today that we didn't see progress [on inflation] in the first quarter, and I've said that it appears then it'll take longer for us to reach that point," he said, adding, "I don't know how long it'll take."

Wall Street traders now envision just a  single rate cut  this year to the Fed's benchmark rate. That compares with their expectations at year start that the Fed could cut rates as much as six times in 2024. 

In its Wednesday statement, the Fed reiterated that it won't cut rates "until it has gained greater confidence that inflation is moving sustainably toward 2%."

"Patience is the watchword now for the Fed and the risk of fewer or no rate cuts this year is growing," Brian Coulton, Fitch Ratings' chief economist, wrote in an email after the Fed decision. "[T]he risk of failing to get inflation down on a sustained basis seems to be rising as each week goes by."

He added, "The statement explicitly recognizes the recent deterioration in inflation dynamics," noting that inflation has edged up by some measures in recent months and an uptick in wages during the first quarter, which could boost prices. 

What does the rate decision mean for your money?

Expect to continue to pay high rates to borrow money, noted Jacob Channel, senior economist at LendingTree.

Mortgage rates are likely to remain above 7%, at least in the near term, he added. Credit card rates, which are at record  highs , are sure to remain elevated, he noted. 

"Across the board, it's all expensive," Channel said. "The interest rate on a credit card will make the interest rate on a mortgage look minuscule by comparison."

On the bright side, savers are likely to continue to find higher-interest savings accounts, with some offering yields above 5%, according to Ken Tumin, banking expert at DepositAccounts.com. Certificates of deposit and other savings vehicles can also offer robust rates. 

—  The Associated Press contributed to this report.

• Jerome Powell
• Consumer News
• Interest Rates
• Federal Reserve

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

More from CBS News

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Can I wipe my credit card debt without paying?

Why you should open a 6-month CD this May

4 signs to invest in gold right now

Today’s average refinance rates

Refinance rate news, what to expect from refinance rates this year, what does it mean to refinance, choosing the right refinance type and term, reasons to refinance, refinance rates slide down again: refinance rates for may 10, 2024.

Several benchmark refinance rates have decreased. If you're in the market for a refi, keep an eye out for lower rates.

Katherine Watt

Katherine Watt is a CNET Money writer focusing on mortgages, home equity and banking. She previously wrote about personal finance for NextAdvisor. Based in New York, Katherine graduated summa cum laude from Colgate University with a bachelor's degree in English literature.

Laura Michelle Davis

Laura is a professional nitpicker and good-humored troubleshooter with over 10 years of experience in print and digital publishing. Before becoming an editor with CNET, she worked as an English teacher, Spanish medical interpreter, copy editor and proofreader. She is a fearless but flexible defender of both grammar and weightlifting, and firmly believes that technology should serve the people. Her first computer was a Macintosh Plus.

CNET staff -- not advertisers, partners or business interests -- determine how we review the products and services we cover. If you buy through our links, we may get paid.

• 30-year fixed-rate 7.18% (-0.16)
• 15-year fixed-rate 6.62% (-0.12)
• 30-year fixed-rate jumbo 7.24% (-0.18)
• 5/1 ARM 6.71% (-0.04)
• 10-year fixed-rate 6.60% (-0.14)
• 30-year fixed-rate refinance 7.18% (-0.16)
• 15-year fixed-rate refinance 6.68% (-0.11)
• 10-year fixed refinance 6.61% (-0.16)

Today's rates

Mortgage refinance rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.

About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.

A vast majority of US homeowners already have mortgages with a rate below 6%. Because mortgage refinance rates have been averaging above 6.5% over the past several months, households are choosing to hold on to their existing mortgages instead of swapping them out with a new home loan.

If rates fell to 6%, at least a third of borrowers who took out mortgages in 2023 could reduce their rate by a full percentage point through a refinance, according to BlackKnight .

Refinancing in today’s market could make sense if you have a rate above 8%, said Logan Mohtashami , lead analyst at HousingWire. “However, with all refinancing options, it’s a personal financial choice because of the cost that goes with the loan process,” he said.

Mortgage rates have been sky-high over the last two years, largely as a result of the Federal Reserve’s aggressive attempt to tame inflation by spiking interest rates. Experts say that decelerating inflation and the Fed’s projected interest rate cuts should help stabilize mortgage interest rates by the end of 2024. But the timing of Fed cuts will depend on incoming economic data and the response of the market.

For homeowners looking to refinance, remember that you can’t time the economy: Interest rates fluctuate on an hourly, daily and weekly basis, and are influenced by an array of factors. Your best move is to keep an eye on day-to-day rate changes and have a game plan on how to capitalize on a big enough percentage drop, said Matt Graham of Mortgage News Daily.

When you refinance your mortgage, you take out another home loan that pays off your initial mortgage. With a traditional refinance, your new home loan will have a different term and/or interest rate. With a cash-out refinance, you’ll tap into your equity with a new loan that’s bigger than your existing mortgage balance, allowing you to pocket the difference in cash.

Refinancing can be a great financial move if you score a low rate or can pay off your home loan in less time, but consider whether it’s the right choice for you. Reducing your interest rate by 1% or more is an incentive to refinance, allowing you to cut your monthly payment significantly.

The rates advertised online often require specific conditions for eligibility. Your personal interest rate will be influenced by market conditions as well as your specific credit history, financial profile and application. Having a high credit score, a low credit utilization ratio and a history of consistent and on-time payments will generally help you get the best interest rates.

30-year fixed-rate refinance

For 30-year fixed refinances, the average rate is currently at 7.12%, a decrease of 24 basis points over this time last week. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 15-year or 10-year refinance, but it will take you longer to pay off and typically cost you more in interest over the long term.

15-year fixed-rate refinance

The current average interest rate for 15-year refinances is 6.57%, a decrease of 27 basis points compared to one week ago. Though a 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan, you’ll save more money over time because you’re paying off your loan quicker. Also, 15-year refinance rates are typically lower than 30-year refinance rates, which will help you save more in the long run.

10-year fixed-rate refinance

The average 10-year fixed refinance rate right now is 6.40%, a decrease of 41 basis points compared to one week ago. A 10-year refinance typically has the lowest interest rate but the highest monthly payment of all refinance terms. A 10-year refinance can help you pay off your house much quicker and save on interest, but make sure you can afford the steeper monthly payment.

To get the best refinance rates, make your application as strong as possible by getting your finances in order, using credit responsibly and monitoring your credit regularly. And don’t forget to speak with multiple lenders and shop around.

Homeowners usually refinance to save money, but there are other reasons to do so. Here are the most common reasons homeowners refinance:

• To get a lower interest rate: If you can secure a rate that’s at least 1% lower than the one on your current mortgage, it could make sense to refinance.
• To switch the type of mortgage: If you have an adjustable-rate mortgage and want greater security, you could refinance to a fixed-rate mortgage.
• To eliminate mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance to a conventional loan once you have 20% equity.
• To change the length of a loan term: Refinancing to a longer loan term could lower your monthly payment. Refinancing to a shorter term will save you interest in the long run.
• To tap into your equity through a cash-out refinance: If you replace your mortgage with a larger loan, you can receive the difference in cash to cover a large expense.
• To take someone off the mortgage: In case of divorce, you can apply for a new home loan in just your name and use the funds to pay off your existing mortgage.

Recommended Articles

Compare current refinance rates in may 2024, refinancing a mortgage: how it works, 30-year refinance rates for may 2024, 15-year mortgage refinance rates for may 2024, how to refinance your home, how does a cash-out refinance work, va refinance rates for may 2024.

CNET editors independently choose every product and service we cover. Though we can’t review every available financial company or offer, we strive to make comprehensive, rigorous comparisons in order to highlight the best of them. For many of these products and services, we earn a commission. The compensation we receive may impact how products and links appear on our site.

Writers and editors and produce editorial content with the objective to provide accurate and unbiased information. A separate team is responsible for placing paid links and advertisements, creating a firewall between our affiliate partners and our editorial team. Our editorial team does not receive direct compensation from advertisers.

CNET Money is an advertising-supported publisher and comparison service. We’re compensated in exchange for placement of sponsored products and services, or when you click on certain links posted on our site. Therefore, this compensation may impact where and in what order affiliate links appear within advertising units. While we strive to provide a wide range of products and services, CNET Money does not include information about every financial or credit product or service.

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The Fed indicated rates will remain higher for longer. What does that mean for you?

FILE - A sign highlighting the financing interest rate is displayed near the price sticker on an unsold 2023 vehicle at a Mercedes-Benz dealer on Nov. 30, 2023, in Loveland, Colo. The Federal Reserve’s decision Wednesday, May 1, 2024 to keep its benchmark rate at a two-decade high should have ripple effects across the economy. Mortgage rates, credit card rates, and auto loan rates will all likely maintain their highs, with consequences for consumer spending. (AP Photo/David Zalubowski, file)

FILE - A screen displays news about the interest rate as traders work on the floor at the New York Stock Exchange in New York, May 1, 2024. The Federal Reserve’s decision to keep its benchmark rate at a two-decade high should have ripple effects across the economy. Mortgage rates, credit card rates, and auto loan rates will all likely maintain their highs, with consequences for consumer spending. (AP Photo/Seth Wenig, file)

FILE - An American flag flies over the Federal Reserve building on May 4, 2021, in Washington. The Federal Reserve’s decision to keep its benchmark rate at a two-decade high should have ripple effects across the economy. Mortgage rates, credit card rates, and auto loan rates will all likely maintain their highs, with consequences for consumer spending. (AP Photo/Patrick Semansky, File)

• Copy Link copied

NEW YORK (AP) — Mortgage rates , credit card rates , auto loan rates , and business loans with variable rates will all likely maintain their highs, with consequences for consumer spending, after the Federal Reserve indicated Wednesday that it doesn’t plan to cut interest rates until it has “greater confidence” that price increases at the consumer level are slowing to its 2% target.

The central bank kept its key rate at a two-decade high of roughly 5.3%, where it has been since last August.

Here’s what to know:

WHAT DOES THIS MEAN FOR BORROWERS?

Credit card rates are at or near all-time peaks, and mortgage rates have more than doubled in recent years.

According to LendingTree, the average credit card interest rate in America today is 24.66%, unchanged from last month, though that rate has risen for 24 of the last 26 months.

“That isn’t likely to fall anytime soon, despite the Fed taking its foot off the gas,” said LendingTree Credit Analyst Matt Schultz. “That’s likely the unfortunate reality for the next several months.”

In the battle against credit card debt, 0% balance transfer cards “are still your best weapon,” according to Schultz, but “they’re getting harder to get and their fees are rising.”

With delinquencies and debt totals also increasing for consumers, some banks are becoming more hesitant about taking on transferred balances, he said, meaning consumers will need good credit to get approval.

WHAT’S IN STORE FOR SAVERS?

Yields on savings accounts and certificates of deposit (CDs) have been hovering at high levels, thanks to the Fed’s increased interest rates, according to Ken Tumin, banking expert and founder of DepositAccounts.com. That said, “several banks have been lowering deposit rates (with the) expectation that the Fed will start cutting rates at some point this year.”

Certificate of deposit rates have been the first to fall, and a few online banks have also started lowering online savings account rates. Ally Bank dropped its rate to 4.25% from 4.35% and Discover to 4.25% from 4.30%.

Even so, most online banks held their online savings account rates steady in 2024, and several online banks still offer yields of 5.25%. The highest online yield is currently 5.55%, with the average online 1-year CD yield 4.94% as of April 1st, according to DepositAccounts.com.

Tumin notes that “brick-and-mortar bank deposit rates continue to be slow in their movement higher,” saying that while their average rates have gone up sharply in the last year, “they are still very low compared to online rates.”

The average savings account yield for all banks and credit unions, of which the vast majority are brick-and-mortar, is 0.52% as of April 24th.

WHAT ABOUT MORTGAGES?

The Fed doesn’t directly set mortgage rates, but it does influence them. The bond market, inflation, and other factors all contribute to the high mortgage rates currently facing consumers.

The average rate on a 30-year, fixed-rate mortgage recently rose to above 7% for the first time since November. LendingTree Senior Economist Jacob Channel notes that mortgage rates can shift even as the Fed holds its benchmark rate steady, and that consumers should consider many economic data points before deciding to take on a mortgage.

“Even in the face of relatively steep mortgage rates and high prices, now could still be a good time to buy a home,” he said. “Timing the market is virtually impossible... In that same vein, there are a lot of people who won’t be able to buy until the market becomes cheaper.”

High shelter and rent costs have contributed to steep inflation in recent months.

A Bankrate study found that renting is cheaper than buying a typical home in all 50 of the largest U.S. metro areas. As of February, the typical monthly mortgage payment on a median-priced home in the U.S. was $2,703, while the typical national monthly rent was $1,979. That’s a nearly 37% gap between the costs of renting and buying a home.

“While it would be nice if the Fed could fix everything on its own, it probably can’t, at least not without causing a great deal of weeping and gnashing of teeth,” said Channel.

I NEED TO BUY A CAR. WHAT’S THE OUTLOOK FOR AUTO LOANS?

While vehicle prices have steadied through late 2023 and early 2024, Bankrate Chief Financial Analyst Greg McBride predicts that high interest rates on auto loans will linger for those with weak credit profiles. Borrowers with stronger credit may see more competitive rates, but the Fed’s decision will continue to make auto loans expensive, even if vehicle prices decline. The average car loan hasn’t been this pricey since 2008.

McBride predicts five-year new car loan rates will reach an average of 7.0% and four-year used car loans, 7.5% by the end of 2024.

In the past year, borrowers have f aced especially expensive monthly payments due to high interest rates, and auto loan delinquency reached its highest rate in nearly thirty years. The average monthly car loan payment was $738 for new vehicles and $532 for used ones in the fourth quarter of 2023, according to credit reporting agency Experian.

New vehicles cost an average of $47,218 in March 2024, according to Kelley Blue Book , a price that, combined with high interest rates, pushes many buyers out of the market for new cars.

IS THE FED MAKING PROGRESS ON SLOWING INFLATION?

Not as quickly as it would like.

Several recent reports on prices and economic growth have undercut the Fed’s belief that inflation was steadily easing.

“Inflation has shown a lack of further progress toward our 2% objective,” said Chair Jerome Powell.

While inflation has cooled from a peak of 7.1% to 2.7%, average prices remain well above pre-pandemic levels, and the costs of services continue to grow — including for rents, health care, restaurant meals, and auto insurance.

“The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.”

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• Mortgage Rates

What Does the New Fed Rate Hold Mean for 2024 Mortgage Rates?

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Key Takeaways

• The Federal Reserve yesterday announced its sixth consecutive hold for the federal funds rate.
• Fed rate moves are not directly linked to mortgage rate movement. But they often create a domino effect that ultimately impacts the rates lenders are willing to offer.
• One of the biggest drivers of mortgage rates is inflation, which persists above the Fed's 2% target level.
• After mortgage rates notched a 20-year high in October, they later fell more than a percentage point. But lately, the 30-year rate has been rising, sparked largely by higher inflation readings.
• The Fed's rate hold is likely to have less impact on 2024 mortgage rates than the direction of inflation readings for the rest of this year.

The Web of Factors That Drives Mortgage Rates

It's popularly believed that when the Federal Reserve raises the federal funds rate—as it did aggressively during 2022 and 2023—mortgage rates are pushed higher. Conversely, when the Fed lowers the fed funds rate, it's commonly expected that mortgage rates will fall. So does the Fed rate hold announced yesterday mean mortgage rates will also remain steady?

Unfortunately, the relationship between the central bank's federal funds rate and what lenders are offering is not quite so clear. Instead, moves by the central bank more directly impact short-term rates, like bank deposit rates and credit card and personal loan APRs.

Since fixed mortgages offer a long-term rate, the linkage to Fed rate changes is a bit more tenuous. Beyond the federal funds rate, the mortgage lending market is affected by a complex mix of many economic factors . These include inflation, consumer demand, housing supply, the strength of the current economy, and the status of the bond market, especially 10-year Treasury yields . Given all these other influences, mortgage rates and the fed funds rate can—and sometimes do—move in opposite directions.

However, that's not the case in the last two years. Between 2022 and 2023, the Fed increased rates at a historic pace and magnitude—raising the benchmark rate 5.25 percentage points over 16 months. Even the indirect influence from the fed funds rate resulted in an equally historic upward surge of mortgage rates over the last two years.

The Fed Is on Hold, But Mortgage Rates Have Lately Climbed

2023 will go down in the mortgage history books as an especially painful year for American home buyers. Granted, 2022 saw 30-year mortgage rates rise faster: After sinking to historic lows in the upper 2% range in 2021, the next year saw 30-year rates shoot above 7%. The rise of 2022 increases was startling.

But 2023 showed that mortgage rates still had more room to run. Though the 30-year average wavered in 6% territory for most of the first half of 2023, by October it had catapulted to an astonishing 8.01%—its highest mark in almost 23 years.

Post-October, mortgage rates dropped more than a percentage point, residing in 6% territory for most of the period from early December 2023 to early April 2024. But over the past month, mortgage rates have been back on the upswing. The current average is 7.33%.

So why is this happening if the Fed rate hasn't moved since last July? A primary reason centers on inflation . In June 2022, inflation hit a 40-year high of 9.1%. With the Fed's rate-hike campaign squarely focused on reducing inflation, it succeeded in lowering the inflation rate to 3.0% by the June 2023 reading (which came out in July).

But if you look at the graph below, you can see that instead of continuing the hoped-for downward trajectory, inflation has instead increased since that low point—with the latest reading showing a March inflation rate of 3.5%.

Unfortunately for home buyers, this had an immediate effect on mortgage rates. When the March inflation report was released on April 10, the 30-year mortgage rate average shot up about a quarter percentage point in a single day.

What 2024 Fed Decisions Could Mean for Home Buyers

Yesterday's post-meeting statement from the Fed signaled once again that until the committee feels confident inflation is falling sufficiently and sustainably, it will not be ready to cut the federal funds rate. New this time was the Fed's acknowledgment that recent progress against inflation had stalled and that the timeline for potential rate cuts has therefore been pushed further down the road.

Speaking in his customary press conference after the announcement, Fed Chair Jerome Powell said: “My colleagues and I today said that we didn’t see progress in the first quarter. And I’ve said that it appears then that it’s going to take longer for us to reach that point of confidence. So I don’t know how long it will take. When we get that confidence, then rate cuts will be in scope.”

In other words, the current Fed rate hold that has already continued for six Fed meetings is likely to extend further still. Right now, a majority of fed funds futures traders are betting the first rate cut won't come until the September meeting, according to the CME Group's FedWatch Tool. That's three meetings away,

Even though the Fed is no longer hiking rates, inflation will hopefully still come down. If the next release of the Consumer Price Index on May 15 shows it doing that, mortgage rates could experience some welcome downward pressure.

Yet it also looks possible that taming inflation from the 3% range to the Fed's target of 2% could take some time—and is far from assured. That means expectations for significant reductions in mortgage rates are probably overly optimistic.

Sam Khater, chief economist at Freddie Mac , puts it this way: “Mortgage rates remain high as the market contends with the pressure of sticky inflation. In this environment, there is a good possibility that rates will stay higher for a longer period of time.”

Once we do arrive at a stage where the Fed appears ready to make rate cuts, that will be a sign not only that inflation has come down further, but also that the Fed believes the inflation rate has stabilized. This decreased inflationary pressure, plus the added impact of a falling federal funds rate, is likely to push mortgage rates lower.

But while the Fed raised its benchmark rate fast and furiously in 2022–2023, it's expected to lower rates at a much slower pace. As a result, any mortgage rate improvements are also expected to be more gradual than dramatic.

How We Track the Best Mortgage Rates

The national averages cited above were calculated based on rates offered through Zillow Group Marketplace by approximately 40 lenders, assuming a  loan-to-value ratio (LTV)  of 80% (i.e., a down payment of at least 20%) and an applicant with a credit score in the 680-739 range. The resulting rates are representative of what customers should expect to see when receiving actual quotes from lenders based on their qualifications, which may vary from advertised teaser rates.

Federal Reserve Board. " Open Market Operations ."

Bureau of Labor Statistics. " Consumer Prices Up 9.1 Percent Over the Year Ended June 2022, Largest Increase in 40 Years ."

U.S. Bureau of Labor Statistics. " Consumer Price Index for All Urban Consumers (CPI-U) ."

U.S. Bureau of Labor Statistics. "Consumer Price Index for All Urban Consumers (CPI-U)."

CME Group. " CME FedWatch Tool ."

U.S. Bureau of Labor Statistics. " Schedule of Releases for the Consumer Price Index ."

Freddie Mac. " Mortgage Rates Continue to Decrease ."

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