Money Management

One tactic to boost your credit may be easy to pull off, in theory. But you’ll need to be careful with this approach. Read on to learn more. [[{“value”:”

The average consumer credit score in 2023 was 715, says Experian. But if you’re gearing up to apply for a large loan, like a mortgage, then you may be eager to get your score up beyond that point.

Now there are different steps you can take to boost your credit score, such as making credit card payments on time and correcting errors on your credit report. You can also boost your credit score by lowering your credit utilization ratio.

Your credit utilization ratio measures the amount of available revolving credit you’re using at once. Generally speaking, a ratio above 30% can hurt your credit score, while a ratio of 30% or less is favorable. But the lower your credit utilization ratio is, the more your score has the potential to improve.

One way to lower your credit utilization ratio is to pay down a chunk of your existing credit card debt. But that may be easier said than done.

However, there’s another tactic you can employ to bring your credit utilization ratio down. It’s an approach, however, that carries some risk.

An easy way to potentially help your credit score

If your total credit limit across your different cards is $10,000 and you have a $4,000 outstanding balance, that gives you a credit utilization ratio of 40%, which isn’t great. Pay off half your balance, and that ratio drops to 20%, putting you in much better shape.

But coming up with $2,000 can be difficult. So thankfully, there’s another way to lower your credit utilization ratio — ask for an increase to your credit limit.

Often, credit card issuers will raise your spending limit if you can show proof of a higher income. Or if you’ve simply been an account holder in good standing for a while, you call and ask for it, and they’ll often comply.

So going back to our example, let’s say you owe $4,000 on a $10,000 credit limit. If you’re able to get that limit raised to $14,000, suddenly, instead of 40% utilization, you’re at about 29% utilization. That has the potential to help your credit score.

However — and this is really important — this tactic only works if you raise your credit limit, but don’t spend more once your higher limit is in place. If you increase your credit limit from $10,000 to $14,000 but then raise your balance from $4,000 to $5,500, you’re still going to be at about 40% utilization. Only now you have a larger balance to pay off — and a balance that’s apt to start accruing more interest by the day.

Paying down debt is your best bet all around

If you owe money on your credit cards, paying down your balances is one of the smartest financial moves you can make. Not only can it help boost your credit score, but it can save you a lot of money on interest.

If you’re eager to see your credit score improve quickly, then getting a credit limit increase may be a more efficient way to go about the process. But in that case, pledge not to add to your existing balances. Otherwise, you risk not only not raising your credit score, but digging yourself deeper into debt.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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Pet insurance can help you afford medical care for your cat. But you’ll need to pay for coverage. Find out how much cat owners are spending on pet insurance. [[{“value”:”

Being a cat owner is rewarding, but it requires work and responsibility. If you’re considering adopting a cat or any other pet, don’t neglect to prepare financially.

You want to feel confident you can give your furry companion the best life possible. Researching pet care costs before you adopt a cat or dog is a must. Like many other costs, pet expenses have increased recently.

If you plan to get a cat soon, you may want to invest in pet insurance. This insurance can help cover some of the expenses of caring for your favorite pal. Let’s take a closer look at what cat parents are spending on pet insurance costs.

Pet insurance isn’t a must, but it can be helpful

Some pet care expenses, like pet food, are necessary, while others are not. One extra expense you may want to consider before adopting a cat is pet insurance.

With a pet insurance policy, you can get reimbursed for eligible pet care expenses, like veterinary bills. However, not all policies are created equally, so it’s best to research your options and compare coverage between policies and insurers.

Fur parents are spending up to $1,200 annually on pet insurance

A recent study by pet sitting and dog walking platform Rover examined how much money pet parents spend caring for their cats. According to the study, 36% of respondents pay for pet insurance coverage. A whopping 92% of those with insurance agree it’s worth the cost.

How much are cat owners paying for insurance? They pay between $10 and $100 monthly or $120 to $1,200 annually to insure their cats. That’s a big range, but pet insurance costs can add up quickly and impact pet parents’ checking accounts. Make sure you research insurance options and costs well before you buy a policy so you’re financially prepared.

Pet emergencies can happen when you least expect it

Why might you want to pay several hundred or even $1,000 annually to insure your cat? Surprise pet expenses due to an unexpected illness or emergency can be a massive hit to your personal finances. Even if you have a seemingly healthy cat, emergencies can happen.

I know this from personal experience. Many years ago, our cat required emergency surgery. We took him to the emergency vet and left with a $5,000-plus bill after he received the surgery and aftercare he needed. Thankfully, he received excellent medical care and lived for several more years.

But that wasn’t the only time we found ourselves at the emergency vet for our furry pal. I’ve owned three cats in my lifetime and never had pet insurance. But now that I know how costly emergency vet bills can be, I plan to buy pet insurance coverage when adopting my next pet.

Always keep your finances in mind

Consider your finances as you make everyday decisions, whether shopping for groceries and household essentials or adopting a furry friend. Are you thinking of adding a new pet to your household? Now is an excellent time to review your finances to see if you can adjust your spending habits to free up extra money to cover your pet expenses.

It’s also wise to double-check that you can adopt. Want to prepare financially? Before you become a pet owner, you can use budgeting apps to monitor your spending and set spending limits so you’re ready for the expenses associated with pet ownership.

You might also explore whether investing in pet insurance is the right move for you. If you’re shopping around for pet insurance, check out our list of the best pet insurance companies.

Our picks for the best credit cards

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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REITs are securities that trade like stocks and invest in real estate. Explore their benefits to see if they’re a good fit for your portfolio. [[{“value”:”

Real estate has always been a popular investment, but in the past, not everyone could get in on the action. Buying an investment property is a serious commitment. You need quite a bit of money, time, and know-how to succeed.

Fortunately, in 1960, Congress created real estate investment trusts (REITs). These are companies that either own or operate income-producing properties, and they allow anyone to invest in real estate. If you’re interested in adding real estate to your portfolio, here’s what REITs have to offer.

1. They’re easy to buy and sell

REITs are traded like stocks. They’re bought and sold in shares, and you can invest in them online through a brokerage account.

This makes REITs a convenient and affordable way to invest in real estate. You don’t need to save thousands of dollars, like you would if you were buying a property. You can buy however many shares your budget allows. Many online stock brokers also offer fractional shares, so you don’t even need enough money to buy a full share.

2. They deliver high returns

REITs have historically been an excellent investment. In fact, they’ve even outperformed the stock market over the last 50 years.

An analysis of REITs vs. stocks by The Motley Fool compared their average annual returns. It used the S&P 500, an index with 500 of the largest companies, to represent the stock market. It used the FTSE Nareit All Equity REITs Index, an index that contains all 13 REIT subsectors, to represent REITs.

From 1972 to 2023, the REIT index posted an average annual return of 12.7% compared to 10.2% for the S&P 500. REITs also performed better over the past 20 and 25 years. Stocks have the better average performance for the last decade, but over a longer period of time, it has been REITs with a solid lead.

3. They pay generous dividends

Some companies pay dividends, a portion of their profits that they distribute to shareholders. By law, REITs must pay at least 90% of their taxable income to shareholders as dividends.

If you’re looking for investments that will generate passive income, there are plenty of high-dividend REITs available. REITs pay an average dividend yield of about 4.3%. On a $10,000 investment, that’d be about $430 in dividends per year. And that’s just the average — some REITs pay much more.

Keep in mind that dividends are taxed as ordinary income. If you invest heavily in REITs, you’ll likely increase your tax burden. But there is a way to avoid this explained below.

4. You can invest in REITs through an IRA or Roth IRA

Since REITs are traded like stocks, you can invest in them through brokerage accounts. That includes standard brokerage accounts and individual retirement accounts (IRAs). If you invest in REITs through a traditional IRA, you can deduct those contributions from your income taxes.

You may be even better off investing in REITs through a Roth IRA, though. While you can’t deduct Roth IRA contributions from your income, this type of account offers tax-free growth and withdrawals. That means you won’t be taxed on REIT dividends if you invest in them through a Roth IRA.

Want to open a Roth IRA? Check out The Ascent’s list of the best Roth IRA options.

5. They’re less volatile than stocks

The stock market goes through lots of ups and downs. It has historically gone up by about 10% per year, but that’s an average based on decades of data. There are years where it does much better, but also years where it loses money.

REITs are less volatile. In investing, beta is the measurement used for volatility. The S&P 500 has a beta of 1.0, and anything lower than that is less volatile. The REIT sector has a beta of 0.75, according to The Motley Fool’s analysis, and several popular REITs have betas even lower than that. If you’re looking for more stability than stocks provide, REITs fit the bill.

With all their benefits, REITs could be a smart and safe addition to your portfolio. They’re good for diversification if you’ve only been investing in stocks so far — they perform well, and the dividends are some of the highest you can find.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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While some people can’t imagine paying for a membership card, Sam’s Club makes it worthwhile. Here are some of the perks of a membership. [[{“value”:”

Sam’s Club boasts more than 69 million members, many of whom know precisely what they want to buy before entering the warehouse club. While it’s good to have a plan, it’s important to update it occasionally.

If you’re a Sam’s Club member who finds themselves picking up the same items every week, it’s possible you’re missing out. You may be forgetting to take advantage of some of the Club’s lesser-known perks.

If you’re not yet a Sam’s Club member, you may be surprised by all the benefits and privileges included with membership. Here, we review 10 of them.

1. Scan & Go

Have you ever needed to shop at the end of a busy day but couldn’t bear the idea of standing in a long checkout line? Sam’s Club has you covered with Scan & Go. By downloading one simple mobile app, you can scan and pay for your purchases as you stroll through the Club. What’s more, you can use Scan & Go to pay for purchases at the store cafe, fill up your vehicle at a Sam’s Club gas pump, or have an out-of-stock item shipped to your home.

2. Health insurance

There are more than 33 million small businesses in the U.S., and odds are, most of those business owners have thought about where they’re going to buy health insurance. In partnership with Simply Insured, Sam’s Club offers members access to medical, dental, and vision plans. According to Sam’s Club, it has “every small business health insurance plan from every carrier with the lowest rates, guaranteed.” It also provides a team of professionals to help you navigate your options and find the best fit for your company.

3. Your dream wedding

If you spent a good portion of your childhood imagining your dream wedding, it’s doubtful that Sam’s Club was the first place that came to mind as you began planning. However, Sam’s Club offers all the essentials you’ll need to make your dream wedding a reality while staying within your budget. You will find everything, from wedding and engagement rings to flowers and reception decor.

4. Free hearing checks

All Sam’s Club members are eligible for zero-cost hearing tests with state-licensed professionals. In addition to the test, you’ll receive a free consultation, free essentials starter kit, free hearing aid cleanings, and a free warranty.

5. Discounted home improvement and maintenance

If springtime puts you in the mood to finish projects around the house, Sam’s Club can supply you with a surprising number of goods and services to help your personal finances. Sam’s Club members receive discounts on everything from home warranties to energy solutions and remodeling.

6. Free tire repair

Not only is Sam’s Club one of the cheapest places around to buy tires, but Sam’s Club goes the extra mile to ensure the tires are in good working condition. Once you’ve purchased your new tires, Sam’s Club provides you with road hazard protection, lifetime tire repair, no charge TIP balance and rotation, air pressure and tread depth check, and 50-mile re-torque — and that’s just for your tires.

7. Sam’s Cash

One decision potential Sam’s Club members are asked to make is whether they want a regular club membership or if they want to upgrade to a Plus membership. Until May 1, 2024, regular club membership is only $25 (50% off the regular price) for the first year, and upgrading to a Plus membership is $70 ($40 off the regular price) for a year. While you can earn Sam’s Cash with any membership plan, with Plus, you’ll earn more. To earn Sam’s Cash, you simply make qualified purchases. Sam’s Cash can be redeemed for merchandise, membership renewal, or cashed out at the time of your choosing.

8. Free shipping

No one enjoys paying shipping charges, which makes this Sam’s Club benefit all the more sweet. While regular club members have access to some free shipping, Plus members can have most items at SamsClub.com shipped for free.

9. Early shopping

If you’re a morning person and enjoy nothing more than accomplishing an entire list of tasks before lunch, you’ll love the fact that Plus members have early shopping privileges every day of the week except Sunday. From Monday to Friday, the warehouse is open to you at 8:00 a.m., while regular members must wait until 10:00 a.m. to shop. On Saturdays, you can begin perusing the aisles at 8:00 a.m., one hour earlier than regular members.

10. Curbside pickup

If you’re a Plus member and truly dislike strolling up and down the aisles, or if you have a physical condition that makes it difficult, Sam’s Club has an easy fix: curbside pickup. You simply shop and pay online with your favorite card, and when your order is ready, you park at a curbside pickup spot and use the app or a text to check-in. There’s no need to ever get out of your car. A Sam’s Club employee will bring your purchases to you and load them into your vehicle.

Although Sam’s Club is one of the most popular retailers in the U.S., that doesn’t mean the company rests on its laurels. The warehouse giant continually develops new and better ways to make membership costs feel like a bargain.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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CDs can be smart places to put your cash. But they aren’t right for every situation. Keep reading to learn the benefits and drawbacks of CDs. [[{“value”:”

Consumer interest rates are at their highest level in years, and several top-notch financial institutions are offering yields of 5% or higher on certain types of CDs. Certificates of deposit, or CD, accounts are far more appealing places to keep cash than they were just a few years ago, but like any financial decision, there are pros and cons to consider first.

For example, while CDs allow you to lock in a certain interest rate for a certain amount of time, they also have penalties if you end up needing your money early.

With that in mind, here’s a list of 10 benefits and potential drawbacks of putting your cash in a CD, so you can make the best decision for your own financial situation.

1. CDs allow you to lock in a yield

You may have noticed that savings accounts are also paying higher interest rates than they have in years, and in some cases, they rival the rates paid by CDs. However, unlike savings accounts, CD interest rates are set for the entire length of the term. If you get a 5-year CD with a 4.00% APY, that’s the rate you’ll get for the entire five years. On the other hand, savings account interest rates can (and do) fluctuate over time.

2. CDs are safe

As long as you put your money in a CD offered by a reputable FDIC-insured bank, your CD funds are safe. CDs are FDIC insured up to a maximum of $250,000 per person, per bank, and some banks have even taken steps to increase the limits beyond these amounts. Unlike putting your money in the stock market, there is no reason to worry about your money in a CD.

3. Higher rates than savings accounts

Savings accounts may offer interest rates that are comparable to those offered by CDs, but you’ll find a better yield on your money with a CD. This isn’t always the case, but if you compare a 1-year or 18-month CD with a savings account offered by the same financial institution, you’re likely to find a significantly higher yield from the CDs. So, not only can you lock in an interest rate for the entire term, but you can get a higher rate of return as well.

4. Income potential

It’s a common misconception that all the money in your CD must be left alone for the duration of the term. That’s true when it comes to the principal (the money you deposited), but in many cases, banks will allow you to withdraw the interest you get paid, as it comes in. In other words, if you deposit $10,000 into a 5-year CD at a 4.00% APY, you’ll receive $400 in interest during the first year. Assuming your bank allows it, you can withdraw the $400 (or part of it), or you can choose to leave it in the account to compound.

5. Available in IRAs

You can buy CDs through individual retirement accounts, or IRAs. This can help you diversify your portfolio away from the stock market or can be a supplement or replacement to fixed-income investments.

By putting your money into CDs within an IRA, you won’t have to pay income tax on the interest your account generates each year. Most major brokerage firms offer CDs to their clients, and some banks allow you to open an IRA directly with them to hold your CDs.

6. Variety of term lengths

CDs are available in a variety of term lengths. Most banks offer CDs ranging from six months to five years, although some offer non-standard maturity terms. There are some that offer 7-year or 10-year CDs for those who want long-term income streams, and some offer short-term CDs (say, three months) for people who simply want to park their cash for a little while. Savers can also use the variety in term lengths to create a CD ladder — which is a series of CDs with staggered maturity dates to combine financial flexibility and long-term yield visibility.

7. Interest can be taxable

Unless you hold your CDs in retirement accounts, as mentioned earlier, interest paid on a CD is generally considered to be taxable income. It’s well known that interest income is taxable, but many people don’t realize that CD interest income is taxable even if you don’t withdraw it. For example, if you have a 5-year CD and don’t touch the account for the entire five years, you’ll have to report all of the interest you were paid each year on your tax return.

8. Early withdrawal penalties

If you take money out of your CD before it reaches maturity, you will likely have to pay an early withdrawal penalty. In most cases, an early withdrawal penalty is equal to a few months’ worth of interest — it depends on the financial institution’s policies and the maturity term of the CD. Some banks offer no-penalty CDs that have a steady interest rate but that allow you to withdraw your money at any time, but these typically offer relatively low interest rates compared to standard CDs.

9. Potential that rates could rise

While having a consistent interest rate for the entire term is a positive factor of CDs, it can also be a potential drawback in a rising rate environment.

Think of it this way. Let’s say that you open a 5-year CD with a 4.00% APY and over the next year, the bank’s 5-year CD yield rises to 6.00%. Now you’re stuck earning 4.00% on your money (or paying a penalty for early withdrawal) for another four years. While most experts aren’t expecting rates to rise much further (if at all) from current levels, if they do, CD owners could regret locking in today’s rates.

10. CDs automatically renew (usually)

Depending on how you look at it, this can be a pro or a con of CDs. But in most cases, CDs will renew automatically upon maturity, unless you take action to withdraw the money during a time window specified by your bank (usually starting a week or two prior to maturity). In other words, if you have a 1-year CD and don’t do anything, it will renew for another year at whatever the bank’s current 1-year CD rate is at the time.

The bottom line

CDs can be an excellent way to get a stable yield from money you aren’t going to need anytime soon. But keep the drawbacks and risks in mind if you’re deciding whether to open one.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Shopping at Costco is a unique experience — and not one without challenges. Read on to learn more. [[{“value”:”

There’s a reason 73 million people now have Costco memberships. Not only is the store known for its fantastic deals, but it also has a reputation for excellent customer service.

But that doesn’t mean you won’t encounter some challenges in the course of your Costco shopping. Here are some struggles you might fall victim to.

1. The sheer weight of a loaded shopping cart

Costco shopping carts are larger than your traditional supermarket shopping cart so they can accommodate bulk purchases. But if you’ve ever had to navigate the store with a cart loaded with cleaning supplies, cases of water, and other such heavy items, you’ve probably risked a muscle pull at the very least.

The good news, though, is that you don’t have to unload heavy items from your cart at checkout. A helpful employee will scan them from your cart to at least spare you a bit of lifting.

2. The “hit you when you walk in” deals

You probably headed to Costco thinking you’d buy milk, eggs, and various grocery items for the week. Oh, but lo and behold — gardening tools are on sale! So are spring dresses! And throw blankets! And coolers!

The problem with shopping at Costco is that there’s lots of temptation in general. But the fact that Costco tends to place its new sale items at the front of the store doesn’t make things easier. You walk in and are often bombarded with deals. And it takes a lot of self control to just say no.

As such, you may want to make a point to shop at Costco with a list — and hold yourself accountable for it. Either that, or make a rule that you can only buy a single unplanned item per Costco visit to minimize the hit to your savings account.

3. The temptation that is the bakery

Some Costco locations have the bakery section right next to the produce area. Talk about a trap. You basically can’t help but get lured by muffins and cake on the way to buy broccoli and cucumbers.

If you’re going to make a pit stop in the bakery aisle, choose your purchases wisely. Costco’s jumbo muffins, for example, freeze really well, so you can load up, eat one or two, and store the rest for the future. You may not have the same luck with some of Costco’s frosted cakes, so you may only want to buy those if you have an actual event you need dessert for.

4. The frozen tundra that is the milk room

Wearing layers is advisable when shopping at Costco. Not only does the sheer size of the store make it drafty, but you may want to bring your heaviest coat for the sole purpose of fetching milk.

Costco’s milk room, so to speak, is downright frigid. But you actually do want to take your time in there because if you’re loading up on milk, it’s important to check expiration dates.

On the plus side, the fact that the milk area is kept so cold no doubt lends to Costco milk’s staying power. You’ll often find that the sell-by date on Costco milk is more generous than the sell-by date you’ll see at your local supermarket.

5. The membership dilemma

Costco offers two types of membership — basic (called Gold Star) and Executive. The basic membership costs $60 a year, while the Executive membership costs $120. With the latter, though, you get 2% cash back on your Costco purchases.

If you’re not sure which membership is right for you, you really only need to answer one question: Do I expect to spend more than $3,000 at Costco in the coming year?

The reason is that when you spend $3,000 exactly, 2% back equals $60 — the cost of your Executive membership upgrade. So if you spend even a dollar more than that, the upgrade makes sense, because you’re coming out ahead financially.

Your shopping experience at Costco may not be perfect. But let’s be real — all of the above struggles have solutions, whether it’s making a list, clearing out space in your freezer for uneaten muffins, or bringing an extra sweatshirt along. And that way, you can continue to enjoy the many benefits a Costco membership has to offer.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Fetch. The Motley Fool has a disclosure policy.

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