Money Management

Credit card bonuses can be exciting to chase, but be careful — sometimes, they’re not worth it. Learn when you should pass up credit card offers here. [[{“value”:”

If you haven’t checked credit card bonuses in a while, you better hold on to the edge of your seat. Even the most basic welcome offers are averaging $200 to $300 a pop, with the more luxurious cards boasting bonuses above $1,000. Unlike bank bonuses, this money comes to you tax-free, too, helping you keep more of your earnings in your pocket.

But for all their value, credit card bonuses aren’t for everyone. After all, bonuses are basically bait on a hook, designed to reel you toward a new credit card company. While they can be useful in moderation, here are three times you’re better off passing up the big offer.

1. You’re in credit card debt

If you’re in credit card debt, it’s probably best to stay away from credit cards — both the ones you have and any new ones. The thing is, credit cards have astronomical interest rates, which can trap you in a spiral of debt that grows at a faster rate than you can pay it off.

If anything, you might want a balance transfer credit card with a 0% APR. This would reduce your interest payment to zero, thus helping you pay off your balance faster. Just be careful: Many of these cards will charge a balance transfer fee of 3% to 5% of the amount transferred. As long as the fee is cheaper than the interest you’ll end up paying, the transfer would be worth it.

2. The credit card doesn’t suit you

When you’re picking a new credit card, bonuses are meant to be a nice addition to other features, like the card’s rewards program, travel perks, and built-in insurance. But if you choose a card based on bonus alone, you might be stuck with a credit card that doesn’t offer much value once the bonus is earned.

For example, some of the best welcome offers are found on travel credit cards. These cards are designed to turn your everyday spending into points or miles redeemable for travel. And while many of these cards earn a decent amount of rewards for everyday purchases, you’re not going to get much value if you don’t travel frequently. Instead, you might get more value by getting a cash back card that will reward you for your biggest spending category, like groceries and gas.

It’s best to consider all aspects of a credit card, not just the welcome offer. After all, you’ll authorize a hard inquiry on your credit report when you apply, which will stay on your report for two years. You don’t want to risk hurting your credit score for a credit card you’re not actually going to use.

3. You’re trying to save money

Most credit card bonuses have spending criteria that must be met within a tight timeframe before they’re dished out. On the lower end, you might be required to spend $500 within three months. For more luxurious bonuses, you could be asked to spend between $6,000 and $8,000 within the same period.

This might be fine if you’re planning a large purchase. But if you’re trying to pad your savings account, credit card bonuses can be counterproductive. This is especially true if the spending threshold is outside your normal monthly expenses. You might end up spending more than normal just to snag the bonus, which might defeat the purpose of getting the bonus in the first place.

Of course, I wouldn’t say you should always avoid credit card bonuses when you’re trying to save money, especially if the card will end up rewarding you for purchases you’re already making. But if any of the above scenarios apply to you, you might be better off passing up the big credit card offer.

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The Federal Reserve is keeping interest rates steady. Here’s how that could impact your finances for better or worse. [[{“value”:”

Rampant inflation has been battering consumers since 2021. And the Federal Reserve’s job is to make sure that surging inflation doesn’t wreak havoc on Americans’ personal finances and the broad economy.

The Fed implemented a series of interest rate hikes in 2022 and 2023 to slow the pace of inflation. And those efforts have largely paid off. Although inflation was most recently measured at 3.2% on an annual basis, as per February’s Consumer Price Index, that’s not nearly as bad as things were back in 2022, when inflation peaked at over 9%.

Since the Fed has made progress in battling inflation, it’s been able to pause its interest rate hikes for its past few meetings. And on March 20, the central bank once again made the decision to hold interest rates steady.

But is that good news or bad news for consumers? Actually, it’s both.

The downside of paused interest rates

The Fed has signaled that it may be in a position to cut interest rates if inflation continues to cool. That’s what consumers who need to borrow money want.

Borrowing has been expensive since the Fed hiked up rates. And these days, consumers are looking at higher costs for products like personal loans, home equity loans, and auto loans. Those carrying balances on credit cards may also be paying more in interest due to the Fed’s string of rate hikes.

The hold-steady approach to interest rates won’t benefit consumers who need a loan or are grappling with credit card debt. Granted, it won’t put them in a worse position than where they are today. But it won’t help. So that’s the bad news part of the equation.

The upside of paused interest rates

At this point, it’s pretty clear that the Fed isn’t looking to raise interest rates. The current state of inflation just doesn’t warrant that.

As such, the fact that the Fed isn’t cutting interest rates is actually a good thing for savers. The Fed’s actions in 2022 and 2023 have led to higher savings account rates, as well as higher CD rates. That’s benefitting people who have money in the bank. Once rate cuts take hold, savings accounts and CDs will likely start paying less. So that’s the good news.

What steps should you take in light of paused interest rates?

If you’re looking to sign a loan, in light of the Fed’s interest rate pause, the best thing to really do is nothing. Keep sitting tight if you’re able to, because waiting to sign a loan could mean locking in a lower interest rate.

Of course, if you owe money on a credit card, it’s a good idea to try to pay it off as quickly as possible. But that advice applies regardless of decisions the Fed makes, as it’s just plain bad news to be racking up costly interest on an outstanding credit card balance.

Meanwhile, if you have money you’re sitting on, whether because you’ve saved some of your recent paychecks or your tax refund recently came in, you should know that now’s a good time to open a CD. This way, you can lock in an attractive rate before rates start to fall.

Later on in 2024, the Fed may opt to start cutting interest rates. But it also won’t be shocking to see the Fed hold steady on interest rates again during its next meeting, which is scheduled for April 30-May 1. It pays to keep tabs on the Fed’s decisions either way, as they could impact your financial situation.

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Budgeting works well for some people, but it may not be right for you. Read on to learn more. [[{“value”:”

My friend Jane (not her real name, but understandably, she asked for anonymity in the context of this piece) realized late last year that her personal finances could use an overhaul. Jane turned 40 in 2023, and, as she put it, “It’s embarrassing that I’m this old and have pretty much no savings, retirement or otherwise.”

In reality, I don’t think Jane needs to be embarrassed per se. She went through an ugly divorce in her 20s that left her in a bad financial spot. She married again in her 30s, but then had kids. That resulted in a short career break and derailed her savings efforts.

I reassured her that it’s not too late to get her finances on track. But I did advise her to start making big changes in 2024.

One thing she agreed to do to kick off the year was follow a budget that I helped her put together. But two months later, she’s given up. And I can’t really blame her.

Budgeting doesn’t work for everyone

Budgeting is a useful thing in theory. You list your expenses, figure out how much they cost, and make adjustments as needed to ensure you’re saving money at the end of the month.

The problem with budgeting is multifold. First, even if you use a budgeting app, the process isn’t seamless. You have to check in and make sure different purchases are being allocated to the right categories, even if that’s supposed to be happening automatically.

Also, budgeting can be restrictive. Say you allocate $600 a month to grocery costs, only to find that you’ve already spent $580 one month with five more days left. At that point, you either have to find money from another expense category or force your family to live off of ramen and canned vegetables for almost a week.

Jane didn’t want to use an app to budget. We tried the good old spreadsheet method instead. But all told, she got frustrated quickly and said she was done. So we knew we needed a better system.

A more optimal way to save

Jane’s goal in budgeting was to control her spending and save more. So we’ve realized we can get her to that goal without having to stick to a strict budget.

One thing Jane has going for her this year is that she’s working full-time again. She gets an employer match for her 401(k) contributions, so she signed up to contribute enough from her paychecks to get that match in full. That’ll help her jumpstart her retirement savings.

Jane also has the goal of building emergency savings, as she has dangerously little at present. For the record, 63% of Americans don’t have enough savings to cover a surprise $500 expense, according to SecureSave, so Jane’s not alone there. But she’s trying to do much better.

What we did at the start of March was set up an automatic transfer from Jane’s checking account to her savings. Now, that money will leave her account at the start of every month off the bat.

As such, Jane doesn’t necessarily have to focus on whether she spent $10 extra at the supermarket or $5 less at the gas pump. She knows she’s saving the amount she’s targeting every month off the bat.

Jane also agreed to cut out a couple of bills that were getting in the way of her savings. She and her husband canceled two out of their three streaming services, and they also canceled their youngest child’s gymnastics lessons since they’re a pain to get to and it’s something they can always resume when money gets less tight.

All told, the combination of automating savings and cutting bills is likely to work better for Jane than following a strict budget. And if you’re trying to improve your finances, you may find that the same holds true for you, too.

So if you’re new to budgeting and it proves to be more complicated or annoying than you bargained for, know that there are other options. And for the record, I’m a former budgeter who gave up on it a while back because it started to bug me, too. I now automate my savings and try my best to keep large expenses (like housing and our cars) low, and that system has worked pretty well.

I’m not saying I’ll never go back to budgeting. But for now, it’s not something I have to do, which means you don’t have to, either.

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Is federal relief on the way for home buyers? Maybe. Read on to learn more. [[{“value”:”

In 2020 and 2021, mortgage lenders started offering up some of the lowest interest rates in history in response to the COVID-19 pandemic and the economic crisis it fueled. But mortgages have been a lot more expensive to sign over the past couple of years. And between higher interest rates and home prices, many buyers — particularly first-timers — have had a difficult time breaking into the housing market.

President Joe Biden acknowledged the hardships first-time buyers are experiencing in his recent State of the Union address. And he made a point to inform those listening that he has a plan that could really help.

Is a new home buyer tax credit in the works?

In 2008, a first-time home buyer credit was made available in response to the housing crisis that ensued at that time. These days, there are no official first-time home buyer tax credits on the books. But that could change.

During his 2024 State of the Union address, President Biden said, “I know the cost of housing is so important to you. Inflation keeps coming down. Mortgage rates will come down as well, and the Fed acknowledges that.”

“But I’m not waiting. I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down to put toward their mortgages when they buy their first home or trade up for a little more space.”

Now to be clear, Biden’s proposal is simply that — a proposal. But such a move could do a world of good for buyers and help open up an otherwise tight market.

A big reason so many buyers have struggled to purchase a home lately is that inventory is low. And inventory is stagnant largely because existing homeowners don’t want to give up the record-low mortgage rates they locked in a few years ago.

Biden’s proposal could serve two very important purposes. First, it could help first-time buyers get into the market. But also, Biden’s language implies that his credit wouldn’t just be earmarked for first-timers. Rather, it would potentially include existing homeowners who wish to upsize.

That’s huge, because if more people are able to afford to upsize, it could open up the supply of starter homes on the market. These are the types of properties first-time buyers tend to target, since they tend to be smaller (meaning, often easier to maintain) and less expensive by nature.

Assistance may already be available to you

Although there’s currently no tax credit available for first-time home buyers, if you’re purchasing your first home, you may be eligible for a down payment assistance program through your state or local housing authority. New York City’s HomeFirst Down Payment Assistance Program, for example, provides qualified home buyers with up to $100,000 toward a home purchase.

You may also be able to qualify for a down payment assistance loan. Eligibility for these programs is determined by your income and credit history, and it can vary based on where you live.

With any luck, President Biden will be successful in providing meaningful relief to first-time (and existing) home buyers and homeowners. It could really help at a time when the housing market is particularly tough to crack.

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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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Ready to file your California state income taxes? Check out this list of the biggest California tax breaks and see which ones can save you money on taxes. [[{“value”:”

California charges its own state income taxes, in addition to federal income taxes. One big difference for California taxpayers is that you cannot get all of the same tax breaks on your California taxes that you get on your federal taxes.

For example, California does not offer a state tax deduction for money put into health savings accounts (HSAs). California also has lower limits for how much people can deduct for charitable contributions, based on their federal adjusted gross income (AGI). Don’t be surprised if your California state taxable income ends up being higher than what you report on your federal tax return.

But residents of the Golden State can still get a few important tax breaks. Let’s look at some of the biggest tax deductions and unique state tax credits for California income taxes.

1. Traditional IRA deduction

One of the biggest and most important deductions that Californians can get on state income taxes — which is also the same as the federal deduction — is tax-deductible contributions to a traditional IRA. This will reduce your California taxable income by the same amount as your federal taxable income.

Not every deduction works this way. California doesn’t follow the same rules as federal taxes for every type of deduction. So if you qualify to put tax-deductible money into a traditional IRA, definitely take advantage of it. This is yet another good reason to open an IRA: it can reduce your California state income taxes, as well as your federal income taxes.

2. California standard deduction

California has a lower standard deduction than the IRS, but it still might be one of the biggest deductions that California taxpayers can get.

For 2023, the California state income tax standard deduction was:

$5,363 for single filers and married/registered domestic partner (RDP) filing separately, and$10,726 for married/RDP filing jointly, head of household, and qualified widow(er) filing statuses.

This compares to the IRS 2023 standard deduction of $13,850 for single filers, $27,700 for married filing jointly, and $20,800 for head of household. This means that if you’re a single taxpayer in California and you take the standard deduction for federal and state taxes, your California taxable income might be $8,487 higher than on your federal return.

3. Deductible home mortgage interest and healthcare expenses

Along with relatively high income taxes compared to other states, California also has a reputation for high-priced real estate. If you own a high-priced home in California, you get one extra tax break on your state income taxes that’s better than the IRS offers: California lets you deduct a larger amount of home mortgage interest.

In California, you can deduct home mortgage interest on home purchases up to $1 million. The federal government’s tax law only allows for deductible interest on mortgages up to $750,000.

Another tax deduction that California has in common with the IRS is tax-deductible medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI). But keep in mind, you can only deduct the portion of these qualifying healthcare expenses that is larger than that 7.5% cutoff. So if you have $10,000 of medical costs, and your AGI was $100,000, you can deduct $2,500 from your taxes.

And remember: you must take itemized deductions if you want to get California tax breaks for your home mortgage interest or deduct your healthcare expenses. Make sure your total itemized deductions add up to more than the California standard deduction.

4. California tax deductions that you can’t get on federal taxes

If you want special state-level tax deductions on your California income taxes, the news isn’t all bad. California offers a few tax deductions that the IRS does not allow.

Personal casualty and theft losses

The IRS will allow you to deduct some losses suffered from a disaster, but only if you experience the losses as part of a federally declared disaster. California is more lenient.

California taxpayers who experience the misfortune of a house fire or natural disaster, being victims of theft, or other qualifying casualty losses can deduct those costs on their state income tax returns — no federal disaster declaration required.

Moving expenses

The IRS no longer allows people to deduct moving expenses (except for some members of the Armed Forces). But California does! You can use California form FTB 3913, Moving Expense Deduction, to get a tax break for the costs of moving to a new home.

Some employee expenses and miscellaneous itemized deductions

Californians can deduct certain expenses that they paid as part of their jobs, tax preparation fees, and some other miscellaneous expenses as part of doing work to earn income. These miscellaneous deductions can only be for the amount that is greater than 2% of your federal adjusted gross income (AGI).

5. Unique California state tax credits

California offers several tax credits for people at all stages of life. These include:

The California Child and Dependent Care Expenses Credit: To help parents cover the costs of daycare.Nonrefundable renter’s credit: For people who paid rent at least half the year, and who have income below a certain limit.Senior head of household credit: For older adults (age 65 and up) who are recently widowed. This tax credit is worth up to $1,748.

Bottom line

California state income taxes are complicated, and you won’t get all the same tax breaks that you’re used to seeing on your federal return. Use tax prep software to make sure you get all the California tax breaks you deserve.

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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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Costco’s Kirkland Signature brand is a big part of its avid following. Here are a few under-$20 examples why. [[{“value”:”

Given its $60 annual membership fee, Costco has to have some great deals to make financial sense — and it does. Some of those deals are limited-time sales and promotions. But many of the most amazing Costco buys aren’t sales; they’re everyday essentials.

Specifically, they’re Kirkland Signature essentials. Costco’s house brand is more than just name-brand knock-offs. You can get some truly quality items for a fraction of the usual cost.

There’s a Kirkland Signature version of pretty much anything you need, from foods to paper goods and even liquors. Here are some of my favorites.

1. Nuts

Nuts, eaten in moderation, are a healthy and delicious snack. Unfortunately, they can easily break the budget when you pick them up at the grocery store. Costco’s Kirkland Signature brand has a wide variety of nuts and legumes, all at remarkably good prices.

For example, you can get a 3-pound bag of shelled walnuts for less than $9 (that’s what my old grocery store charged per pound!). Similarly, if you want shelled pistachios, you could pay more than $20 a pound at the grocery store — or about $11 a pound at Costco.

2. Vodka

Vodka is a staple in many home bars thanks to its versatility in drinks and cocktails. But while most of us end up mixing our vodka, that’s no excuse to cheap out. Even great mixers can’t hide the taste of cheap vodka.

The Kirkland Signature French Vodka is a good example that inexpensive doesn’t have to mean cheap. It’s often hailed by shoppers and professionals alike as a great quality vodka, especially for the price: $19.99 at my local warehouse.

3. Coffee

Is making coffee at home going to make you a millionaire? Of course not. Could skipping that $15-a-week drive-thru habit help your savings? Absolutely. That doesn’t mean you need to deal with crappy coffee, however — especially not when you’re shopping at Costco.

You can get a range of different Kirkland Signature coffees, from Colombian to French Roast, pre-ground or as beans. The specific price varies by type, but a 3-pound bag of Colombian Supremo will run you around $19 (or a bit over $6 a pound). Even from the bulk aisle, my local grocer would charge me more than double that!

4. Batteries

Even though most products these days seem to be USB rechargeable, we still manage to go through a shocking number of AA and AAA batteries. Instead of $5 for a pack of four at the big-box store, try buying Kirkland Signature packs in bulk. You can get 48 batteries for $16 (that’s about $0.33 per battery.)

Costco is also a great place to pick up hearing aid batteries. You can get them in packs of 48 for less than $0.20 a battery at most Costco locations. That’s cheaper than you can get in regular stores, or even on Amazon.

5. Facial tissue

As someone currently getting over a cold, this one hits home. The only thing worse than an abrasive tissue? Paying a fortune for them. That’s why we keep Kirkland Signature 3-ply Facial Tissues on hand.

My family tested these against Member’s Mark and Kleenex, and we unanimously agreed the Kirkland Signature tissues were the softest. While much more affordable than the name brand, the Costco tissues are actually a little bit more expensive than the Sam’s Club Member’s Mark 3-ply version. That said, we found them to be worth the extra $0.005 per tissue!

6. Filled pastas

Sure, there are some meals we eat more for convenience than flavor. But I like to mix them both when I can. A yummy filled pasta, an easy sauce, and a quick side, and you can put together a great meal in minutes. You can also do it on a budget when you’re getting your ingredients from Costco.

There are a variety of tasty filled (and layered) Kirkland Signature pastas, all for a very reasonable price. The tortelloni and/or ravioli two-packs get you dinner for less than $10 a meal, or go even heartier with a Kirkland Signature lasagna for about $6 a pound.

7. Party snacks

Feeding a crowd is what bulk buying is made for, and Costco is a great place to shop for party supplies, particularly those of the edible variety. You can get a ton of great Kirkland Signature snacks, from tasty tortilla chips (about half the price of Tostitos) to dips of every persuasion (try the chunky guac!). If you want something a bit more substantial for your guests, grab a charcuterie (less than $8 per pound) or veggie platter (less than $4 per pound) from the deli.

8. Grass-fed butter

The culinary hill I’d die on is that grass-fed butter is better than regular butter (and science actually backs me up on this one). But I’ll admit the price is a bit much for my beloved Kerrygold, even at Costco. You can get what’s probably the next best thing by buying Kirkland Signature grass-fed butter. You’ll save about $2.50 a pound over Kerrygold (from Costco, way more from the grocery store), letting you bake with grass-fed butter guilt free (or at least guilt-lite).

9. Organic free-range eggs

Eggs are versatile and durable, lasting weeks (if not months) in the fridge, so they can be a great staple to buy in bulk. The price of eggs has seen a lot of variation over the last few years, but Costco’s prices have been relatively steady — and affordable.

Costco has a few eggcellent options, but I prefer the Kirkland Signature organic free-range eggs, which run about $8 (or so) per two dozen. That’s about the same price my grocery store charges for regular sad-chickens-in-cages eggs, so I call it a win.

10. Over-the-counter medicines

Whether it’s actually curing me or just masking the symptoms, I’m grateful for my over-the-counter miracles whenever I need them. That gratitude doesn’t mean I want to drain my bank account to keep them in stock, however. Costco is a great place to pick up all kinds of pills, syrups, and sprays designed to help what ails ya. Kirkland Signature Allergy Medicine, for instance, will run you just $0.02 a pill; that’s a huge relief for your wallet (and your sinuses).

America’s favorite house brand

One of the biggest reasons so many folks are such rabid avid Costco fans is that the wholesaler takes its Kirkland Signature products seriously. You can typically expect name-brand quality at better-than-store-brand prices. So, while we only included 10 on this list, you can expect most Kirkland Signature items to be amazing buys.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Costco Wholesale. The Motley Fool has a disclosure policy.

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