Money Management

Paying no interest on a credit card sounds like an amazing deal. Learn about the warning signs that a 0% APR offer could be a bad idea. [[{“value”:”

If you’re trying to avoid those costly credit card interest charges, 0% APR credit cards are a popular way to do it. The rate isn’t permanent — any company offering that wouldn’t last long. Instead, these cards offer a 0% intro APR for a fixed time period. With some cards, you can get 15 months or longer of zero interest.

A 0% APR card can certainly save you money on interest. But it could also end up causing more problems than it solves. Before you finance any purchases this way, here are the warning signs that you probably shouldn’t.

1. You already have credit card debt

It’s never good to be in credit card debt. Sometimes it’s your best option, like if you have an emergency expense, and a credit card is the only way to pay for it. But because of how much the interest costs, you should do your best to get out of credit card debt as quickly as possible.

Adding more credit card debt to the mix, even at a 0% intro APR, is only going to make your job harder. Also, keep in mind that the 0% APR is only an intro rate. After the intro period, it will go up quite a bit. If you haven’t paid off the balance by then, you’ll start getting charged interest on it.

You’re better off not opening new cards or financing any more purchases while you’re paying off credit card debt. The only time it could make sense to open a new card is if it’s a balance transfer credit card. This type of card has a 0% intro APR on balances you transfer from other cards, so it can be useful for avoiding interest charges on credit card debt.

2. You haven’t thought about how you’ll pay back what you spend

The benefit of 0% APR offers can also be one of the biggest risks. When you’re not being charged interest on a credit card, you may not be as motivated to pay it off. Some people only make minimum payments, leaving them with a hefty balance once the intro period is over.

Before you put any big expenses on a 0% APR card, make a payment plan for yourself. Decide how much you’ll pay toward your balance per month. Make sure it’s enough to pay off the card during the intro period.

To find out how much you’ll need to pay, divide the amount you’re planning to spend by the length of the 0% APR period. Imagine you’re planning to spend $5,000 on a card with a 0% APR for 15 months. You’ll need to pay at least $333.34 per month to have that balance down to $0 before the intro period ends. And remember that if you continue using the card, you’ll need to pay even more.

3. You’re planning to buy a home or a car soon

When you apply for a mortgage or auto loan, your credit score is extremely important. It’s one of the biggest factors in your loan’s interest rate. For example, rates on a 30-year mortgage could range from 6.585% to 8.174% depending on your credit score, according to MyFICO (as of March 2024). A low credit score could easily cost you over $100,000 in interest.

For that reason, you don’t want to do anything that will damage your credit score before your loan application. That includes racking up too much credit card debt.

Your credit score is based on several scoring criteria, and one of the most important is your credit utilization — the balances on your cards compared to their credit limits. If you open a 0% APR card and charge a large balance, it could lead to high credit utilization. This can take 25 points or more off your credit score — exactly what you don’t want. You’re better off paying down credit card balances as much as possible before any big loan applications.

Credit cards with a 0% intro APR can be useful, but they can also end up costing you money if you’re not careful. Only use this type of offer if you don’t have any credit card debt, you’ve made a plan to pay off what you charge, and you won’t be applying for a mortgage or a car loan any time soon.

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I owed Uncle Sam more money for last year — partly because of my high-yield savings account. Learn how to cope with this consequence of higher interest rates. [[{“value”:”

Tax season is upon us — as I write this, there’s just a little over a month left until the April 15 tax-filing deadline. I was extremely motivated to get my taxes done ASAP this year, and in fact, submitted all of my paperwork to my accountant at the beginning of February. My eagerness was not for the same reason as many Americans (the prospect of a fat tax refund), but because I’m finally ready to buy a house. I needed two years of tax returns showing solid self-employment income to qualify for a mortgage.

My tax return is now done and filed, and I was not at all surprised to owe money to Uncle Sam as well as my state of residence — my quarterly estimated tax payments were based on 2022 income, and 2023’s was higher. But my accountant also called out another big reason for my higher tax bill: the interest I earned on the cash in my high-yield savings account (HYSA). Did you earn interest in a bank account last year? Then this article is for you.

Did you have a HYSA, CD, or MMA last year?

I started throwing house money into my high-yield savings account in the fall of 2022. I kept it up for the duration of 2023, and I’m still saving in 2024. My savings account pays interest to me on the same day every month, and I love logging in to see how much I got. I ended up racking up almost $1,900 in interest on the account in 2023.

If you had cash in a high-yield savings account, certificate of deposit (CD), or money market account (MMA) in 2023, you may also owe money as a result (unless you can offset it in another way, such as credits and deductions). The same is true if you scored a sweet bank account bonus in 2023. The money is considered taxable income, and the amount you’ll owe is determined by your federal tax bracket.

This isn’t to say these accounts aren’t worth opening, of course — I was absolutely delighted to earn so much on my savings last year, and I really hope my account keeps the same APY (or higher) for the duration of 2024, too. (This will depend on whether we see Federal Reserve rate cuts, and how big they are.) But it’s a good idea to plan for any extra taxes you might owe as a result.

How can you plan for a higher tax bill?

If you earned interest on a savings account, CD, or money market account last year, you likely have a 1099-INT form waiting for you in your bank account’s web portal. You’ll need to refer to this form when filing your return using tax software (or send it to your tax preparer, if you’re like me and would prefer to outsource this annual task). It’ll show how much you earned throughout the year.

It’s a good idea to look up your federal tax bracket to see what percentage you can expect to owe of the interest or bonus you received. You can set this amount aside in preparation to pay Uncle Sam. In my case, I have a dedicated tax payments sub-account in my savings, because I’m a freelancer and expected to pay taxes every quarter. I take a percentage off the top of everything I earn and stick it there, so it’s always ready. As such, my higher tax bill this year was an annoyance rather than a crisis.

If you’re one of the 31% of Americans taking advantage of high-yield savings accounts with rates over 4%, a higher tax bill might be a fly in the ointment of interest payments. Find out how much you might be on the hook for, and aim to either offset it with credits and deductions, or prepare to cough up what you owe. And enjoy your account for as long as you can keep that high APY — even if you owe more in taxes as a result.

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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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Prescription drugs can be quite expensive. Here are three programs that could help you reduce your out-of-pocket costs. [[{“value”:”

Health insurance is most people’s go-to for reducing their prescription drug costs, but it doesn’t always do the job — and not everyone has a policy. Paying out of pocket is pretty tough, especially for rare (and expensive) medications or medications you take routinely. But fortunately, that might not be your only option.

Several programs could help you reduce the cost of your prescription drugs or, in some cases, get them for free. Here are three you should know about.

1. GoodRx

GoodRx is a free online site that offers coupons on prescription drugs at popular pharmacies. You don’t even need to create an account to use it. All you have to do is search your prescription, check rates at nearby pharmacies, then choose the coupon you want. Present it to your pharmacist and they’ll scan it to help you save. Sometimes, it’s possible to save more than 90% off the original price.

GoodRx also has a Gold Membership option for those who are willing to pay a monthly fee. This gives you its best rates, plus free home delivery and access to telehealth services. The company estimates that individuals who enroll in this plan save over $2,862 per year, while families save $4,052 per year.

2. Pharmaceutical assistance programs

Many pharmaceutical companies also offer assistance programs to help customers who cannot afford to pay for their medications out of their own pockets. Each company sets its own rules to determine who qualifies for these services.

Generally, these include being a U.S. resident with a prescription for the medication in question, not having access to health insurance that would cover the cost of the prescription, and having an income below certain thresholds set by the company.

If you have any questions about these programs or whether you qualify, contact the pharmaceutical company to see what types of assistance it can offer you. And if this isn’t an option for you right now, keep it in the back of your mind in case your financial situation changes.

3. State assistance programs

Currently, 48 states offer some sort of pharmaceutical assistance program to their qualifying residents. Some of these programs are only available to seniors or to those with HIV/AIDS. But others are open to residents of all ages and health statuses.

Each program has its own rules for what medications are covered, who qualifies for assistance, and what kind of assistance it provides. Some may just offer savings on the original prescription price while others might help residents obtain their medications for free.

Investigate the programs in your state thoroughly to see which, if any, you might qualify for. And if you have questions, reach out to the program directly for more information.

Keep in mind that you can use more than one of these techniques to save. You can apply for a pharmaceutical assistance program and use a GoodRx coupon to reduce your costs further. Comparing prices between several pharmacies and opting for generics whenever possible can also keep costs manageable. Don’t forget that drug prices can fluctuate over time, so it doesn’t hurt to check out rates at other pharmacies once in a while to see if you can find a deal that would help you keep more money in your bank account.

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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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A low credit limit is inconvenient, and it may even affect your credit score. Find out what you can do if you’re not happy with your card’s credit limit. [[{“value”:”

When you get a credit card, the card issuer will set a credit limit. This is the maximum amount you can spend, so if it’s too low, it could become a frustrating issue.

You’ll need to carefully manage how much you spend. After all, no one wants to be in a store or restaurant and hear that their card has been declined. Your credit limit even plays a role in your credit score. If you use a large portion of your credit limit, you’ll have high credit utilization, which can cause your score to drop.

If your card’s credit limit is lower than you’d like, here’s what you can do to fix it.

1. Ask the card issuer to increase it

Credit card companies will sometimes bump up your credit limit automatically. You can also request a credit limit increase yourself.

Many card issuers include an option to do this online through your credit card account. Or, you can always call your card issuer at the number on the back of your card. You may want to call if you’d like to talk to someone directly about your situation and let them know why you need a higher credit limit.

You’re more likely to be approved for more credit if you’ve always paid the bill on time and you’ve had the card for at least six to 12 months. That’s just a recommended timeframe; I’ve heard about people getting a credit limit increase immediately after opening their cards. It’s less likely, but it can happen.

2. Make sure your income is correct and up to date with your card issuer

Your income plays an important role in your credit limit. If you make more money, card issuers will trust you with more credit.

This is why you should keep your income updated with your card issuer, especially if it has been a while since you applied for your card. If you were making $50,000 per year when you applied for your card, but now you’re making $60,000, make sure your card issuer knows that. You can update your income with your card issuer online or by calling.

Also, check that you’ve included all your income. Some people just include their salary, but if you’re at least 21 years old, you can include any income you can reasonably expect to access. That can include household income from your spouse or partner, retirement fund distributions, and income from freelancing or side hustles.

LEARN MORE: How Your Income Affects Credit Card Applications

3. Increase your credit score

The other big factor in your credit limit is your credit score. If you have a high credit score, that’s a sign you’re likely to repay money you borrow, so credit card companies will trust you with more credit than if you had a low credit score.

If your credit score is below about 720, improving it could help you qualify for higher credit limits. Here are a few ways to increase your credit score.

Pay your bills on time every month. Your payment history is the most heavily weighted factor in your credit score. Each on-time payment is good for your credit, but even a single late payment (that’s late by 30 days or more) can cause a huge drop in your score.Pay down credit card debt. Your credit utilization is also a significant part of your credit score. As you pay down your card balances, your credit utilization will decrease, which can increase your credit score.Don’t open too many credit cards and loans. Each credit application has a small impact on your credit score. It normally only takes off a few points, but multiple applications can add up.

4. Apply for a new credit card

One of the easier ways to get more credit is to open a new credit card. You won’t have a higher limit on your original card. But if you’re approved for a card with a $2,000 limit, that’s another $2,000 in credit you can use.

Some credit card companies also tend to be stingier with credit than others. Even if one card issuer gave you a low limit, you may be able to get much more elsewhere. Check out high limit credit cards to see cards that other people have gotten with very high credit limits.

A lower credit limit than you’d like can be annoying, but it’s also not that hard to fix. It may be as simple as asking your card issuer for a higher limit, especially if your income has increased or you’ve raised your credit score. And you can always try your luck applying for a new card to see if you get approved for a larger credit line.

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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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Reporting income from third-party payment platforms might seem tricky, but the rules are actually pretty simple. Here’s what you need to know. [[{“value”:”

When you’re self-employed, managing your taxes can be a bit more complicated than it is for people who get paid a salary. That’s because you’re required to pay estimated taxes on your earnings during the year, as opposed to having taxes withheld from your pay.

You’re also required to keep accurate records of your freelance earnings, since you’ll need to report your income in full to the IRS, and you may not receive tax forms summarizing every dollar you earn.

In fact, if you got paid a lot in 2023 through a third-party platform, like Venmo, then you may be stressed about reporting that income this spring. In a recent Adobe survey, 30% of tax filers said they were stressed about reporting income they received from payment platforms.

But while the rules of reporting income in that category might seem complex, they’re actually pretty simple.

You have to report all of your income — period

Currently, third-party platforms like Venmo are only required to issue 1099 forms to users who earned more than $20,000 in 2023 across more than 200 individual transactions. The IRS had originally sought to lower that threshold to $600 for 2023, regardless of transactions, but held off on implementing that new rule.

So here’s how that might play out for you. Let’s say Venmo was your payment platform of choice in 2023, and you received a total of $14,000 in payments across 204 transactions. In that case, you won’t get a 1099 form from Venmo for 2023 because you didn’t meet the $20,000 threshold.

Or, let’s say you received six very large Venmo transactions totaling $24,000 for freelance work you did in 2023. Here, you meet the income threshold but not the transaction requirement, so once again, you won’t be in receipt of a 1099 form for 2023.

But let’s say you earned a total of $26,000 across 210 transactions. In that case, you should have received a 1099 form for 2023 already.

But regardless of how much you were paid by a third-party platform in 2023, and regardless of how many transactions your payments entailed, you have to report all of your income to the IRS on your tax return. It doesn’t matter whether you have a 1099 form in your hands or not. If you earned the money, you must report and pay taxes on it. Period.

You may want to ask for help

Reporting and managing self-employment income can be tricky. It’s a good idea to enlist the help of a tax professional to not only file your tax return, but to manage your income and tax obligations during the year.

A tax professional, for example, can help you calculate your estimated quarterly IRS payments so you’re not coming up short but you’re also not parting with too much money that could otherwise sit in your bank account.

Either way, don’t let yourself get caught up in complicated payment platform reporting rules. Go through your records to see how much income you earned in 2023 and report it all — regardless of where it came from.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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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