Money Management

A fee hike at Costco could be in store. But how bad will it be? Read on to find out. [[{“value”:”

Costco’s business model is unique compared to that of other retailers in that it requires you to become a member of the store in order to shop there. And a big reason is that Costco uses its membership fee revenue to offset the cost of procuring goods. That’s partly how it’s able to offer such low prices to its members on items ranging from groceries to household essentials to electronics.

Right now, a basic Costco membership costs $60 a year, while an Executive membership, which gives you 2% cash back on all Costco purchases, costs $120. But it’s been more than six years since Costco last raised fees. As such, many people are anticipating a near-term price hike. But just how expensive will Costco fees get if that happens?

It’s a question of when, not if

Costco’s last fee hike took place in June of 2017. During the company’s December 2023 earnings call, CFO Richard Galanti was asked when the warehouse club giant expects to raise fees next. And Galanti’s answer was, “It’s a question of when, not if” — meaning, he wouldn’t commit to a timeline but made it clear that Costco fees are likely to go up eventually.

Whether that happens in 2024 is yet to be determined. However, since it’s been, as Galanti acknowledged, longer than usual since Costco last raised fees, a near-term increase is something members may want to gear up for.

How much will fees rise?

Just as Costco hasn’t given a date for a fee hike, so too has it not committed to a specific fee increase. But the last time Costco raised fees, the cost of a basic membership rose by $5 and an Executive membership rose by $10. And the time before that, in late 2011, Costco fees also went up in similar increments — a basic membership fee rose by $5 and the cost of an Executive member rose by $10.

As such, there’s a good chance Costco will follow the same pattern this time around. If so, that would make the new price of a basic membership $65 and the new price of an Executive membership $130.

Should you keep your Costco membership if fees increase?

If you’re someone who uses your Costco membership often, then it probably pays to keep it even if the cost goes up. And if you can’t remember the last time you shopped at Costco, then you may be wasting your money on a membership. In that case, it certainly wouldn’t pay to maintain one at a higher cost.

All told, any Costco fee hike that comes down the pike is likely to be modest. So if it currently makes sense to hold onto a membership, that’s likely to be the case following Costco’s next increase — whenever it happens to hit.

That said, one thing you may want to do before Costco raises fees is upgrade to an Executive membership if your spending at Costco has increased. Once you spend more than $3,000 in a year at Costco, the Executive membership pays for itself, since the cash back you get will exceed the $60 upgrade fee — that’s an easy personal finance decision. So crunch the numbers to see what you’ve been spending recently, and consider an upgrade while it’s still cheaper to put one in place.

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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. The Motley Fool has a disclosure policy.

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Free walking tours can be a fun way to experience a new city. Find out how these tours can be a win for your wallet, too. [[{“value”:”

Travel is one expense that I always make room for in my budget. My travel budget has increased as I’ve grown my small business. But my travel spending looked a lot different five to six years ago. I took advantage of hotel and airfare deals to save money.

I also reduced my travel spending by taking advantage of free and low-cost activities. If you want to see more of the world while on a limited budget, you can benefit by doing the same. Here’s one nearly free activity you may want to make time for when visiting a new destination.

Free walking tours are an excellent way to explore a new place

Whether visiting a new domestic or international destination, looking for free and low-cost activities can benefit your personal finances. By spending less on activities and events, you’ll have more room left in your vacation budget for other expenses like transportation and food.

One of my favorite ways to discover a new destination is to explore by foot. I do a lot of walking and exploring independently, but I also take advantage of walking tours. In many cities worldwide, you can book free walking tours.

A local guide or expert will walk you and other tourists around the destination while giving insider travel tips and a brief history lesson. Some tour companies offer multiple free tours with different themes, so research before you arrive at your destination.

Here are a few destinations that have tours like this:

AustinBostonDenverLondonNew York CityParisSeattleSydneyTorontoWashington D.C.

Here’s how free walking tours operate

While free walking tours aren’t entirely free, they’re nearly free. The cost of the tour itself is free, but the tour guides make money through tips. So, if you plan to take advantage of this nearly-free travel activity, you’ll want to budget for the cost of gratuities.

Not having to pay an expensive entry fee for tours like this can allow you to save money on travel. Plus, it’s a great way to acclimate to a new place. If you like taking tours and want to keep more money in the bank, consider making time for this activity on your next vacation.

When visiting a new city and researching things to do, I check to see if any free walking tours are available. I usually take a walking tour within two to three days of arriving. Doing this gives me time to get back on a regular sleep schedule and helps me plan the remainder of my adventure.

Travel doesn’t have to break the bank

It’s a privilege to be able to travel — and it costs money. But don’t assume that you need to be rich to travel. Exploring new destinations without going broke or racking up debt is possible.

You can travel affordably by taking advantage of low-cost and free activities and events like walking tours. It’s also beneficial to stay alert to deals that could help you save on transit and accommodation costs. One way I save on airfare costs is through flight deal subscriptions.

Another strategy that could result in savings is to use travel credit cards to pay for your trip expenses. You can earn valuable rewards and access travel benefits from your credit card issuer. Learn more by reviewing our list of the best travel rewards 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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Homeowners associations may have the right to take a home if fines and fees go unpaid. Keep reading to learn how this works. [[{“value”:”

Recently, I purchased a new home from investors who bought it after it was foreclosed on. The mortgage lender didn’t take the house, though. Instead, the homeowners association (HOA) was the one that ended up getting a court order to foreclose on the home and have it sold.

This may come as a surprise, since many people assume mortgage lenders are almost always the ones who foreclose and take homes. But the reality is, if you live in an HOA neighborhood, there may be a possibility that your association could come after your property if things go wrong. Here’s why.

HOA foreclosures are a real possibility, depending on governing documents and state laws

When you buy a home in a neighborhood with a homeowners association, you agree to be bound by certain rules and regulations. Typically, you must pay association fees and dues on a set schedule. Your association may also have the right to impose fines if you violate certain regulations in the neighborhood, like failing to cut the grass.

The rules governing your association typically give your HOA the right to force you to pay fines and fees — and it can do this by putting a lien on your home if you don’t comply voluntarily and pay up.

A lien is a claim against the property that gives the HOA an ownership interest. While state laws sometimes limit exactly when HOAs can place a lien (for example, the fine may have to be for a certain amount before it can act), this is generally a legal right afforded to associations across the country.

Once an HOA has a lien on your home, it can enforce it just like a mortgage lender or other creditor. This means the HOA can generally go to court and ask the court to foreclose on your home and require it to be sold. They can do this even if you are current on your mortgage payments and, in some cases, HOAs actually have first priority to claim money that comes from a foreclosure sale even above mortgage lenders or other creditors.

You do have some options to try to stop the process, such as by contesting whether the HOA assessment is fair or by paying the full amount due out of your checking account. But if you don’t make good on the loan and you legitimately owe the association money, you could very well end up losing your home, just as the prior owner of my house did.

Know what you’re getting into when you buying in an HOA neighborhood

The reality is, homeowners associations are not just a community of neighbors or an organization looking out for your property value. They have a lot of power over your life, and living in an HOA community can affect your finances.

If you’re considering buying a house governed by an association, be sure you read the rules carefully, understand the costs, and really take the time to decide if you’re comfortable with what the association requires of you. Otherwise, you could come to regret moving in — especially if you fall behind on paying and the HOA ends up trying to take your house.

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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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Costco has gotten stricter about sharing memberships recently, but there’s a reason for it. Read on to learn more. [[{“value”:”

At a time when so many consumers are continuing to struggle with their personal finances, many people are taking steps to try to save a bit of money. And for you, that might mean piggybacking off of a neighbor’s Costco membership instead of buying your own.

But Costco is getting stricter about membership sharing. And soon, it may be even more difficult to benefit from the store’s offerings without ponying up yourself.

Some big changes are in the works

Costco is implementing a few changes that could be problematic for non-members. First, it’s adding card scanners to some store entrances (with the possibility of ramping up over time). This way, membership cards can be verified on the way in, and non-members can’t get away with sneaking in.

Additionally, Costco has announced plans to limit food court purchases to members only. So come April, the option to waltz into Costco for a cheap hot dog and soda may be off the table if you’re not a paying member.

It’s not a matter of corporate greed

You might assume that Costco’s membership sharing crackdown is stemming from a desire to bring in extra revenue. But that’s not really the main reason why Costco is getting stricter.

Sure, Costco would no doubt love to grow its membership base. Those annual fees comprise a huge chunk of the company’s revenue. Rather, the reason Costco is cracking down on membership sharing boils down to wanting to make things fair and pleasant for existing customers.

During the company’s most recent earnings call, CFO Richard Galanti explained the company’s stance by saying, “We also had complaints from members saying, ‘I pay. Why shouldn’t they?’ So the view was we needed to just shore that up a little bit, and we did.”

Galanti went on to say, “Are we getting some new sign-ups from it? Absolutely. But it’s — relative to the 60 million or 70 million members, it’s not terribly meaningful, but it’s more fair and the right thing to do.”

In other words, yes, Costco’s new policies may be boosting memberships to a modest degree. But more so than anything else, they’re designed to make sure the system is fair. After all, why should one shopper have to fork over the money for a membership while someone else gets to game the system?

Also, allowing non-members into the store and giving them food court access could lead to bottlenecks at checkout for paying members. That’s not fair. So that’s another reason Costco is limiting non-member access.

Should you join Costco?

A basic Costco membership has a price tag of $60 a year, while an Executive membership costs $120. With the latter, you get 2% cash back on your Costco purchases.

To see if a membership makes sense for you, tag along to Costco with a friend or neighbor and jot down the prices of the items you’re most likely to buy. Then, compare those prices to what your regular supermarket charges. If you think you’ll save enough to make up the cost of your membership, then joining makes sense.

Furthermore, if you’re someone who’s been known to sneak into Costco, then you’re probably already aware of how much savings you can enjoy by shopping there. So at that point, it’s more a matter of whether you can swing the cost of a membership.

If you can’t afford that fee, it’s understandable. But you may have to accept that soon enough, getting into Costco, whether for purchases or a meal, is not going to be easy if you don’t have a paid membership in your name.

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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. The Motley Fool has a disclosure policy.

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A tax extension can be surprisingly easy to get. But there’s a lot you should know first. Keep reading to see how to get extra time for your 2023 taxes. [[{“value”:”

The deadline to file your tax return for the 2023 tax year is April 15, 2024, which is rapidly approaching. However, there are plenty of legitimate reasons why you might not be ready to file by that date. Maybe you’re still waiting for some of your tax documentation to arrive. Or maybe you found errors on your W-2 or other documents, and it will take longer than a few weeks to get them fixed, just to name a couple of potential scenarios.

Whatever your reason may be, you aren’t alone. Millions of Americans need extra time to file their taxes every year, and there’s no reason to believe that 2024 will be any different.

Fortunately, filing a tax extension can get you an additional six months to file, and if you’ve never done it before, you might be surprised at how easy the process is. However, even though the process is easy, there are a few important things you need to know.

What an extension does (and doesn’t do)

As mentioned, a tax extension gives you an additional six months to file your tax return. And if six months from April 15 falls on a weekend or holiday, the extended tax deadline will be the next weekday. In 2024, that isn’t the case, so if you file a tax extension with the IRS, you will have until Oct. 15 to file your tax return.

However, it’s equally important to point out what a tax extension doesn’t do. A tax extension gives you more time to file your taxes, but it doesn’t give you more time to pay any money that you owe the IRS.

Of course, if you’re expecting a tax refund, this isn’t an issue. But if you expect to owe the IRS money when you file, you’re required to use your best estimate of how much you’ll owe and pay this amount along with your extension (or at least before the April 15 regular tax deadline). If you don’t pay the balance you owe before the regular deadline, you may owe interest and penalties when you eventually file your tax return — even with an extension in place.

Now, even if you can’t pay what you think you’ll owe, still file an extension. And if you can’t pay even when the extended tax deadline rolls around, still file your tax returns. The penalty for failing to file is 10 times more than the penalty for failing to pay what you owe, and there are payment plans available, so under no circumstances should you not file your tax return or an extension by the deadline if you owe the IRS money.

How to request a tax extension in 2024

You can request a tax extension by filing IRS Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. This is an extremely short form (it takes up about one-third of a single sheet of paper), and you can mail a paper copy to the IRS.

Alternatively, you can file the form electronically with your preferred tax preparation software, and doing so is generally a quick and easy process.

Finally, you can also request a six-month extension by simply paying your estimated income tax due and indicating that the payment is for an extension (such as by writing it in the memo line of a check).

What about your state taxes?

It’s also worth noting that you might have to file a separate extension for your state income taxes, depending on where you live. Many states accept the federal extension as an extension for state tax purposes as well, although some states require you to use a separate form, especially if you owe money. Check with your state’s department of revenue (or whatever the taxation authority is called) for the rules that apply to you.

Is a tax extension a smart move for you?

A tax extension can be a valuable financial tool if you need more time to file your tax return in 2024, as long as you’re aware that it isn’t an extension of the time you have to pay what you owe. If you choose to file an extension, the form must be submitted by the regular April 15 tax deadline, so be sure you get it to the IRS promptly.

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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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Inflation is proving to be more stubborn than expected. This could affect the trajectory of CD rates this year. Here’s what you need to know. [[{“value”:”

While inflation has cooled off significantly since its mid-2022 peak, it has proven to be a little more stubborn than the Federal Reserve would like to see. According to the most recent consumer price index (CPI) data, the inflation rate was 3.1% in January, still significantly higher than the Fed’s 2% target.

This, combined with recent commentary from Fed officials, indicates that interest rates might stay elevated for longer than many experts had predicted. And this could have implications for the interest rates banks are willing to pay on CDs.

Expectations have changed a lot

The short version is that at the start of 2024, many experts expected the Federal Reserve to cut interest rates aggressively and quickly, with many expecting the first rate cut to happen at the March Fed meeting (ends on March 20) and the median expectation of six quarter-percentage-point rate cuts for the year, or a 1.50% reduction in the federal funds rate.

To put it mildly, things have changed since the start of 2024. Not only is inflation taking longer than expected to cool off, but the economic data has been surprisingly strong this year, for the most part. Plus, Fed officials (including Fed Chair Jerome Powell) have said several times that they’re in no rush to cut rates until there’s more clarity that inflation is under control. Of course, it’s worth noting that the Fed itself was calling for just three quarter-percent rate cuts (a 0.75% reduction) as recently as December.

Now, futures markets are pricing in almost no chance of a rate cut at the March meeting, or the one after that (May). According to the CME FedWatch tool, the first rate reduction is now expected to arrive in June, plus the median expectation is for just four rate cuts this year for 1 percentage point in total.

What does this mean for CD rates?

To be perfectly clear, CD rates are not directly tied to the Federal Reserve’s policy decisions. In other words, there’s no rule that says if the Fed lowers the benchmark federal funds rate by 0.25% that CD rates have to fall by the same amount.

Having said that, CD rates generally tend to move in the same direction as the Fed’s interest rate movements. That’s why after a steep period of rate hikes in 2022 and 2023, CD rates steadily trended upward and are now at their highest level in years.

I’ve written before that when the Fed decides to cut rates, it would likely lead to falling CD rates as well. It won’t be a perfect correlation, but it would be quite shocking if the Fed were to make four rate cuts this year, as it’s expected to, and CD rates proceeded to go up, or even stayed put.

The bottom line

If the consensus expectation is correct and the Fed doesn’t start lowering rates until June, it most likely means that CD rates will stay roughly where they are until at least that time. So, if you’re putting money into CDs, or hoping to do so soon (say, when your tax refund arrives), you might have more time.

However, it’s important to emphasize that nobody knows for sure. I’ve discussed the expectations, but there is still a non-zero chance that we could see a rate cut at the March or May Federal Reserve meetings. On the other hand, if inflation data is unexpectedly bad, it’s possible the Fed could wait much longer to cut rates (or even increase them). After all, at the start of 2022, no notable experts were expecting interest rates to rise nearly as fast as they did.

The bottom line is that CD rates might stay at their multi-year highs for a few months longer. But that doesn’t mean you should keep your money on the sidelines. Virtually nobody is expecting interest rates to go higher in the near term, so now still looks like an excellent time to shop for a CD.

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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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