Money Management

Are you sick of paying expensive credit card late fees? A CFPB final rule will limit most credit card late fees to $8. Here’s how consumers will benefit. [[{“value”:”

On March 5, the Consumer Financial Protection Bureau (CFPB) announced a final rule to curb excessive credit card late fees. This ruling will limit how much credit card issuers can charge for these fees. According to the agency, credit card companies charged Americans more than $14 billion in late fees in 2022. But that will soon change. Here’s what you need to know.

Credit card companies have taken advantage of this loophole

Credit card issuers make a lot of money from their fees, and late fees are a money maker. When a consumer forgets to pay their credit card bill or makes a late payment, they’re charged a fee. Credit card late fees have continued to climb in recent years.

However, the CFPB announced a final ruling to close a loophole credit card companies have used to charge consumers expensive fees.

Here’s how credit card issuers have gotten away with charging excessive fees: The CARD Act banned excessive fees and made it so banks could only charge fees that recovered the costs of collecting late payments.

But a loophole allowed credit card companies to charge up to $25 for the first late payment and $35 for subsequent late payments. Additionally, fees were allowed to be adjusted for inflation, driving the average fee even higher.

Banks have most recently been allowed to charge up to $30 for the first instance of a late payment and $41 for subsequent late payments. Now, the average credit card late fee is $32.

Most credit card late fees will soon be capped at $8

The final rule announced by the CFPB on March 5 will close the above loophole and end excessive credit card late fees. Credit card late fees will be capped at $8 in most instances. The rule also ends automatic inflation adjustments.

Larger credit card issuers will still be allowed to charge fees above this threshold. These companies must show their math and prove that the higher fee is necessary to cover their actual collection costs. Otherwise, they must abide by the $8 fee limit.

This is excellent news for credit card users feeling the impact of rising prices. It’s worth noting that credit card users won’t see immediate changes. The rule will go into effect 60 days after publication in the Federal Register.

Here’s how much Americans will save

According to estimates from the CFPB, once this final rule goes into effect, American families will save more than $10 billion in late fees annually. This will result in an average savings of $220 per year for the more than 45 million consumers charged credit card late fees. More reasonable fees can help Americans keep more money in their bank accounts.

Do this to avoid late fees

Paying your bills late can have consequences. The first is late fees, such as those charged by credit card companies. Any extra money you pay in fees impacts your personal finances.

Another risk you face is a negative mark on your credit report. Your credit report includes an overview of your payment history, including missed and late payments. If you care about your credit report and credit score, avoiding late payments is in your best interest.

Billers can report a late payment to the three major credit bureaus if it’s at least 30 days past the due. But it’s wise to pay your bills by the due date every time. If you’re forgetful, you may want to set your bills on autopay so you no longer have to schedule payments manually.

Many billers, including credit card companies, allow customers to use autopay tools. You can enable automatic payments through your online credit card account. This way, you stay caught up on payments and avoid being charged credit late fees.

Check out our best credit cards list if you’re thinking about applying for a new credit card.

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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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Cheap car insurance could leave drivers owing thousands. Read on for a breakdown of the surprise costs that could result from a subpar insurance policy. [[{“value”:”

Cheap auto insurance sounds like a great thing. And sometimes it can be. A driver who shops around for insurance coverage could reduce premium costs by anywhere from 5% to 25%, depending on the situation. Savvy motorists who take advantage of discounts, such as safe driver discounts, can also save.

But there’s a big caveat. A low-priced insurer offering affordable full coverage policies is a blessing. An insurer offering a cheap substandard policy is a curse. And there are a couple specific situations where a cheap policy could turn out to be very expensive for a driver’s bank account. Here’s why.

1. Cheap coverage can sometimes mean insufficient coverage

Getting cheap coverage could be a very expensive mistake if the reason premiums are low is because the policy offers too little protection.

In most states, drivers are only required to buy a relatively small amount of liability coverage. And liability policies only pay for losses the policyholder causes to others — and only up to the maximum limit on the policy.

A motorist who buys only the required $15,000 per person and $30,000 per accident in liability insurance, for example, could end up losing a fortune if they cause any kind of serious harm to others. Their insurer would pay only a maximum of $15,000 for each victim and $30,000 total for the whole accident, and those with uncompensated losses could sue the driver personally.

A driver who doesn’t buy add-on coverage such as collision insurance (to pay for their own car after a crash) or comprehensive coverage (to pay for losses not caused by a crash) could have to cover the entire cost of repairing their car. They might even have to buy a new vehicle if something happens on the road.

READ MORE: Types of Car Insurance Coverage

There is virtually no situation where drivers should not buy a full coverage policy and buy more than the minimum coverage needed to protect their assets. Otherwise, even a relatively minor incident that does real damage to a car or causes injuries could be financially ruinous.

2. Cheap coverage can sometimes mean an insurer cuts corners

There’s another issue as well. Some auto insurers offering affordable coverage are great. Others advertise cheap rates because they provide poor coverage. They may make it really difficult for drivers to make a claim, or could lowball motorists when it comes to valuing their car if it’s declared a total loss.

After an accident, most people just want to get paid what’s fair and get back on the road ASAP. They don’t really want to fight an insurance company or have to sue to get a claim paid. So, it’s important to look at an insurer’s reputation, not just its premium price. The National Association of Insurance Commissioners maintains a database of complaints drivers can view, and J.D. Power ranks insurers, so it’s worth taking a glance at that list.

Fortunately, drivers using these tools don’t have to settle for a cheap insurer who is going to give them a hard time — and drivers who understand the risks can make sure they’re getting the coverage they need. These smart motorists can shop around to find coverage that’s the best deal when looking at the big picture, rather than focusing on the cheapest car insurance alone and ending up with regrets.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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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Investors are once again bullish on the stock market in the early months of 2024. Learn about these five investment trends to put on your radar. [[{“value”:”

Whether you’re a new or seasoned investor, you’re probably wondering what to expect from the stock market and other asset classes in 2024. Unless you have ESP, it’s impossible to tell what the year will bring. But there are several trends that are already taking shape in the first two months of the new year. Here are five surprising investing trends to have on your radar in 2024.

1. We’re bullish on stocks again

Investors are more bullish about the stock market than they’ve been since January 2022, according to a recent Bank of America survey. Case in point: The S&P 500 index — which is a collection of 500 of the largest, most profitable companies in the U.S. — crossed the $5,000 mark on Feb. 8 for the first time in history. That’s a big deal because the S&P 500 represents about 80% of the American stock market’s value.

While there’s lots of attention devoted to short-term swings in the S&P 500, there’s never been a bad time to invest in its underlying stocks through an S&P 500 index fund if you’re in it for the long haul. Though there are good and bad years, the index has a remarkable track record, producing average annual returns of about 10%.

2. Short-term CD rates are still highest

Usually, you get the best rates on long-term certificates of deposit (CDs) because banks want to incentivize you to lock up your money for several years. But the best CD rates you can find right now are generally for 12-month CDs rather than those with longer terms, like 36 months or 60 months.

The reason: CD rates are closely tied to the federal funds rate, and financial institutions believe that the Fed is likely to slash interest rates at some point this year. So they’d rather not commit to a higher interest rate on a long-term CD because they believe interest rates could drop before the end of the term.

3. AI is still unstoppable

Artificial intelligence (AI) has been on a frenzy ever since ChatGPT launched in 2022. Investors have poured massive amounts of money into AI stocks, while a McKinsey & Co. report finds that 40% of organizations plan to increase their investments in AI.

Much of the S&P 500’s tear in 2023 and 2024 has been driven by AI stocks. A recent analysis by Bespoke Investment Group found that 67 stocks in the S&P 500 that are related to AI have soared by 45.3%, while the other 433 stocks rose just 9.2% in the same period.

In 2024 alone, those 67 AI-related stock prices are up 3.7% on average, compared to 1.1% for the remaining 433 S&P 500 stocks.

4. Bitcoin is back

After a brutal crypto winter that tanked its price to less than $16,000 in late 2022, Bitcoin has made quite the comeback. It’s back above $50,000 again, with its price up about 16% thus far in 2024.

Two big factors are driving up the price of Bitcoin: One is the approval of several spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission, which makes it possible to invest in crypto with a brokerage account or retirement account instead of using a crypto exchange.

The second is the Bitcoin halving, which is expected to occur in April. Bitcoin halvings occur about every four years and will continue until the entire supply is depleted. After a halving event, miners get 50% fewer bitcoins when they verify transactions. That, in turn, limits the supply and often pushes the price upward in the following months. Many investors are likely putting money into Bitcoin out of anticipation that it will happen again this time around.

5. More interest in socially responsible investing

There’s growing evidence that sustainability initiatives are associated with better financial performance and that ESG investing — that is, investing with environmental, social, and governance factors in mind — tends to provide downside protection in bad times.

In 2024, more investors are interested in sustainable investing. According to Morgan Stanley research, 54% of individual investors plan to allocate more into sustainable portfolios, while more than 70% believe focusing on ESG objectives can deliver superior financial returns.

Climate change and healthcare were the top two themes investors surveyed are prioritizing in 2024.

Should you invest in 2024?

Before you invest, you typically want to pay off high-interest debt and have a solid emergency fund in place. After that, though, it’s essential to start investing as soon as you can.

A good way to get started is with an S&P 500 index fund or another fund that invests your money across most of the U.S. stock market since you get automatic diversification. Be more cautious before you invest in individual stocks or cryptos, though. Putting too many eggs in one basket is risky, especially with cryptocurrency, which is notoriously vulnerable.

Investing is the best way for regular people to build wealth and improve their personal finances. The sooner you get started, the more time your money has to grow.

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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.Bank of America is an advertising partner of The Ascent, a Motley Fool company. Robin Hartill, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and Bitcoin. The Motley Fool has a disclosure policy.

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You don’t have to be a member of Costco to buy discounted gift cards online. Learn more about how to save money here. [[{“value”:”

If you aren’t a Costco member, chances are good that you assume the deals the warehouse club offers won’t be available to you. But that’s not necessarily true in every situation. In fact, I’m not a Costco member, but I was recently able to take advantage of a few great bargains that will benefit my personal finances over the long run.

Here’s how I managed to land some awesome Costco deals without paying the membership fee to join the club.

Anyone can take advantage of these Costco bargains

You have to be a member (or have a Costco Shop Card) to browse the warehouse, but anyone can shop Costco’s website. Costco.com sells discounted gift cards that you can use at other merchants. (You can also find discounted gift cards in stores, if you happen to be a member.)

Fortunately, there are plenty of online bargains to be had. In my case, I purchased gift cards to Landry’s restaurants, since the multi-brand card can be used at several places we eat at frequently (including T-Rex and Joe’s Crab Shack). And the gift cards I bought were just one of many deals available that could help you cut your credit card bills.

Costco also offers discounted gift cards for:

Children’s entertainment venues, like Chuck E. CheeseDozens of restaurants, including IHOP, Papa John’s, and Morton’s SteakhouseFlights through Southwest AirlinesSeason passes to theme parks, like Universal Studios Hollywood

There’s a whole host of other categories as well. The great thing is, you absolutely do not need to be a member to buy any of these bargain-price cards online. You do pay 5% more if you aren’t a club member — but if you’re buying a gift card at a substantial discount already, you’re still saving a lot even with the 5% added onto your bill.

In my case, for example, the Landry’s restaurant gift cards I bought were priced at $79.99 for $100 worth of gift cards. So I paid an extra 5%, and my total costs came to $83.99. I’ll still get $16.01 in free food. That isn’t bad for just taking a few seconds and signing into a website to make a gift card purchase that was delivered directly to my email.

Be sure to check out the Costco gift card deals regularly

Costo’s gift card deals are awesome if you happen to be a regular customer of any of the stores, restaurants, airlines, or other places that have cards available — or if you want to try out any of these places. There is absolutely no reason not to buy a gift card at a lower price and save money on your other purchases — as long as you are 100% confident that you are going to use it and not forget about it.

After scoring my good deal, I know I’ll be checking in at Costco.com at least once a week to see what other gift cards are on offer. You may want to do the same — especially since you don’t have to be a member to be able to save at places you’d be spending money anyway.

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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.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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