Money Management

To open a secured credit card, you need to pay a security deposit. Learn how this can affect your credit score and how much you should deposit. [[{“value”:”

If you’re building or rebuilding credit, secured credit cards can be a helpful tool. You usually don’t need to meet any sort of minimum credit score requirement to get one of these cards. Instead, you pay a refundable security deposit to open it. The security deposit protects the card issuer in case you don’t pay the bill.

Card issuers let you choose a deposit amount within a specific range, such as $200 to $2,500. It’s typically equal to your card’s credit limit. The amount you deposit is an important decision, as it could impact your credit score and how much you get to use your card.

The benefits of a large security deposit

With most secured cards, your credit limit depends on how much you deposit. If you deposit $200, you get a $200 credit limit. If you deposit $2,000, your credit limit is $2,000.

A higher credit limit is helpful, for a few reasons. For one, it’s easier to manage. When you have a $200 credit limit, you could max out your card in one trip to the grocery store. You’ll need to carefully monitor how much you’re spending. If you try to pay for a purchase that will put you over your credit limit, your card will be declined.

The other advantage of a high credit limit is that it can help your credit score. One of the main factors in your credit score is your credit utilization. Credit utilization is how much of your credit limit you’re using. For example, if you have a $100 balance and a $200 limit, your credit utilization is 50%. That will hurt your credit score.

But let’s say you have a $100 balance and a $1,000 limit. Your credit utilization would only be 10%. That’s much better, and would have a positive impact on your credit score. The only difference in this situation is your credit limit. A higher limit means lower utilization.

You don’t need to overdo it

There are advantages to depositing more and getting a higher credit limit. But that doesn’t mean you need to drain your savings to pay the security deposit on a credit card.

You can still build credit if your card has a low credit limit. Even if you’re only able to deposit the minimum, that’s fine. In this case, just use your credit card for a few small purchases per month.

For example, if you have a $200 credit limit, you could use your credit card solely to pay Netflix and your phone bill. Let’s say those cost you $50 a month total. You won’t be at risk of maxing out your credit card this way. And you’ll have good credit utilization, too. The rule of thumb on credit utilization is to keep it below 30% to avoid damaging your credit. A $50 balance and a $200 limit would put you at 25%.

Keep in mind that you won’t need to do this forever. The goal of a secured credit card is to improve your credit score. Once you do that, you may be able to get your security deposit refunded and get a higher credit limit. At this point, you’ll also be able to apply for top credit cards, and these generally offer higher limits.

Deciding how much to deposit for a secured credit card

If you don’t have much money saved, deposit the minimum amount when opening a secured credit card. It’s important to have money saved for emergencies. Using too much of your savings for a credit card could be risky. If you don’t have the money to pay for an emergency expense, you’ll need to put it on your credit card. Secured cards have high rates, with many of them charging over 28%.

If you have plenty of money saved, including a three-to-six-month emergency fund, then you have more flexibility. It still doesn’t make sense to deposit too much. That’s money you could put into a high-yield savings account or a CD, where you can currently earn rates of over 5%.

A security deposit of $500 to $1,000 is a good amount to choose, if you have the money. You’ll have enough credit to pay some bills every month, without having high credit utilization. You can deposit more if you really want a high credit limit, but there are better places to put your money.

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The IRS takes a piece of more than just your employment income. Take a look at seven other things you could owe taxes on this year. [[{“value”:”

The IRS is officially accepting 2023 tax returns, and in the next couple of months, we’ll all have to explain to the government what we did with our money last year. You probably expect to pay taxes on the income from your job or retirement account withdrawals if you’ve already left the workforce. But these aren’t the only income sources the IRS wants a chunk of. If you have any of the following seven expenses, you’ll also have to report them to the government this year.

1. Side hustle income

Side hustles usually don’t withhold income taxes from your earnings like your regular employer does. But it’s still earned income, and you need to tell the IRS about it. The good news is you can write off any business-related expenses to offset some of your profits. And if you paid estimated taxes throughout the year, this will also reduce how much you owe when you file your taxes. You may even get a refund if you paid more throughout the year than you owed.

2. Savings account interest

The best high-yield savings accounts have had interest rates hovering at or above 4.50% this year. That could put $450 or more in your pocket in a year with a $10,000 initial balance. Often, we don’t notice these earnings because our bank deposits the funds automatically each month. But it’s still taxable income, and you have to report it to the IRS.

If you don’t know how much you’ve earned on your savings account funds in 2023, try looking back at your bank statements or contacting your financial institution for help.

3. Gambling winnings

Those who made a profit while gambling in 2023 will owe taxes on their winnings. If you lost money gambling, you can use these losses to offset your gains. However, the losses you claim cannot exceed your winnings.

4. Unemployment benefits

If you received unemployment benefits at any point in 2023, you will receive a special tax form known as a 1099-G showing the total amount of compensation you got throughout the year. Keep this form, as you’ll need it when you enter your income information on your 2023 return.

5. Forgiven credit card debt

It’s sometimes possible to get rid of credit card debt by negotiating a settlement with your creditor. This is often only an option when you’ve already defaulted on the debt and the creditor doesn’t think it’s likely to recoup what you owe. You can contact the company and negotiate a payment agreement in which you pay less than what you owe, and in exchange for that payment, the credit card company agrees to forgive your remaining debt.

It can work, but it’s not great for your credit. And the debt the credit card company forgives is technically income to the IRS. So you’ll have to pay taxes on it as if it were money you received, even though you didn’t actually get a dime.

6. Alimony payments

Alimony payments are taxable if the divorce was finalized before 2019. For divorces finalized in or after 2019, this income is not taxable. It’s also not taxable if the divorce was finalized before 2019 but the divorce or separation agreement was modified in 2019 or later.

7. Social Security benefits

Some seniors could owe federal and possibly state taxes on their Social Security benefits. It depends on their income and the size of their checks. Some could owe taxes on up to 85% of their benefits, but that doesn’t mean they’d lose that much of their checks. You just pay ordinary income tax on the taxable portion of your benefits.

If you have any questions about whether something is taxable or how you can reduce your tax liability, reach out to a tax professional who can give you advice on your situation. Sooner is better than later, as accountants tend to get very busy as tax season progresses.

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Hotels and home rentals are both good options when going on vacation. Find out which is more popular with travelers and how to decide between the two. [[{“value”:”

When you travel, you need a place to stay. The two most common options are hotels and home rentals, and Airbnb is the top home rental platform by far. If you’re interested in knowing what type of accommodations are most popular, we have the answer, courtesy of The State of Travel 2024 by Going. We’ll also go over how you can choose the best option for your next trip.

Travelers prefer hotels, but home rentals are also popular

Going reports that 83% of travelers prefer hotels, compared to 64% who prefer apartment and home rentals. (Respondents were allowed to select more than one option, which is why the percentages add up to more than 100%.) Here’s the full list of options and how many travelers chose each one.

Hotel: 83%Apartment and home rental: 64%Resort: 24%Campervan/camping: 11%Hostel: 9%Couchsurfing: 5%

Hotels vs. home rentals: Pros and cons

Hotels and home rentals each have their benefits. To be clear, every hotel is different, and every home rental is even more different. But in general, here’s where each option shines.

Hotels: Consistent quality, more amenities, and better locations

The biggest advantage hotels have is quality. Hotels have quality control, and major hotel brands are expected to provide a certain level of service. If you have a problem during a stay, there’s staff at the front desk 24/7 to help resolve it.

With home rentals, quality is hit or miss. You need to carefully look at pictures and read reviews before you book. If you have a problem, you may need to call the booking platform or the host, and it often takes more time to get issues resolved.

Hotels also tend to have lots of amenities that home rentals usually don’t, especially if you stay in four- and five-star hotels. These can include:

RestaurantsSpas and swimming poolsConcierges to help with planning and booking activities

It’s also worth mentioning that hotels are often better located, especially in popular destinations. For example, in cities known for their beaches, hotels usually have the prime locations right on the beach. If you book a home rental, you may be several blocks away.

The main drawback with hotels is that they tend to be more expensive than home rentals. This is especially true if you have a family or large group and need multiple rooms. But hotels also have loyalty programs and hotel credit cards. You can use these to earn points that you redeem for free stays.

Home rentals: More affordable and spacious

Prices on home rentals have gone up quite a bit over the years. However, if you’re looking for budget-friendly options, you’ll probably still have more luck on home rental platforms. For example, you can find lots of smaller homes and room rentals on Airbnb, which tend to be cheaper than hotels.

This is especially true if you need a larger space for multiple people. If you have a family of four or a group of five friends, a hotel room probably won’t cut it. You’d either need to book multiple rooms or a suite, both of which are expensive. In that situation, you’d most likely save by booking a home rental.

Another reason home rentals can be easier on your personal finances is that you have access to a kitchen. If you want to prepare some meals yourself so you’re not going out to expensive restaurants all the time, you can do that. You can’t do that in most hotel rooms.

Some travelers also prefer home rentals for the atmosphere. It feels like being at home, which a hotel definitely doesn’t. This can be nice on longer trips. If you’re staying a week or longer, that could be a lot of time to spend in a hotel.

Choosing between a hotel and a vacation rental

The right place to stay will depend on your travel preferences, budget, and the type of trip you’re taking. Here’s when it makes sense to go with a hotel:

You’re looking for a high-quality place to stay, or you’re going on a luxury vacation.You want to have on-site amenities, such as a restaurant and concierge.You have a travel credit card with your favorite hotel chain or you’re a member of a hotel loyalty program.You don’t mind spending more to ensure you have a great time on your vacation.

Here’s when you’re normally better off with a home rental:

You have a large group and need plenty of space.You’re traveling on a tight budget.You’re staying at a destination for a week or longer and don’t want to feel cooped up in a hotel room.You don’t mind taking the time to compare home rentals and read plenty of reviews.

Both options can make for a fun vacation. It’s just a matter of choosing the one that best fits you and your upcoming trip.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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It can be hard to travel as much as you want. Find out what people see as their biggest barriers to travel and how you can solve these issues. [[{“value”:”

Most people don’t get to travel as much as they want. Only 17% of travelers said they went on as many trips as they wanted last year, according to The State of Travel 2024 by Going.

Going also asked travelers about the reasons they weren’t able to travel as much as they wanted. They overwhelmingly mentioned three specific barriers to travel.

1. Not enough time off from work or school

The most common barrier to travel is a lack of time off. Nearly one-third (30%) of travelers said this was their issue in 2023. A similar amount (29%) expect it to keep them from traveling in 2024.

When you work or go to school full-time, you might feel like you can’t take time off. But everyone needs time away from the responsibilities of daily life. Travel is a great way to do that and enjoy yourself in the process.

How to make time for travel: You can probably create more travel time than you think in 2024. Here are some ideas to make it happen.

Plan a trip and request time off now. If you don’t make firm travel plans for this year, you’re more likely to postpone them until 2025, 2026, and beyond. When you commit to a trip by getting time off from work and making reservations, you’re far more likely to go through with it.See if you can work remotely. Even if your employer doesn’t let you work remotely full-time, you could ask to do it for a week or two. Then, you can continue working while you travel.Take shorter trips. Not every travel experience needs to involve an eight-hour flight. Check out places closer to home that you can visit over the weekend.

2. Lack of money

A lack of money is also a common issue, with 28% saying it was their barrier to travel in 2023. And 25% expect it to be an issue in 2024.

Travel can certainly be expensive. Flights and hotels can cost thousands of dollars, and you’ll also be spending on food and activities wherever you go. On the bright side, there are plenty of ways to travel without running up balances on your credit cards.

How to have the money to travel: If you feel like you don’t have enough money to travel like you want, here’s what you can do.

Set up a travel fund and add to it every month. If you love to travel, why not make it one of your savings goals? Open a savings account to serve as your travel fund. Many banks let you set up sub-savings accounts, so you could also see if your current account gives you this option. Make sure to use a high-yield savings account to earn as much interest as possible.Start using travel credit cards to pay your bills. These cards have lots of travel perks, including points that you can redeem for travel expenses. Many of them also have big sign-up bonuses that you earn by meeting a spend requirement, such as $3,000 in the first three months. Some sign-up bonuses can save you $500 or more on travel.Master budget-friendly ways to travel. Travel doesn’t need to cost a ton of money. You can do it for less if you shop around for deals on flights and accommodations, visit affordable destinations, and look for free or low-cost activities when you travel.

3. Family and other commitments

It wasn’t mentioned as often, but 16% of travelers said family and other commitments were their barrier to travel in 2023. Even more (20%) expect it to be a barrier to travel in 2024.

Spending time with family and friends is always nice, but it can make traveling more difficult. Even when you have the time off to travel, you may feel pressured to spend it with loved ones, especially if it’s around the holidays or a special occasion.

How to fit in travel plans with family and other commitments: This is undoubtedly the hardest issue to solve. I’ve wrestled with it myself. It’s difficult to spend as much time as you want with family and friends while also seeing the world. Fortunately, there are ways to make it work.

Invite your loved ones on a group trip. A group trip can be the perfect way to get the best of both worlds. You can travel and spend time with the people you love. If you want to do this, get started early. It takes much more time and planning to set up a group trip, but it can be well worth it.Figure out a balance between travel and your other commitments. For example, you could choose to do one trip for yourself and one family get-together a year, with smaller trips in between.Stay connected no matter where you are. Even if you travel more and don’t see your loved ones as much, you can still keep in touch. Regular texts, phone calls, and video chats are all easy ways to stay connected. It’s not the same as being in the same room as someone, but it helps.

If you want to travel more in 2024, don’t let any of those issues stop you. Whether it’s lack of time off, lack of money, or family commitments, some solutions will allow you to travel as much as you want.

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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.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Travel could be more affordable than you think. Check out how one frequent traveler saves thousands on vacations every year. [[{“value”:”

I’m a frequent traveler, and I like to enjoy each trip as much as possible. For that reason, I normally make sure to book business-class airfare and a nice hotel or home rental.

You might think that I’m paying a ton of money to travel this way. Indeed, I occasionally spend big on travel. It’s one of the things I value most, and I save money specifically for travel, so I don’t mind spending on it when necessary. But I also save thousands of dollars every year because of a few key travel habits. If you’re trying to travel for less, they could help you do the same.

1. I pay for everything with travel credit cards

Travel credit cards are my favorite travel hack. Every time I spend money, I use a travel card. The only exception is transactions that can’t be paid with credit cards, or when there’s an extra fee involved.

Otherwise, it’s going on a travel card so I can earn points. When I have enough points, I redeem them for travel purchases — usually business-class airfare, since that’s often the best deal, but sometimes I use them for hotel stays. I also open new travel cards every year. This isn’t necessary, but many travel cards have large sign-up bonuses, so I do it to earn more points.

It’s possible to score amazing deals with travel points you earn using credit cards. Here are a few examples of how I’ve saved using credit card points over the last few years:

In 2022, I saved $7,455 on hotels in New York.In 2023, I saved $11,378 on business-class flights to and from Europe.In 2024, I’ve already saved $5,687 on a business-class flight to Europe again.

2. I’m flexible about when I travel

Flight and hotel prices vary quite a bit by date. Sometimes you can cut your costs in half just by traveling on a different day or week.

For example, round-trip economy flights from New York to Paris are currently $466 if you depart on March 10 and return on March 17. If you depart on March 9 and return on March 18, that drops to $328. The same is often true when you’re paying with travel rewards. I recently booked a flight for 77,000 miles that cost 193,500 miles on another date.

I try to go into travel planning with as much flexibility as possible. This isn’t always achievable, especially when there’s a special occasion or you need to schedule travel around your work. But when you can, I recommend looking at travel prices on different dates before figuring out what time you’ll take off from work. That way, you can base your travel plans around which dates have the lowest prices.

3. I spend plenty of time at each destination

I was in a bar once in Barcelona and got sucked into a conversation with some other American tourists. One of them decided to proudly explain the “best way to do Europe” to me. Spend one or two days in each hotspot, and then go party at the next place on the list. I’m paraphrasing, but there weren’t exactly any finer points to this strategy. And I thought it sounded absolutely awful.

I prefer to spend more time at each place I visit. I like getting a chance to know a city and not feel like I’m rushing through it. Another perk of this approach is that it’s a less expensive and less stressful way to travel.

When you bounce from place to place, you spend much more on transportation. Each new destination probably means another $50 to $100 flight or train ride. There’s also the hassle of packing up, spending half a day traveling, and then settling in at your next hotel or home rental. If you have a packed itinerary, consider cutting one or two cities. It’s more important to enjoy yourself than to check places off a list.

I like to recommend advice that has worked for me. These travel habits all fit the bill. They’ve helped me save quite a bit of money over the years, and they continue to work for me today.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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The best strategy for CDs in 2024 helps you maximize returns while minimizing risks. Read on to learn what it entails — and how to set one up today. [[{“value”:”

If you have cash in savings that isn’t reserved for emergencies or short-term goals, then that money could find a cozy home in one of today’s top-paying certificates of deposit (CDs). CD rates are rarely as high as they are today, with the best 12-month CDs paying out above 5% APY. These rates might drop lower in 2024, making now a good time to lock in before it’s too late.

But, like other investments, putting a little forethought into your CD strategy could help you maximize your returns and squeeze out more high interest for a longer period. And when it comes to getting the most out of your CD, one tried-and-true strategy pretty much takes the cake: CD laddering.

How to ladder your CDs

With a CD ladder, you divide your money among several CDs with staggered terms. For instance, if you had $30,000 to invest in CDs, you could divide your money like this:

$5,000 in a 6-month CD$5,000 in a 12-month CD$5,000 in an 18-month CD$5,000 in a 2-year CD$5,000 in a 3-year CD$5,0000 in a 4-year CD

The goal here is to set up a chain of CDs that mature at regular intervals, helping you avoid the early withdrawal penalties that usually give CDs a bad rap. Instead of locking $30,000 in a 4-year or 5-year CD, you create these “rungs” with differing maturity dates. This gives you the option of accessing some of your cash early, should you need to.

It also prevents you from having to liquidate a single CD account if you ran into an emergency and needed to break into a CD early. CDs aren’t like savings accounts — you can’t make partial withdrawals. If you’re going to withdraw early, you have to terminate the CD and withdraw it all, even if you only needed a small portion of your savings. A CD ladder could free your money up for partial withdrawals, plus give you a choice of which early withdrawal penalty you choose to incur (short-term CDs typically have less harsh penalties).

Of course, the luxury of a CD ladder is that it can extend today’s best CD rates while also minimizing their risks. You might even want to mix in some no-penalty or brokered CDs, both of which can give you a fallback plan if you need to free up some cash and want to avoid paying penalties.

Finally, you don’t have to get your CDs at just one bank. You can shop around and open several CDs from multiple providers. This could help you lock into the best rates for specific terms while also increasing your FDIC insurance coverage.

Consider a brokerage account to save for retirement

Although CD ladders help you lock into today’s great rates, they might not be the best place to put all your money. This is especially true if you’re saving for a far-off goal, like retirement. In that case, you might be better off opening a brokerage account and investing in assets with potentially greater returns, like stocks. CDs may have guaranteed returns, but for a little more risk, you could potentially walk away with more money.

Of course, you could also combine stocks and CD ladders to get the best of both worlds. You’d get guaranteed returns on your CDs, plus a chance to grow your money at a faster pace. Just be sure to leave some cash in a high-yield savings account, too, as you don’t want to be stuck choosing between selling your investments or breaking CD contracts if you end up needing cash in a pinch.

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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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