Money Management

BNPL can be an excellent way to cover significant expenses. Here are three times tapping a buy now, pay later plan could be a good idea. 

If you’ve bought anything online lately, you’ve probably seen a buy now, pay later (BNPL) option in the checkout cart. BNPL are convenient because they usually don’t require a hard credit check, and you can pay for expensive purchases over time without accruing interest, as long as you make scheduled payments on time.

But there are downsides to using BNPL, including incurring late payment fees and paying significant interest if you miss payments or don’t pay them in full.

Still, if you use it responsibly, BNPL can be a good option in certain situations. Here are a few places to consider using these payoff plans.

1. Appliance stores

It’s never fun paying to replace a broken appliance, and they always seem to break at the wrong time. Making matters worse is that appliances are costly — even a supposedly inexpensive refrigerator will set you back hundreds of dollars.

That’s why using BNPL plans to cover the cost of expensive appliances could be a good option. For example, GE works with the buy now, pay later company Affirm to help customers finance appliances through its website. The interest rates can be as low as 0% for 18 months for those who qualify. The company says a $1,000 refrigerator would cost $83.34 per month for 12 months, with 0% interest.

2. Furniture stores

I’m currently shopping around for a new couch, hoping to find one that will last many years. The problem with the sofas I like, and most furniture in general, is that it’s not cheap. BNPL could be a good option for expensive furniture that you plan to hold onto for many years, and many companies offer this payment option.

For example, Rooms To Go works with BNPL companies Klarna and Affirm and lets customers spread out their payments over time. Both BNPL companies offer plans with four interest-free payments you make every two weeks, with an additional option to finance the purchase with monthly payments.

3. Vacation booking websites

It’s better for your personal finances if you have money in your savings account to pay for your vacation in full. But the average price of a week-long vacation for one person is $1,584, and that doesn’t even include airfare, which means that paying it all at once can be difficult.

That’s why many people choose to book their dream vacation using BNPL. Fortunately, many airlines and hotels offer buy now, pay later options. For example, Alternative Airlines partners with a handful of BNPL companies to finance flights through 650 airlines.

And Expedia gives customers the option to “book now, pay later” through Affirm, so travelers can make monthly payments on their vacation.

How to use buy now, pay later responsibly

BNPL can be a great way to cover the expense of an unexpected purchase or to spread out a costly purchase into smaller payments. But like any installment payment plan, you should keep a few things in mind before signing up for one.

Don’t take on too much debt: It can be tempting to buy something that you can’t afford with a buy now, pay later plan. Even if you can handle the monthly payments, it’s a good idea to be cautious about upgrading your purchase or making unnecessary purchases with a BNPL plan.Make your payments on time: This is the cardinal rule of using a BNPL plan. Some plans won’t charge you interest or fees if you pay on time. But if you make a late payment or don’t make the payment in full, you’ll often incur a fee or will have to pay interest on the amount you owe.Avoid BNPL if you can pay in cash: When you can, it’s usually best to make purchases in cash rather than finance them. There are exceptions to this, but tapping into your savings account and then building your balance back up is usually a better option.Don’t sign up for multiple BNPL payments: This goes hand in hand with not taking on too much debt, but it’s good to remember that while BNPL repayment plans are convenient, relying on multiple buy now, pay later accounts could make it more challenging to pay your purchases off on time.

Finally, it’s a good idea to read through the fine print before signing up for a BNPL plan so you know all of the details about how much you’ll owe for each payment, what fees you might be responsible for, and what your interest rate will be, if applicable.

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Home insurance could become more expensive if a property isn’t maintained properly or if certain hazards are added to the home. Learn more here. 

The average cost of homeowners insurance is $2,304 per year. Many factors impact the cost of covering each home, though, so some property owners pay less and others pay much more.

Costs aren’t set in stone for a policy either. In many cases, homeowners insurance premiums can increase even after coverage has been purchased. There are a few specific moves property owners could make that might result in premiums rising substantially.

1. Letting the home fall into disrepair

Homeowners insurance companies want to make sure that the property they are covering is in good condition and is as protected against the elements as possible. As a result, homeowners who fail to maintain their property could end up paying much higher premiums out of their checking account.

Say, for example, a homeowner opts not to fix their roof even as it gets old and starts to leak. Their standard insurer might drop them, forcing them to buy coverage from a high-risk insurer that could charge much more for less coverage.

Something similar happened to me. Many years ago, I bought a home that needed some remodeling and the insurer felt the roof was in poor condition even though it didn’t leak. The company requested that we replace the roof, which we did not do, and it raised our premiums by 10% as a result because it said our house was riskier to cover.

2. Making a claim on the policy

Homeowners who actually make a claim on their insurance policy could also face higher premiums. Prices could go up around 9% to 20% per claim, depending on the insurer and the specifics of the claim that was made. That’s because insurers have found people who make one claim are more likely to make others in the future.

3. Adding a swimming pool

A pool is also considered to be risky by an insurer since there’s a greater chance of a liability claim if someone gets hurt. The insurer also has to cover the pool under other structures coverage, which means there’s an added type of loss it would have to pay out.

Adding a pool could add about $50 to $75 to an annual premium on a home insurance policy. Homeowners need to be sure to take this ongoing added cost into account before deciding that putting in a pool is the right choice.

4. Adding an expensive new addition

Property owners need to make sure their policy limits are high enough to cover the replacement value of the property, even as it changes over time. Otherwise, there may not be enough money to rebuild.

Building an addition onto a home increases the cost of rebuilding it, so buying more home insurance coverage could become necessary. Getting higher coverage limits will typically send insurance premiums higher. The exact premium increase will depend on how much coverage limits have to be raised.

5. Getting a dog

Since homeowners insurers provide liability coverage and may have to pay out when a policyholder is sued, anything that increases the chance of a lawsuit will cause an insurer to raise rates. And having a dog can increase that chance since dogs can bite.

Certain breeds make insurers especially nervous, and getting one of them could lead to much higher insurance premiums or even having coverage dropped. These usually include breeds like pit bulls, German shepherds, and Rottweilers. Anyone who is bringing one of these animals home should check with their homeowners insurer to see just how much the added costs would be.

In some cases, paying a little more for homeowners insurance makes sense if doing so allows for lifestyle improvements (such as building a pool for someone who loves to swim or adding a dog to your family). But it’s important to know that upfront, so higher insurance premiums don’t lead to a financial scramble.

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Costco can provide you with some great benefits you may not know about. Check out these unexpected perks of warehouse club membership. 

Costco has a ton of great perks that can make warehouse membership well worth it. You probably already know about some of these benefits, like bargain prices on grocery items, free samples, and delicious food court treats that are easy on your bank account.

But, the warehouse club also offers some surprising benefits many people don’t know about or take full advantage of. To make sure you’re getting the most value from your membership, check out these four unexpected perks.

1. You can score discounts at other retailers

A Costco membership can help you save on things you buy at other places. That’s because you can often buy discounted gift cards. For example, it’s possible to buy a $500 Southwest gift card for $449.99 as of the end of December 2023. Or you could purchase $100 worth of Domino’s Pizza gift cards for $79.99.

These are just a few of many examples. It’s well worth checking out Costco’s selection of gift cards, both online and in store, regularly to see if any of them are for retailers or restaurants where you tend to shop or eat. If they are, the savings you get at these other retailers could more than justify the cost of Costco’s $60 annual basic membership fee.

2. Your car may last longer

I’m not going to pretend I know anything about cars or gasoline or gas additives. But, I do know that Costco’s Kirkland Signature Gas is a higher quality than the products sold by many competitors.

Specifically, Costco gas is TOP TIER™, which many auto manufacturers recommend. It also contains additives that Costco says have been lab-tested and proven to keep engines cleaner and performing well.

This means that not only can you get great prices on gas at the warehouse club, often saving about $0.20 per gallon, but you could also get better performance from your car and an engine that lasts longer. Since cars are so expensive these days, the unexpected benefit of better fuel could more than justify the cost of a Costco membership by itself.

3. Products are protected with extended warranties

When you buy products, you typically expect them to be covered only by the manufacturer’s warranty. But, if you’ve purchased them at Costco, you may get even more protection.

Specifically, Costco will extend the manufacturer’s warranty for up to two years from the date you bought an item or had it delivered to you. Eligible items include:

ComputersTelevisionsProtectorsMajor appliances

If Costco’s extended warranty helps cover your repair bills or even replace an appliance that’s stopped working soon after you bought it, this can really help keep your credit card bills down.

4. Free technical support is on offer

Finally, Costco offers free technical support through Costco Concierge Service for eligible products, including certain electronics and appliances. There’s no separate sign-up required to take advantage of the technical support and you can just call 1-866-861-0450 for assistance (be ready to provide your member number and the product details).

These are all perks that you might not expect when you join Costco, but that can end up saving you a lot of money over time. Be sure to take advantage of them to make the most of your membership.

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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 has a disclosure policy.

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Switching auto insurance could be a good way to save money or get better coverage. Learn how to avoid expensive errors in the process. 

Switching auto insurance policies can sometimes be a really smart move for drivers. A change may be in order if there’s a cheaper car insurer out there or if a consumer isn’t happy with the customer service they’re getting from their current company.

When switching insurers, though, it’s important to avoid certain costly mistakes. Here are four errors consumers may be in danger of making that could hurt their personal finances in the long run.

1. Not making sure they get the right coverage

One of the biggest insurance mistakes people make is accidentally failing to duplicate the coverage they had when they switched companies.

For example, say a driver has a policy with $100,000 per person in liability insurance, which is more than their state’s minimum. When they shop for a new policy, the company they get a quote from assumes they want only the minimum required coverage of $20,000.

If the driver doesn’t notice that change, they may think the new policy is cheaper because the premiums are lower. But really, they’re paying less because they’re getting less coverage. If that driver later got into an accident and caused a victim to suffer $60,000 in damages, their new insurer would only pay $20,000. The victim of the crash could try to sue them personally and collect the other $40,000 in damages — which the policyholder might get stuck paying out of pocket.

This mistake can be avoided by carefully looking at coverage types, policy limits, and deductibles when comparing the new policy to the old one during the process of shopping for quotes and buying coverage.

2. Allowing a lapse in insurance

It’s important not to cancel an old auto policy before a new one takes effect. Otherwise, this could be considered a lapse in coverage. Insurers consider a driver to be a higher-risk person to insure if there’s a lapse in coverage lasting even just a day or two. Premiums could be as much as 10% higher after a coverage lapse.

Even worse, if something happens to go wrong during the period between when the old policy is canceled and the new one takes effect, the driver could have no coverage at all. A motorist who crashed and totaled a $40,000 car during the period when there was no car insurance in place would have to pay for replacement themselves with no help from an insurer.

To avoid this error, find out exactly when the new insurance policy takes effect and do not drop existing coverage until that happens. A phone call to the new insurer can make the dates clear.

3. Forgetting to ask about discounts

Insurers offer discounts for lots of different things, from being a safe driver to working for a participating employer. When switching coverages, sometimes motorists forget to ask about all the discounts their new company offers. This could lead to leaving money on the table.

To avoid missing out on whatever savings a discount can provide, drivers signing up for coverage should ask their insurer exactly what opportunities exist to reduce premium costs.

4. Not considering how unbundling could affect them

Finally, if a driver has multiple policies with one insurer, they may get a bundling discount that could save them as much as 20% on their coverages. If that driver finds a cheaper auto insurer and switches only that coverage, they may forget to consider the impact on their other policies.

Say, for example, a driver saves 20% on home and auto insurance by bundling. If they can get auto insurance cheaper elsewhere, but that insurer doesn’t have good prices for home insurance, they may decide to switch only their car coverage. If they save, say 5% by doing that, but their homeowners insurance premiums jump up 15% once the bundling discount is gone, they may end up paying more overall.

To avoid this, be sure to look at the total costs of current coverage for all policies with a particular insurer and compare that to what total costs would be for all policies after a change to auto coverage.

Fortunately, avoiding any or all of these errors doesn’t have to be difficult. Drivers just need to make informed choices as they consider all their auto insurance options.

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Instead of making a budget, just cap your fixed expenses. Here’s what else you can do to make your life a lot easier. 

Many people do not budget their money. As many as 65% of Americans have no idea how much they even spent over the course of the prior month, much less a clear spending plan and a detailed analysis of whether they stick to spending limits.

If you don’t have a budget of your own, it’s understandable why that would be the case. Budgeting is boring. It takes a long time to write out a plan for where your money should go. And, often, you won’t stick to that plan anyway since life gets in the way and tracking every dollar just isn’t enjoyable.

The good news is, you can give up budgeting forever in 2024 and not hurt your personal finances. You just need to do a few things instead. Here’s what they are.

Keep your fixed expenses reasonable

If you don’t want to budget, one of the best things to do is to make sure your fixed expenses are reasonable. These are the expenses that don’t change each month. You have to pay them because they are things like your mortgage or rent payment.

The lower you can keep your fixed expenses, the more money you’ll have left over for the kind of discretionary spending you’d ordinarily have to budget for. Typically, fixed expenses should take up no more than 50% of your income. But the lower you can go, the easier it is to make your spending work without planning where each dollar goes.

Let’s say you bring home $5,000 a month. If you keep your fixed expenses at 30% of your income, you’d have $3,500 left over for everything else, compared to $2,500 if you limited fixed expenses to 50% or $1,500 if your fixed expenses took up 70% of your income.

If you only have $2,500 or $1,500, you have to be a lot more careful about what you buy — and most likely would have to make a budget to make everything work. If you have a lot more money left over, then this isn’t as much of a concern.

Automate your savings and bill payments

Once you’ve taken care of limiting your fixed expenses, the next step is to automate your savings. Typically, you want to save about 20% of your income. This is for things like retirement but also short-term and medium-term goals like building an emergency fund and saving for a house or vehicle.

You should have money transferred right from your bank account to your retirement or savings accounts automatically each month. That way, you’ll know for sure you’re saving enough, even without having to budget to do it.

You can also set up automatic payments for all of your bills so your money will go where it should.

Once you’ve done that, then you’ll know everything you have remaining in your checking account is for spending. If you’ve kept your fixed expenses reasonable, you should have plenty left over to cover the things you need and want, and you won’t have to make a detailed budget to figure out what to do with the money — you can just enjoy spending it.

Give this a try if you dislike budgeting so you can see if this approach will work for you. It’s a lot more fun, and it may just work better since you can enjoy your money while also ensuring you’re on track toward hitting your financial goals.

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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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