Money Management

Perfect credit hinges on certain financial habits. Read on to see why limiting your credit card usage could help your score rise a lot. 

FICO, the most commonly used credit scoring model in the U.S., has a score range of 300 to 850. If your FICO® Score is 300 or somewhere in that vicinity, your chances of getting approved for a loan are pretty slim. But with perfect credit, you’re extremely likely to get approved to borrow. You’re also likely to snag a competitive interest rate.

Now, there are different things you’ll need to work on to achieve perfect credit. For one thing, you’ll need a pretty spotless payment history. That means no late or missed payments on your credit record.

You’ll also need an established credit history. Chances are, if it’s your first year holding a credit card or paying off a loan, that alone will stop your credit score from being perfect.

But there’s another important step you’ll need to take on the road to perfect credit, and it’s keeping your credit utilization ratio low. That’s not always such an easy thing to do.

What’s a credit utilization ratio?

Your credit utilization ratio measures how much of your total credit card limit you’re using at once across your various accounts. If you have a $10,000 spending limit across your different credit cards and you rack up a $2,000 balance, that puts your utilization at 20%.

Generally, a credit utilization ratio of 30% or less is helpful to your credit score. But if you want perfect credit, then you may want to keep that ratio to 4.1% or less.

FICO found that the average consumer with perfect credit (a score of 850) has a credit utilization ratio of 4.1%. So for context, on a $10,000 credit limit, that would mean limiting your balance to $410.

An easy way to keep your credit utilization low

Normal credit card usage can drive your credit utilization up well beyond 4.1%, even if just temporarily. That could make it difficult to achieve perfect credit. If that’s important to you, one way to keep your credit utilization low is to ask for a credit limit increase each time your income rises. Credit card issuers are usually willing to do this (as long as your account is in good standing), because they want you to spend more.

Now, if you do get your limit increased on a given card, you’ll need to stay disciplined and avoid the urge to spend more. Not only might that drive your utilization up, but it might also land you in debt.

Don’t worry if you don’t have perfect credit

Keeping your credit card usage low could result in a credit score of 850 if other factors also align in your favor. But perfect credit is not necessarily something you have to push yourself to attain.

Not only is it a very hard thing to do, but for the most part, once your credit score reaches the 800 mark, it doesn’t really matter how high it is beyond that point. The borrowing options you’ll get with a score of 805 versus 850 are likely to be very comparable.

However, it’s generally just a good idea to keep your credit card balances as low as possible so you’re more likely to be able to pay them in full before interest accrues against you. While it may be helpful to know that a low credit utilization ratio can boost your credit score, it can also save you money indirectly by making it less likely that you’ll have to carry your balances forward.

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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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EVs aren’t cheap, but these vehicles could be the best deal for budget-conscious buyers. Read on to see which EV models made the list. 

Automakers continue to add more models to their growing list of electric vehicles, giving consumers more EV options than ever before.

And while many electric vehicles aren’t exactly budget-friendly, a handful of 2024 models are relatively affordable. Here are four great options that won’t break the bank.

1. Nissan Leaf

MSRP: starts at $28,140

EV enthusiasts are acquainted with the Leaf, considering that Nissan launched the vehicle all the way back in 2010. EV years are like dog years, which makes the Leaf ancient by electric car standards, but don’t let the graying paint fool you; this one is still worth a look.

With a starting price of just over $28,000, the Leaf is one of the cheapest EV options if you want to stay in an affordable price range. Speaking of range, the Leaf’s base model’s 121-mile range won’t shatter any records, but you can always upgrade (for a fee, of course) to the Leaf SV Plus model, which boosts the range to 212 miles.

Safety-minded buyers will love the Leaf’s 5-star overall safety rating from the National Highway Traffic Safety Administration (NHTSA), which could be good for your car insurance premiums.

2. MINI Cooper SE Electric

MSRP: starts at $30,900

Many automakers are making their new EV models look distinct from their gas-powered counterparts, but the all-electric MINI Cooper SE bucks that trend and instead keeps the vehicle’s iconic look.

Stomp the pedal and the MINI Cooper SE will spring from 0-60 mph in just a hair under seven seconds, tapping into 181 horsepower. MINI says the battery will charge to 80% in just 36 minutes, which is good considering that a full charge will only give you 114 miles of range.

It turns out the electric MINI SE is also a fan favorite. The EV ranked No. 1 in ownership experience and ownership cost in a recent J.D. Power electric vehicle ownership study.

3. Hyundai Kona Electric

MSRP: starts at $32,675

The Kona Electric is entirely redesigned for 2024 and is quite the looker. While the updated version will initially have limited availability, the stylish sub-compact EV will likely be more readily available throughout the year.

The base SE version of the Kona Electric boasts a range of 200 miles on a full charge, but if you choose to step up to the next two model trim versions, you’ll get a 261-mile range. The base model also sports a 12.3-inch infotainment display and has six more cubic feet of storage than the 2023 model. And, as per Hyundai’s usual warranty offer, you’ll get a 10-year/100,000-mile powertrain warranty with Kona Electric.

4. Chevrolet Equinox 1LT

MSRP: starts at $34,995

The Equinox will become GM’s cheapest EV after the automaker decided to stop production of its affordable EV — the Chevrolet Bolt — at the end of 2023. You may still be able to find some Bolts in dealerships before they run out of stock, but you can expect the Equinox to be the EV that Chevrolet salespeople will be pitching you.

The Equinox officially goes on sale in early 2024 with a unique (and more expensive) Launch Edition model, but the more affordable 1LT model will make its way to showroom floors in mid-2024. This version will have an EPA-estimated 319 miles on full charge and an AWD option that will propel the Equinox from 0-60 mph in just 5.9 seconds using 288 horsepower. In short, this well-priced EV may be worth the wait.

One thing to consider before buying an EV

While these EVs are the most affordable on the market, you’ll likely want to shop around a little when buying insurance for them. Electric vehicles are generally more expensive to insure than gas-powered ones because they take longer to repair, may require more repair parts, and have costly battery packs.

Spend some time comparing policies to find the best car insurance company for you. You may also want to consider bundling your auto insurance with your renters or homeowners insurance to potentially lower your premiums.

Our best car insurance companies for 2022

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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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Bitcoin’s price is hovering around $44,000, erasing some of the losses of recent years. Find out whether that makes it safe to buy Bitcoin in 2024. 

This time last year, crypto investors wondered if the bleak winter would ever come to an end. FTX, a popular crypto platform, had just collapsed and Bitcoin (BTC) had erased most of the gains of the previous few years. Some wondered if the emerging crypto market could ever recover.

Today tells a different story. The granddaddy of crypto has soared over 160% since the start of the year. According to CoinGecko data, Bitcoin opened at around $16,540 on Jan. 1, and at time of writing it was worth almost $44,000.

Is the crypto winter over?

There’s a sense of cautious optimism about Bitcoin and crypto right now. It has crept upwards in spite of economic uncertainty and heavy regulatory headwinds. Bitcoin’s price hasn’t reached the highs we saw in November 2021, but it has demonstrated a certain resilience. The crypto fear and greed index, which measures market sentiment, has been in greed territory for over a month now.

One of the big driving factors behind Bitcoin’s recent rally is the hope that the SEC might approve a spot Bitcoin exchange-traded fund (ETF) in 2024. Up to now, the SEC has steadfastly refused to greenlight spot Bitcoin ETFs. However, many observers think next year will bring a change of heart.

Earlier this year, an appeals court ruled that the SEC didn’t have grounds to say no to the EFT proposals. The SEC didn’t appeal the judgment, which fueled speculation that it may now give the go-ahead to one (or several) of the applications in the pipeline.

A spot Bitcoin ETF could significantly change the crypto landscape. Investors would no longer need to buy Bitcoin from a crypto exchange. Instead, they could use their brokerage account to buy shares in an ETF that owns Bitcoin. It would make it much easier for both retail and institutional inventors to hold the leading crypto.

Is it safe to buy Bitcoin in 2024?

During the crypto frenzy of 2020 and 2021, many Americans bought crypto for the first time. The soaring prices created a sense that the market could only go upward. Speculation was rife. Sadly, many retail investors lost money in the subsequent crash, which saw Bitcoin lose around half its value in six months.

If you’re wondering whether it will be safe to buy Bitcoin in 2024, the short answer is that cryptocurrency is a risky asset class. It is still a relatively new and unregulated industry, and there is a lot we don’t know about how it will unfold. Here are some questions to consider:

Are you comfortable with the volatility? Bitcoin’s price fluctuates dramatically. It gained over 300% in 2020, gained another 60% in 2021, only to lose 65% in 2022. It isn’t uncommon for Bitcoin’s price to move by 20% in a matter of days, which can be difficult for some investors to stomach.How do you plan to store your Bitcoin? If you don’t want to move your Bitcoin to a crypto wallet, make sure you know what might happen to your funds if the exchange you use fails. Cryptocurrency exchanges don’t carry the same protections as a bank or brokerage account.How does crypto fit with the rest of your portfolio? There are many different investments to choose from, so try to make sure crypto only makes up a small percentage of your portfolio. That way you’ll benefit if Bitcoin goes to the moon, but your wealth-building plans won’t be destroyed if it doesn’t succeed.How do you think Bitcoin will perform long term? Short-term speculation rarely pays off, so try to understand Bitcoin’s long-term potential use cases. Some people argue that Bitcoin could become the native currency of the internet. Others think it could take a portion of the global remittance market or become a currency for emerging markets. Critics believe it has no inherent value at all.Are you comfortable with crypto’s regulatory situation? Most cryptocurrencies are currently viewed as commodities and come under the purview of the CFTC. The SEC has brought charges against several top crypto exchanges this year, making the case that many cryptos are actually unregistered securities. At the same time, at some point the government is likely to introduce a regulatory framework for crypto. But right now there’s a lot of noise and not a lot of certainty, which some investors find concerning.

Speaking personally, Bitcoin and other cryptocurrencies continue to make up a small percentage of my wider investments. However, I am concerned by the regulatory landscape and the questions about what goes on (or has gone on) behind the scenes at various crypto platforms. Bitcoin’s price may have recovered from the collapse of FTX, but for me, the stain of the fraud and extreme mismanagement remains.

Key takeaway

Bitcoin’s 150% rally in 2023 is great news for crypto investors. But don’t assume that the end of the crypto winter means it is safe to enter the crypto waters. Bitcoin still has many significant hurdles to cross. These include a changing regulatory landscape, bruised investor confidence, and questions about its utility. Do your research before you jump in.

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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.Emma Newbery has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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What does the first month of the year have in store for home buyers? Read on to find out. 

If you’re someone who’s been trying to buy a home since the start of 2023, you may not be shocked to have arrived at the end of the year without being successful. The past 12 months have been downright torturous for would-be buyers. At this point, it’s best to look forward to 2024.

But will things change dramatically in January? Probably not. Here’s what the upcoming month could have in store.

1. Mortgage rates might fall — but only a bit

As of mid-December, the average 30-year mortgage rate was 6.95%, according to Freddie Mac. Seeing as how rates were stuck at well above 7% for much of 2023, a dip below 7% is an improvement. And mortgage borrowers may be in line for slightly lower interest rates in January.

However, mortgage lenders are unlikely to lower their rates to a notable degree next month. That could happen gradually during 2024, but buyers should generally expect mortgage rates to be pretty high at the start of the year.

2. Housing inventory is unlikely to increase

As of the end of November, there were only 1.13 million unsold housing units across the U.S. market, says the National Association of Realtors (NAR). That’s a 1.7% decline from the previous month, and it represents a 3.5-month supply of available homes.

That might seem like a decent supply of properties, but it typically takes a four- to six-month supply of homes to fully meet buyer demand. So all told, buyers shouldn’t expect a vast selection of homes to choose from in January.

However, because the winter months don’t tend to be a popular time to buy, you may fare pretty well if you opt to do your house hunting in January. Even if there’s not a lot of inventory to choose from, if you’re looking during a month when there’s not much competition, you may have an easier time getting an offer accepted without having to put out a number that’s well over a seller’s asking price.

3. Home prices will likely remain elevated

The NAR reports that in November, the median existing home sold for $387,600. That’s a 4% increase on a year-over-year basis. November was also the fifth month in a row where home sale prices rose on an annual basis.

Since there aren’t many homes on the market, sellers can get away with higher asking prices. You may have a little more wiggle room to pay more for a home if mortgage rates tick downward a bit more. But crunch your numbers before making an offer so you don’t end up taking on a home you can’t comfortably afford.

All told, your monthly housing costs, including your mortgage payments, homeowners insurance, and property taxes, should really not exceed 30% of your take-home income. Going beyond that point could put you at risk of falling behind on your bills.

Good luck trying to buy in January

January 2024 may not be the easiest month to buy a home. But the good news is that it shouldn’t be any worse than recent months. And if mortgage rates drop even more, it may end up being better.

If you find yourself struggling to find a home in January, remember that real estate inventory tends to pick up in the spring. So before you rush to make an offer on a so-so home because there aren’t enough affordable choices, recognize that sitting tight for a few months might work to your advantage.

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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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Car insurance isn’t getting cheaper — especially if you don’t check your renewal notices. Here’s why. 

Maybe this has happened to you.

You get an email or letter informing you that your car insurance policy is set to renew. You have about a month, it says, to make changes before the auto-renew kicks in. You’re already juggling a million tasks (getting the kids out the door for school, taking care of that thing at work, prepping your notes ahead of an interview), so the last thing on your mind is checking your insurance policy before it renews. You let it auto-renew and get back to the busyness of your life.

If that sounds like you, you’re not alone. Many drivers simply don’t have the time or patience to scrutinize their car insurance policies at every renewal period. You already did the hard work upfront six or 12 months ago. Why open that can of worms again when your car insurance company can just reinstate your policy?

Truth is, ignoring your car insurance renewal notice could be costly. You might be super busy, but here’s why your car insurance company is hoping you don’t double-check that renewal notice.

Rates can swing drastically from year to year

The reason you should double-check your renewal notice is that your car insurance rate may have gone up — sometimes for no apparent reason.

Car insurance rates are notoriously fickle. While you may have originally locked into the cheapest car insurance for you, the market could very well have changed at the time of your renewal. Unfortunately, most car insurance companies won’t point out when your rate increases, leaving it up to you to catch the higher premium on your renewal notice.

Occasionally, your rate will go up because you filed a claim or had a traffic violation. But more often than not the reason is outside your control. For example, the drivers in your area may have filed numerous claims with your insurer, thus raising premiums for all drivers. Or, the parts for your car may be more expensive, thus making it more risky for your car insurance company to insure you.

Even though many car insurance companies claim their rates are the cheapest, the truth is no company is consistently the cheapest every year. That’s why it’s super important to compare car insurance companies consistently year after year, as you could snag a lower rate by switching to another insurer.

What you should do if you notice a different rate in your renewal notice

Easy — shop for car insurance.

The premium you get through one company won’t be the same as the premium you get through another. Sometimes, the rates will be so close it would be insignificant to choose one on price alone. But every now and then there’s a clear winner among car insurance companies — sometimes saving you hundreds of dollars.

Even if the rate enclosed within your renewal policy is roughly the same (in other words, it hasn’t gone up), don’t assume you’re still getting the best deal. It still pays to compare that rate with two to three car insurance quotes you gather online. You never know what another car insurance company will offer you just to entice you to switch.

So if you get that car insurance renewal notice, don’t toss it aside. Take a look at your rate and see if you can find a lower one with another car insurance company. Getting the same car insurance coverage for a lower price is a surefire way to save money — and doing that consistently over your lifetime could turn into thousands of dollars saved.

Our best car insurance companies for 2022

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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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Does your airline frequent flyer program feel like it’s not such a good deal anymore? Learn about the big benefits of maintaining your frequent flyer status. 

Delta Airlines caused a bit of a kerfuffle recently when it announced changes to its SkyMiles® frequent flyer program. Starting Jan. 1, 2024, Delta is cutting back on lounge access for all but the biggest-spending customers, and Delta passengers no longer earn actual “miles” for being frequent flyers. Instead, Delta Airlines’ elite status can only be earned by spending cold, hard cash.

Although other airlines still offer frequent flyer miles for actual, well, flights, the Delta changes were widely seen as an ominous sign. Will airlines start driving a harder bargain with their most loyal customers? As the air travel landscape shifts, airport lounges get more crowded and rules to gain airline status get more confusing. Some industry watchers are starting to question if it’s worth it for your personal finances to maintain frequent flyer status.

There’s no easy way to decide whether to keep or cancel your frequent flyer membership. Breaking up is hard to do, especially if it’s with a major airline you’ve been flying for many years. It all depends on how much you fly and which airline has the biggest presence at your home airport or has the most flights to your favorite destinations. The decision of whether to keep or ditch your frequent flyer status can also depend on how much you spend on airline credit cards and partner travel rewards cards, and how much value (financial, emotional, and otherwise) you feel you’re getting from the airline.

But even though airline rule changes can be unclear and frustrating, don’t be too hasty to cut up your frequent flyer membership card. Having elite status with airlines is still one of the best ways to elevate your travel experience.

Let’s look at a few unexpected benefits of having frequent flyer elite status.

1. Elite status with partner airlines

Being an elite status frequent flyer doesn’t just give you extra benefits with your primary airline; it can also unlock a larger world of possibilities to get deals and privileges on other airlines in an airline alliance.

For example, AAdvantage Gold® status also gives you oneworld® RubySM status. You can use your American Airlines elite status to get priority service and other experiences with oneworld’s international partner airlines like British Airways, Iberia, Japan Airlines, Qantas, and more.

2. Bonus miles

Once you get elite airline status, you can earn frequent flyer miles even faster than before. That’s because airlines often give bonus miles to their elite status customers. Think of it like compound interest for your miles.

For example, United Airlines gives Premier Silver members bonus miles equivalent to 7x the miles they would ordinarily earn from booking a fare. Premier Gold members get 8x the miles, and Premier Platinum flyers get 9x the miles. Once you earn enough miles to get elite status, it gets even easier to keep earning frequent flyer miles and to keep your elite status. It’s circular logic, but in a good way! Isn’t that a perk worth keeping?

3. Bonus points to start the new year

When you get elite status with an airline, it doesn’t last forever. You have to keep earning enough loyalty points or credits to keep your status for the following year. Some airlines make this easier by giving you an advance payment of status-earning bonus points to start the new year.

For example, at the start of the new program year, United offers a “PQP deposit” of bonus Premier Qualification Points (PQPs) for existing Premier members. This is a nice head start on reaching your elite status goals for the new year.

4. Same-day flight changes

Some levels of elite airline status make it easier to change your flight in case your plans change. American Airlines AAdvantage® Platinum offers same-day standby priority, and Platinum Pro® gives you free same-day flight changes.

5. Lots of free checked bags

Tired of trying to pack light? Elite airline status lets you be extravagant and pack all your extra socks, power tools, or perhaps the actual kitchen sink. American Airlines AAdvantage Platinum status provides two complimentary checked bags, and higher status levels let you check three bags for free. Never worry about baggage fees again!

6. Free upgrades for companions

Getting elite airline status is not only a good thing for you; it can help your family and friends have a better flight experience, too. That’s because many airlines offer free upgrades for your companions, even if they’re not elite status members.

For example, United Airlines lets your companion get the same upgrade you qualify for at every level of your Premier® status. But keep in mind there are some restrictions — if your companion is traveling on an award ticket, they cannot upgrade for free.

7. Priority customer service

People love to complain about airlines’ customer service, especially in extreme situations like weather delays and mass cancellations. If you dread getting trapped at the airport or having to stand in line for hours at understaffed ticketing counters, getting elite airline status could be the right move.

American Airlines AAdvantage® offers priority service and reservation assistance for all levels of elite status, from Gold to Executive Platinum. As an elite status customer, airlines are more likely to pamper you and take the extra step to make sure your trip goes smoothly. In case of delays and cancellations, elite status can be like backup travel insurance to get you in the air as soon as possible.

Gaining elite status with airlines is not easy, inexpensive, or uncomplicated. You’ll have to fly and buy a lot, navigate complex frequent flyer program rules, and be strategic about how you spend money on airline credit cards. But getting elite airline status — and keeping it — is often worth the effort. These unexpected benefits of frequent flyer status make it hard to walk away.

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If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

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

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