Money Management

The cost of auto insurance has jumped by about 20% since 2020, but discounts can help you save. Check out some of the lesser-known policyholder discounts. 

The average auto insurance premium has increased by around 20% since 2020. While the year-over-year increase has slowed, the new, higher rates can still hit the average checking account hard.

One way to roll those rates back a bit is by taking advantage of every potential auto insurance discount. We’re not talking about the “biggies” here, like safe driver or policy bundling. We’re talking about the underrated and often overlooked discounts that can easily be stacked for extra savings.

1. Auto-pay

Like any business, car insurance companies appreciate knowing they’re going to be paid on time. By automating your payments, you give the insurer permission to withdraw enough money from your bank account to cover your premium. That way, you never have to worry about making a late payment, and the insurer doesn’t have to wonder if it will get paid.

As a reward for setting up automatic payments, many insurers offer a discount of up to 5%.

2. Paid in full

If you can swing paying for your entire annual or six-month policy upfront, it’s possible to receive a premium discount of up to 9%. A secondary advantage of paying upfront is that you don’t have to worry about making a monthly or quarterly payment.

3. Paperless

It wasn’t so long ago that we all received correspondence from insurers via the U.S. Postal Service. Today, we have the option of receiving those notifications via email.

Not only are we helping save trees, but most insurance companies offer a discount to customers who agree to go paperless. The discount may be a modest 1%, but any discount leaves you with more money to tuck away in a high-yield savings account.

4. Good student

If you have teen drivers in your household, you know just how expensive their insurance coverage can be. If your teen also happens to be a good student, their hard work may be rewarded by a premium discount. According to a CarInsurance.com rate analysis, the average good student discount for auto insurance is 14%.

5. Loyalty

Insurers are all about their loyal customers, the people who stick with them even when rates get wonky. Customer loyalty discounts can be as high as 20%, depending on the insurance company.

6. Mature driver

There are definitely benefits associated with growing older. You know who you are, have a greater sense of confidence, and have banked some pretty sweet memories. In addition, you don’t have to pay as much for movie tickets, you’re offered discounts at some restaurants, and you can score a discount on your auto insurance.

While the size of the discount varies by insurance company, you could receive somewhere between 5% and 15% for your extra years of driving experience.

7. Alumni

If you went to college, you could have access to an alumni discount. Again, rates vary by insurer, but you could save 5% to 10% just for working toward your diploma. What’s interesting about alumni discounts is that different insurers offer them to graduates of different schools, so ask about which schools your insurer discounts.

Finally, be sure to ask your current auto insurance agent for a list of additional discounts offered. If the company’s discounts are nothing to write home about, there’s no rule saying you need to stick with that insurer. Switching insurance companies is not only easy, but it can save you hundreds of dollars a year (or more).

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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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Upgrading to business class can improve your travel experience quite a bit — but not if it kills your budget. Try these tips for saving on upgrades. 

As much as I love flying in business, I’d never pay the full cash price for the privilege. Luckily, I don’t have to. As many times as I’ve flown business class, I’ve never once paid full price for the tickets.

I prefer to find bargains on my business class tickets from the get-go to ensure I get my seat. But if you have a higher risk tolerance than me, you could try to purchase a lower cabin fare and hope for a great deal on an upgrade. Here are a few ways to make it happen.

Use rewards points and airline miles

My go-to method for flying business class without draining my savings account is to use rewards. Every major airline has a frequent flyer program that lets you use miles to pay for flights, but most will let you upgrade using miles, as well.

You can earn those miles by flying, but you can also earn them through travel rewards credit cards. Cobranded airline credit cards directly earn frequent flyer miles. Transferable rewards cards earn flexible rewards that you can transfer to participating airline partners. Both have pros and cons, and I like to use a combination of the two to maximize my perks and rewards.

The best way to accrue miles quickly is to earn a welcome bonus (or three). These are lump-sum bonuses of points/miles that you get for spending a certain amount on your new credit card within the first few months. Most rewards cards have some kind of welcome bonus for new cardholders.

Earn elite status (and some luck)

This isn’t an easy one, but it’s an effective way to get free upgrades. Unfortunately, it’s much more difficult to get elite airline status than it is to get hotel status. You can actually get top-tier hotel elite status automatically just by opening some hotel credit cards.

Not so with airline status. Sure, you can spend your way to status with a few airline cards — American Airlines makes this especially easy. But if you want airline elite status, you’ll need to either spend a lot or fly a lot — or both.

However, if you’re a regular flyer, elite status can be well worth it. For one thing, elite status bumps you up the list for free upgrades on the day of departure. Depending on your status, you could also be eligible for automatic upgrades on some flights. And I’ve seen airlines offer free upgrade certificates as annual perks for higher elite tiers.

Track prices to spot last-minute deals

The cost to upgrade to business class from a lower cabin can decrease a good amount the closer you get to takeoff. Airlines don’t like to move planes that aren’t full, so they may offer a good deal on an upgrade to a harder-to-sell business class seat so they can sell your main cabin itinerary.

I’ve found that simply popping into my airline’s mobile app once a day is an easy way to check changing prices and look for any pop-up deals. (Either way, get the airline’s app! It’s the most reliable way to get updates about your flight.)

Wait until the day of departure

If all else fails, you can always ask about an upgrade at the check-in desk. Flights that aren’t full a few hours before departure aren’t likely to sell many more seats, so the airline could be happy to get something for the business class seats before it starts giving them to elite members for free.

Business class can be a great experience, but it’s an even better experience when you haven’t paid through the nose for it. If you can’t get a great deal on a business class itinerary from the start, finding a bargain on an upgrade could be the next best thing.

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

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Want a nice return on your money? Read on to see if a three-month CD is a good choice for you. 

If you have money you don’t need for emergencies but aren’t looking to invest, you have a choice. You could put that cash into a regular savings account, or you could use it to open a CD.

CDs come in a variety of terms, and while not every bank offers a three-month option, some do. You may be inclined to open a three-month CD in 2024. But there’s an upside to going this route as well as a downside.

The benefit of opening a three-month CD

When you open a CD, you commit to locking your money up in the bank for a preset period. Because of that, CD rates tend to be higher than savings account rates. Not only that, but CD rates are guaranteed for the duration of your CD, whereas the interest rate on a savings account can change based on market conditions.

So, let’s say you put money into a savings account. After a month, you may find that you’re earning less interest than when you started. If you open a three-month CD paying 4% interest, that’s the rate you’re going to get for that entire 90-day period.

Also, when you open a three-month CD, you’re not tying your money up for a long time. There can be penalties to cashing out a CD before it comes due, and you’ll usually lose out on a few months of interest for withdrawing your money early. With a three-month CD, this may be less likely to happen.

What’s more, many people are feeling uncertain about the economy going into 2024 even though it’s strong right now. Some financial experts are still cautioning that there’s the potential for a near-term recession. If you’re worried at all about losing your job in the new year, then you may want to limit yourself to a three-month CD so your money frees up fairly quickly and becomes available should you need it.

The downside of opening a three-month CD

Many banks don’t even offer three-months CDs, but rather, have a minimum term of six months. But among those that do, you should know that you’ll commonly get a more generous rate with a CD of a lengthier term.

As an example, EverBank offers a three-month CD that, as of this writing, has a 4.00% APY. But a nine-month CD comes with a 5.50% APY. That’s a big difference.

Also, you might specifically want to lock in a longer-term CD in 2024. The reason? If inflation continues to cool, the Federal Reserve may opt to cut rates. If so, savings account and CD rates might follow suit. So locking in a longer-term CD could mean getting to enjoy a higher APY for longer.

All told, three-month CDs give you more flexibility with your money than longer-term CDs. And you may decide that it’s worth forgoing a higher interest rate in exchange for that. Either way, spend a little time researching CD rates offered by different banks so you’re able to get the best deal.

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Donating your old car can be easier than selling it, but what are the costs? Find out more about how car donation affects your finances. 

If you have an older, high-mileage vehicle, it may not have much resale value. Selling the car could be a huge headache with little payoff.

One alternative: donating your car to charity. But what are the hidden costs? We’ll walk you through how donating a car affects your finances.

What are the costs of donating a car?

You probably won’t have to pay money to donate your car. Even if your vehicle is in poor condition, chances are that a charity will gladly accept it. Many will also assist you with the paperwork and pick it up for you (even if it needs towing) for free.

Some expenses you could save on if you’re donating your car:

Auto insurance and tag fees: The average cost of insurance in a medium-cost state for a six-month, liability-only policy is $102 per month, according to Progressive. Keeping a vehicle properly registered is another factor to consider. Donating your vehicle can save you money on auto insurance premiums and registration costs, especially if your policy or tag is due for renewal soon and you don’t have time to sell the car.Towing: If your car isn’t driveable, you may have to pay to have it towed to a car lot or junkyard. Towing costs can vary widely, but J.D. Power reports that the average cost of towing a vehicle is $109 nationwide. Donating your car could save you on this expense, as many charities will tow vehicles for free.Your time: Selling your used car to a private third party will often fetch you a higher price than going through a dealership. But advertising the car will cost money — and fielding inquiries from potential buyers, showing the car, haggling, and dealing with paperwork can eat up a lot of time. Only you can determine the value of your time. But consider:How much you earn per hourHow many hours you think it would take to sell your carHow much you think someone will pay for your car

If A x B is less than C, donating may be the better option. For example, if you earn $50 per hour and you’d spend 15 hours selling a car that likely wouldn’t earn you more than $500, selling may not be worth your time.

Of course, it’s worth doing some research to see how much money you can expect if you sell your car. Pricing tools like Kelley Blue Book and Edmunds are valuable resources.

Donating a car can be a great way to help a charity whose work you value. Bear in mind, though, that while used car prices have fallen in recent months, they’re still more than a third higher than they were in January 2020. Older used cars — think those that cost less than $15,000 — remain in short supply.

The big cost of donating your car is the fact that you can’t sell your car. Even if you don’t have the flashiest ride, you may still be able to sell it for a decent price. That’s especially important to consider if you’ll be financing your next car, as having a trade-in will lower the amount you need to borrow.

What about the tax deduction?

It’s true that donating a car could help you score a tax deduction — but you’ll need to itemize instead of taking the standard deduction. If your itemized deductions don’t add up to more than the standard deduction — which is $13,850 for single filers and $27,500 for married couples filing a joint return in 2023, and $14,600 and $29,200, respectively, in 2024 — you’re better off going with the standard deduction.

If you itemize your deductions on your tax return, here’s how donating a car affects your taxes:

If the charity sells your vehicle for over $500: You can deduct the amount of the sale price. If your car has a fair market value of $3,500 but the charity only sells it for $2,500, you can only deduct $2,500.If the charity sells your vehicle for $500 or less: You can deduct $500 or the fair market value, whichever is less. If the fair market value is $600 but the charity sells your car for $400, you can deduct $500.If the charity keeps the car or sells it at a discount to someone in need: You can deduct the fair market value of the car. Going back to the first example of the car with the fair market value of $3,500, you’d be allowed to deduct the full $3,500.

If your car donation is valued at over $500, you’ll need to submit IRS Form 8283 with your tax return. You’ll need to complete Part A if the deduction is between $501 and $5,000. For deductions of more than $5,000, you must submit both Parts A and B. For deductions of $5,000 or more, you’ll also need to get an independent appraisal.

Because of the complicated rules for deducting a car donation, there are a lot of ways you can run afoul of the IRS. Check with a tax adviser if you’re considering a tax-deductible car donation.

Donating vs. selling: A third option

If you think your car has decent resale value and you’re willing to donate it, there’s a third option: You could sell the car, then donate the proceeds to charity — which may help the charity even more, since you can typically get more when you sell your car than a nonprofit would get at an auction.

Going this route will require a donation of your time, as well as your vehicle proceeds. But it could be the best option if you want to maximize the value of your donation.

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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.Robin Hartill, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fetch. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

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Maxing out a 401(k) is a tall order. If you can’t do that in the new year, take a look at a good goal to aim for. 

Having access to a 401(k) plan is by no means a given. Some employers routinely skip out on a 401(k) offering to avoid the cost and hassle. But if you happen to have access to a 401(k) through work, then you have a prime opportunity to build a retirement nest egg. So it pays to put as much money into your account as you can.

Maxing out a 401(k), however, is a pretty tough thing. In 2024, the maximum allowable 401(k) plan contribution is $23,000 for workers under 50. For workers 50 and over, it’s $30,500 thanks to a $7,500 catch-up contribution. As such, many people will not be in a position to max out a 401(k) in 2024.

Even if you earn a $100,000 salary, maxing out a 401(k) means parting with almost a quarter of your income. That may not be reasonable.

In fact, Vanguard reports that the average 401(k) saver puts 7.4% of their income away for retirement. So by that standard, you’d need to earn over $300,000 to max out a 401(k) while sticking to 7.4% of your earnings. But if you can’t max out your 401(k) in the new year, there’s another worthwhile goal to target.

Aim to snag your full employer match

Many companies that sponsor 401(k)s also match worker contributions to some degree. If you can’t max out your 401(k) next year, instead, aim to save enough to snag your complete employer match. If your company matches 100% of contributions of up to 3% of your salary as a policy, figure out what that number is and put that amount in from your earnings.

If you earn $50,000 a year, in our example, you’re looking at a $1,500 contribution for the entire year to get a free $1,500 from your employer. That’s just $125 a month coming out of your paychecks.

Not only is extra money in your 401(k) a good thing, but you get to invest the money your employer puts in. And if you snag a $1,500 employer match in 2024 and don’t retire until 2054, that $1,500 will be worth over $26,000 after 30 years if your 401(k) returns an average annual 10%, which is consistent with the stock market’s average.

Look outside of your company 401(k) if there’s no employer match

It definitely pays to get your hands on every free dollar your employer is willing to contribute to your 401(k) in 2024. But if your company’s retirement plan doesn’t come with a match, then you may want to consider saving for your future in an IRA instead.

Not only do IRAs commonly charge lower fees than 401(k)s do, but they’re available from many different brokerages and they usually offer more investment choices. For example, you can generally buy individual stocks in an IRA. With a 401(k), you’re typically limited to different funds, like mutual funds and index funds, that may not give you the control over your investments you want. And while index funds tend to be a low-fee investment choice, mutual funds are notorious for being expensive from a fee standpoint.

Maxing out a 401(k) is a tall order, even if you earn a pretty large wage. So if you can’t max out in 2024, don’t sweat it. Instead, do the best you can with the goal to put in enough money to get all of the free cash your employer is willing to give you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Want to get charitable giving write-offs? It’s harder than it used to be. Learn the new IRS rules of tax deductible donations. 

Giving money or goods to charity can be a great way to get a break on your taxes — but you need to understand the IRS’s rules. Some donations to qualifying charities can allow you to get a tax deduction, where you subtract the amount of the donation from your taxable income. At its best, giving more money to charity can help reduce your tax bill. Sounds simple, right? The truth is more complicated.

First: if you want to give money or donate unneeded items to your favorite charity, good! Keep doing it. Being generous to charity is always a good idea. It’s a wonderful way to support your community and fund good causes. But just because you write a check or drop off a bag of old clothes at a nonprofit, that doesn’t mean you’re automatically going to get charitable giving write-offs at tax time.

Not all charities are properly set up to receive tax-deductible donations. Not all taxpayers are allowed to deduct charitable donations. If you want to maximize charitable giving write-offs on your taxes, it’s going to depend on several factors, including your income, marital status, stage of life, state of residency, and whether or not you’re a homeowner.

Let’s take a closer look at a few tips for how to navigate the complex reality of charitable giving write-offs.

1. Donate to a qualifying nonprofit or “tax-exempt organization”

The IRS has special rules for which kinds of organizations are allowed to be exempt from federal taxes, and which are allowed to receive tax-deductible donations. Here are a few examples of nonprofits that qualify:

Churches and other religious organizationsCharities like the Red Cross or United WayColleges, schools, universitiesOrganizations dedicated to education, such as museumsVeterans’ organizationsGovernments (local, state, or federal) — as long as your donation is intended for a public purpose

Nonprofit organizations like the ones listed above that can receive tax-deductible donations are called 501(c)(3) organizations. There are also some other types of nonprofits that do good work and are not required to pay taxes, but they are not allowed to accept tax-deductible donations. For example, organizations that do political campaign work or lobbying activity are not allowed to accept tax-deductible donations.

Nonprofits will usually be able to tell you if they are allowed to receive tax-deductible donations. But if you want to double-check, you can use the IRS website’s Tax Exempt Organization Search (TEOS) tool.

2. Itemize your tax deductions

Not everyone gets to automatically claim charitable giving write-offs at tax time. Under IRS rules, you can only deduct these donations if you itemize deductions on your tax return. But most Americans don’t itemize. Instead, they take the standard deduction — which is $13,850 for single filers, and $27,500 for married couples filing jointly for the 2023 tax year. If your itemizable deductions add up to a smaller amount than the standard deduction, you should take the standard deduction; that’s often going to be the best deal for your taxes.

Having such a high standard deduction is a good thing in many ways; it makes it simpler for most people to do their taxes. IRS data has shown that almost 90% of American tax returns use the standard deduction. But the standard deduction has made it harder for many people to get charitable giving write-offs.

Basically, if you want to get a tax break for your charitable donations, your itemized deductions need to add up to be more than the standard deduction. And that means you need to be racking up a lot of itemized deductions.

Here are some of the types of deductions that are included in itemized deductions — with certain limits:

State and local income taxes and real estate taxesState and local sales taxes (if you made a big purchase like a car, you might have paid a large amount of sales tax that could become an itemized deduction)Personal property taxesMortgage interestDisaster lossesGifts to charitiesSome medical and dental expenses

Keep in mind that there is a $10,000 limit per household on the amount of state and local taxes (SALT), which include homeowners’ property taxes, that can be itemized. This is known as the SALT deduction cap. If you live in a state that has high income taxes and high property taxes, you might not be able to deduct all of those costs on your federal tax return.

This change to the tax code was part of the 2017 Tax Cuts and Jobs Act, and it significantly raised the standard deduction. Only being able to deduct $10,000 of state and local taxes has made it harder for many Americans to get charitable giving write-offs. It’s harder for most people to itemize deductions than it used to be. And if you can’t itemize, you can’t deduct your nonprofit donations.

3. Keep receipts of your charitable donations

If you’ve crunched the numbers on your tax prep software and it turns out that you’re one of the small percentage of Americans who is better off itemizing deductions: congratulations! Now it’s time to claim your charitable giving write-offs on your tax return. But before you hit “send” to the IRS, make sure you have kept the receipts of your charitable donations.

Many nonprofits will give you a tax receipt at the end of the year to keep for your records; this can be convenient if you have set up recurring monthly donations to your favorite charities. Or if you donate canned goods to a food bank or old furniture to an organization like Goodwill, you can ask the nonprofit to give you a paper receipt for your donation of goods. The IRS requires you to keep a receipt for any donations of $250 or more. If you’re giving non-cash contributions of $500 or more, you’ll have to fill out additional forms.

Most Americans can no longer claim charitable giving write-offs on their taxes, because the standard deduction is so high. But if you are able to itemize deductions, if you give significant amounts to charity, and you want to make sure you’re maximizing your tax benefits, consult with a professional tax advisor. Working with an accountant or tax attorney is a great way to make sure you’re keeping receipts and filing the right forms for the level of donations that you’ve given.

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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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