Money Management

Want better credit in the new year? Read on to see how to get it. 

Your credit score tells lenders how much of a risk they’re taking when they loan you money. It’s in your best financial interest to raise that number as high as possible.

The average U.S. credit score is 714. And while that’s by no means a poor score to have, boosting it to the upper 700 range or beyond could put you in a better position to snag more competitive interest rates when you apply for things like auto or personal loans.

Also, certain credit card offers are reserved for borrowers with top scores. If you want to snag perks like sign-up bonuses and extra cash back, a higher score could open the door to more opportunities.

Now, one thing you should know is that boosting your credit score is something that might take time. But if you start making these moves in early 2024, your score might be much higher by the end of the year.

1. Pay your bills on time

Your payment history carries more weight than any other factor when calculating your credit score. So to that end, aim to pay every bill on time.

To increase the chances of that happening, set as many bills as you can on autopay so human error doesn’t cause you to be late and get a black mark on your credit report. Also, do your best to keep some cash in an emergency fund. That way, you’ll be less likely to pay a bill late due to a lack of money.

2. Pay off your holiday credit card debt as soon as possible

If you’re coming away from the holiday season with a pile of credit card debt, you’re no doubt in good company. But the sooner you pay off that debt, the sooner you might see a nice jump in your credit score.

Your credit utilization ratio is another important factor that’s used to calculate your credit score. And it speaks to the amount of revolving credit you’re using at once. Lowering your credit card balances will lower your utilization, potentially leading to a higher score.

3. Get a credit limit increase

Paying down some of your credit card debt could shrink your credit utilization ratio. But actually, raising your credit limit could have the same effect.

It’s better to work on paying down your balances to limit the amount of interest you’re racking up. But if you’re eager to raise your credit score, then asking for a credit limit increase may be a more expedient way to go about things. Your credit card issuers may be willing to give you an increase if you can show proof of a higher income since the time of your initial application.

However, be careful with that higher limit. If you start using it, you may not help your credit score at all. If anything, you might only drive yourself further into debt.

4. Check your credit report for errors

Your credit report is a snapshot of your borrowing history. And you’re entitled to a free copy of it every week.

If you want your credit score to increase in 2024, make a point to access your credit report and review it for errors. This isn’t necessarily something you have to do every week, but it could be a good idea to check your credit report every three months or so.

5. Avoid new credit card applications

When you apply for a new credit card, a hard inquiry is done on your credit report that has the potential to lower your score by a handful of points. This isn’t necessarily a big deal if you have great credit and are happy with your score.

However, if you’re specifically looking to raise your score, then avoiding new credit card or loan applications for a period is a good bet. And if you do feel compelled to apply for a new credit card in the new year, try to limit yourself to just one.

A higher credit score could open the door to more affordable borrowing opportunities. Take these steps so you end up looking at a higher number by the end of 2024.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

Tired of overpaying for homeowners coverage? Read on for ways to save. 

When you own a home, insurance is a major expense you need to account for. It’s so essential that you generally cannot get a mortgage without it.

But a recent report by the Wall Street Journal has found that property owners are increasingly forgoing homeowners insurance due to cost. And that’s a problem. (Of course, in some disaster-prone areas, insurers are no longer writing policies, so that could be a contributing factor as well.)

If you’re having a hard time affording homeowners insurance, you may be inclined to go a similar route. But that could leave you in a downright terrible spot if major damage occurs to your property or, worse yet, your home gets destroyed completely.

Plus, homeowners insurance doesn’t just pay to fix your home. If a visitor gets hurt on your property, the liability portion of your policy could kick in, protecting you from a personal lawsuit.

So rather than make plans to dump your homeowners insurance, instead focus on steps you can take in the new year to lower your costs. Here are some tactics that might work.

1. Bundle with your auto insurance

Own a vehicle as well as a home? Using the same insurance company for both a homeowners and auto policy could result in lower costs for both. However, don’t just make this assumption. Rather, shop around with different insurers to see what their bundled versus unbundled rates look like.

2. Add security features

Investing in certain security features that help you feel safer at home could result in lower homeowners insurance rates. These might include:

An alarm systemDoorbell cameraStorm shuttersWater leak sensors

However, before you purchase any of these items for the express purpose of slashing your homeowners insurance rates, talk to your insurance company to see what savings, if any, are likely to ensue. If your sole motivation for installing a doorbell camera is to lower your homeowners insurance costs but you’re looking at a non-existent discount, why spend the money?

3. Boost your credit score

Your credit score tells lenders how risky or reliable you are as a borrower. As such, you’d think it wouldn’t really be a factor in what you’re charged for homeowners insurance.

But believe it or not, you may find that raising your credit score results in reduced premium rates for your homeowners policy, as it may indicate that you’re a responsible person who will care for your home wisely.

Plus, a higher credit score could make it easier to qualify for loans and snag competitive interest rates when you do seek to borrow. So it pays to work on raising your score by paying your bills promptly, whittling down credit card balances, and reviewing your credit report once every few months for mistakes.

If you’re struggling to keep up with the cost of homeowners insurance to the point where you’re thinking of ditching that coverage altogether, that’s a problem. Rather than go that route and put yourself at risk of ending up without a home to live in, try using these tips to lower your costs in 2024.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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.

 Read More 

Many people are aiming to boost their savings in 2024. Read on to see why this writer is holding steady. 

A lot of people I know are hard at work these days mapping out their financial goals for 2024. And I’ve certainly been putting some thought into the various things I’d like to accomplish in the new year.

In recent years, I’ve managed to max out my retirement plan, and I hope to do the same in 2024 — both for the benefit of growing my nest egg and shielding some income from taxes. I also hope to invest more for my kids’ college education. Although I’ve been putting money aside for my children’s education since they were young, I’m not done saving for that milestone.

But one goal I don’t have for 2024 is boosting my emergency fund. And there’s a big reason why.

I already have enough cash

You might argue that there’s no such thing as having too large an emergency fund. But I disagree.

You don’t want to keep too much cash in a savings account because even though banks are paying generously these days, today’s interest rates aren’t the norm. If you keep too much money in a savings account earning 1% or 2% per year, which is more typical, you might lose out on the much higher returns you can get in a brokerage account or retirement plan.

The stock market’s average annual return over the past 50 years has been 10%, whereas these days, I’m earning between 4% and 5% on my savings. That’s certainly a great interest rate given that it’s risk-free, but I don’t expect today’s rates to last for too long. And even if they do, 4% to 5% isn’t 10%. Over time, I want that 10%.

I’m a firm believer in buying yourself protection against various financial scenarios, like unemployment and home and vehicle repairs. Without adequate cash reserves, you risk having to resort to expensive debt.

But here’s the thing — I already have enough money in my emergency savings to cover about a year of essential bills, plus a little extra to pay for home or car repairs. Usually, people are told to save enough in an emergency fund to cover three to six months of living expenses.

So the way I see it, I’ve done my part to sock funds away for the unknown. And I don’t need to go beyond that, especially when I have a specific goal — education — that I’m trying to invest for.

How much emergency savings do you need?

The reason I even have that much money in emergency savings is that I’m self-employed. This means I could lose all of my work overnight without warning, and I wouldn’t be entitled to any sort of severance pay. I also would not be entitled to any amount of unemployment. So I need to pad my savings to account for my specific circumstances.

However, if you work a salaried job, then you may not have to save nearly as much. You might, in that situation, be able to get away with three to six months’ worth of bills in emergency savings. If you want to add a little extra to account for a potential home or car repair, that’s great. But the typical person probably doesn’t need 12 months’ worth of bills in the bank.

That said, you might need that much money in the bank for your own peace of mind. If that’s how you feel, go ahead and add to your emergency fund in the new year.

I, however, plan to focus my efforts on college savings — because while I feel confident in my ability to handle an emergency expense, I don’t yet feel confident in my ability to put three children through college. Not even close.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

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.

 Read More 

Worried about fraud or improving your credit score? See which tools can help you monitor your credit. 

Recently, I was trying to open an account through Credit Karma in my search to replace my Mint app, when I was told my Social Security number was already attached to another account.

Surprised, I looked closely at the information connected to this account. Everything was accurate to me — my name, my birthday, the last four digits of my social — except for one bizarre, frightening detail: The email wasn’t mine. Rather it was my dad’s work email from a company he left over a decade ago. As I suspected, my dad hadn’t heard of Credit Karma before and wouldn’t have opened an account in my name regardless. It appears someone had taken my information and opened the account without my knowledge.

We’re still investigating how this account came about — my credit report checks out with no new credit cards I don’t recognize — but it got me thinking: Just how vulnerable am I to fraud? It’s easy to think you’re safe, but I suppose it’s the unsuspecting whom fraudsters love to prey on.

So I’ve been looking at some tools to help me monitor my credit and prevent fraud. Plenty of credit monitoring services exist, but here are three free ones that are indispensable.

CreditWise

CreditWise is a free credit monitoring tool by Capital One. The tool lets you monitor your VantageScore 3.0 credit score, which is an alternative scoring model to your FICO® Score, as well as gives you weekly updates on the health of your credit.

What I like is that it scans the dark web — a patchwork of evasive websites that you can reach only through special software — and alerts you when your information has been compromised or for sale on a black market. CreditWise scans the dark web daily and will send alerts to your email if it finds your information there.

>> Click here to sign up now for CreditWise. <<

CreditWise can also help you build your credit score. The app gives you a summary with tips on how to increase your score. For instance, CreditWise tells me I could improve my score by adding different accounts, like a mortgage or personal loan, which I currently don’t have. It also has a neat score simulator in which you can try out different scenarios, like increasing your credit limits or buying something with your available credit, to see how it will affect your score.

You don’t need a Capital One account to sign up, but if you have a credit card or bank account through the company, you’ll find CreditWise in your app. If you don’t bank with Capital One, you can download the CreditWise app and create an account separately.

>> Click here to sign up now for CreditWise. <<

Experian

Experian is one of the three major credit bureaus, but it also has a free credit monitoring service. The service lets you access your Experian credit score and alerts you if Experian sees something fishy. A basic account is free, but if you want extra protection — like identity theft monitoring — you’ll pay a monthly subscription.

It’s worth noting that each of the three major credit bureaus — Experian, TransUnion, and Equifax — has its own credit monitoring service. If you don’t want the company to monitor your credit, however, you can also get one free credit report weekly from all three bureaus through AnnualCreditReport.com.

Credit Karma

Finally, the very app that started this search is actually one of the best for tracking your credit score. Credit Karma works with TransUnion and Equifax to give you access to a free credit score. It can also alert you if your personal information is involved in a data breach. To be fair, this isn’t anything special — Apple’s “Security Recommendations” on my phone does pretty much the same thing — but it’s still a neat feature for a free app.

One thing I don’t like about Credit Karma is that it uses your personal information to hit you with ads for financial products. While this isn’t unusual, it does distract from the app and makes the experience somewhat clunky.

All in all, free credit monitoring services can help you track your credit score and stay informed of information breaches. They can’t prevent fraud, but they can help you catch fraudsters before they wreck your score. If you want more robust credit monitoring, you could look at paid services, but for the basics, these freebies can keep you well informed about your credit.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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 positions in and recommends Apple. The Motley Fool has a disclosure policy.

 Read More 

Kids learn best when they’re having fun. Check out seven holiday gifts that allow children to learn about personal finance as they play. 

Teaching kids about money management doesn’t have to involve a long, boring lecture. According to HealthyChildren.org, learning is fueled by tapping into a child’s natural urge to play. Besides, allowing your child to learn through play is sure to be more fun for you than sermonizing about the importance of finances.

Here, we highlight some holiday gifts designed to help children learn how money works.

1. Save Spend Share Piggy Bank: $18

Suggested ages: Any

Imagine three transparent boxes that look like giant Lego pieces, each a different color. They stack atop each other with the word “Spend” on one, “Save” on the next, and “Share” on the last box. When a child receives money, they use the boxes like piggy banks and are able to watch their money stack up.

It’s not a game, but these boxes offer a great opportunity to teach kids the importance of assigning a purpose to their money. Some money is to spend, some is to save (what a great lesson to learn early!), and some is to give. How cool would it be if there was an adult version of this?

2. Real Working Cash Register: $40

Suggested ages: 3 to 9 years old

Many of us had play cash registers when we were kids, and they were cool — for their time. This cash register is straight-up 21st century. It has a solar-powered digital display and built-in calculator that makes adding, subtracting, multiplying, and dividing fun as kids pretend to ring up purchases. The cash drawer pops open when it’s time for a child to figure out the correct change. The register measures 10 1/2 inches and requires two AAA batteries.

3. Money Bunch Board Game: $17

Suggested ages: 5 and up

The Money Bunch game teaches children essential money management skills as they ride bikes around town (otherwise known as the playing board) and earn money that they learn to save, share, and spend. At the end of the game, players have the opportunity to work cooperatively with fellow players to share their money and invest in new playground equipment for the entire town to use.

4. Real Working ATM Bank: $40

Suggested ages: 5 to 11 years old

You have to wonder what a child thinks when an adult in their life pulls cash from an ATM. Do they imagine it’s made inside that machine, or believe Mom and Dad have access to an endless stash of cash?

This cool ATM works just like the ones Mom and Dad use. There’s an automatic bill feeder, coin reader, and locking vault door so kids can deposit cash. When it’s time for a child to withdraw cash, they’ll need to type in their PIN, just like an adult does. Ideally, they’ll come to realize that an adult must have money in their bank account to make a withdrawal. This sweet machine measures 10 1/2 inches high and requires three AA batteries.

5. The Allowance Game: $20

Suggested ages: 5 to 11 years old

Whether or not a child in your life earns an allowance, this game teaches them all about working for their money. For example, if they wash the car, they earn $1.30 (they really may want to look into union representation). It’s a fast-paced game where players race around the board doing chores, collecting an allowance, and buying the things they want. The game is designed for two to four players.

6. Making Cents Money Game: $30

Suggested ages: 7- and 8-year-olds

The goal of this board game is to see which player can fill their piggy bank up first while polishing their adding and subtracting skills and making changes. Players must work out money problems using coins and write the answers on a piggy bank card. It’s designed for two to four players.

7. Bulls and Bears Strategy Board Game: $50

Suggested age: Teens

While developing a playing strategy of their own, teens learn about cryptocurrency and investing in the stock market. Featuring realistic scenarios and challenges anyone could face as they invest, this strategy board game helps teens develop practical skills and self-confidence.

If you were well into your twenties before you had a handle on personal finances, just imagine how much easier early adulthood would have been if you’d already known the ins and outs of money management. With so many options available, it’s easier than ever to give your child the foundational knowledge they need to thrive financially.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More