Money Management

Donating your car could be a great move for your wallet. Here’s a closer look at some of the biggest benefits to giving your vehicle away. 

Cars can be a useful way to get from point A to point B, but sometimes, they cause more trouble than they’re worth. They can be expensive to insure and maintain, and if you live in a city, it can also be difficult to find parking. And then there are the environmental impacts to consider.

If you feel the drawbacks of owning your car outweigh the benefits, you might consider donating it instead of selling. Here are five benefits of doing so.

1. You’ll avoid the hassle of selling

Selling a car means haggling on a price and setting up test drives. You also have to do a bunch of paperwork to transfer the title to the new vehicle owner. And if for some reason you don’t have the title anymore, you might find it nearly impossible to get someone to buy your car.

When you donate a car, things are a lot simpler. You and the charity you’re donating to just have to agree on a time to pick up the vehicle and sign the title. Then, it’ll take it off your hands.

2. You could get a tax break

Charitable donations to qualified tax-exempt organizations can earn you a tax deduction, assuming you itemize your deductions this year. Depending on your income, tax-filing status, and the number of deductions you qualify for, this could save you money and result in a larger tax refund compared to taking the standard deduction.

But the amount you save on taxes for donating your car depends upon the value of the vehicle in question. This is determined in a few ways. If the charity sells your car and uses the proceeds to further its cause, you may deduct the lesser of the proceeds of the sale or the fair market value of the vehicle. If the charity sells the car for less than $500, you may deduct the lesser of $500 or its fair market value. You would also use the fair market value if the charity kept the vehicle for its own use.

In order to claim any vehicle donation tax deduction, you must have a record of the donation from the charity you donated to. You also need records of any goods or services you received in exchange for the donation.

3. You’ll support a great cause

Giving to charity, whether in the form of cash, canned goods, or a vehicle, means you’re supporting a cause you believe in. Even if you don’t make any money in the process, it can still feel good to know you’re helping in a small way.

4. You’ll probably save money

When you don’t own a car, you no longer have to pay for everything owning a car entails — gas, maintenance, parking, registration, and auto insurance, to name a few. Insurance alone can cost several thousand dollars. The average auto insurance policy in 2023 costs $3,017 per year. When you add in the other costs listed here, you could reasonably save $5,000 or more.

There might be some tradeoffs, though. You might have to pay for a bus or subway pass, for example, if you no longer have a vehicle to transport you. But these expenses likely won’t cost as much as what you pay to own your vehicle.

5. You’ll free up space

For those who store their vehicles at home, donating your car will free up space in your garage or driveway that you could use for other purposes. This could potentially be more affordable than paying for a storage unit to hold your belongings.

Donating your car is a big decision, but it could pay off for you in more ways than one. Think through the benefits outlined above and compare them to the potential drawbacks of not having a vehicle any longer. Or if you’re thinking about buying a new vehicle, weigh the perks of donating your car against the potential trade-in value it offers to decide which option is best for you.

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.

 Read More 

Some people love buy now, pay later plans. Read on to see why I really don’t. 

Whether you do your shopping in person or online, at some point, you may have come across an offer to sign up for a buy now, pay later plan, or BNPL plan. These agreements have you paying off your purchases over a short period of time — usually 12 weeks or less.

Recent research from The Ascent found that 35% of U.S. consumers have used a BNPL plan. But here’s why I make a point to steer clear of them.

1. I don’t believe in borrowing for leisure purchases I can’t afford in full

One thing I really don’t like about BNPL plans is that they can trick you into buying items you can’t afford. So can credit cards, for that matter. But I’ve never carried a credit card balance I couldn’t repay in full. And I refuse to sign up for a BNPL plan as per that same logic. The way I see it, if I can’t afford a leisure purchase (something like new clothing or electronics) in full, then I shouldn’t be buying it.

Plus, one of the perks of BNPL plans is that they don’t charge interest or fees if you stick to your payment schedule. But we’re all human, and humans sometimes forget things. I’d hate to be charged a penalty for failing to make a BNPL payment. And you’d probably feel terrible if the same thing were to happen to you.

2. I have emergency savings for purchases I can’t put off

Sometimes, a BNPL plan can come to your rescue if you’re faced with a sudden expense you can’t wait on. Let’s say your fridge stops running, for example. That’s a necessity. If a new one costs $2,000 and you don’t have that money on hand, then that’s a situation where it makes sense to sign up for a BNPL agreement, assuming you’re confident you can keep up with the payments based on your earnings.

But thankfully, I have an emergency fund for situations like that. So unless my cash reserves run out on me, in theory, I shouldn’t need a BNPL plan for a sudden purchase I can’t delay.

3. I wouldn’t want to deal with the stress of owing money

When I borrowed money to go to college, I found the process of paying off my debt extremely stressful — even though I could afford my payments. Right now, I have a mortgage and a new car loan, but other than those obligations, I don’t have debts. And I’d like to keep it that way for the sake of my finances as well as my mental health.

Even though BNPL plans are short-term loans, they’re loans nonetheless. And that just plain makes me uneasy. If you’re someone who’s also bothered by the basic idea of being in debt, then you should really avoid borrowing in any capacity unless it’s absolutely necessary.

Although BNPL plans have their benefits, for the most part, I’m not a fan. I feel strongly that they trick consumers into thinking they can afford purchases they can’t. And for that and the reasons above, I refuse to sign up for one of these agreements. If you make it a rule to only spend money on leisure purchases when you have the cash, and if you maintain a solid emergency fund, you can avoid BNPL plans, too.

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 

Credit card fees can add up fast and significantly impact your finances. Find out what kinds of fees U.S. consumers paid in 2022 and how to avoid them. 

Many people use credit cards to pay for everyday expenses. But if you’re not careful, you could pay more than necessary in credit card fees. A recent study found that American credit card users paid $130 billion in credit card fees and interest in 2022. Find out more and discover what you can do to avoid additional credit card fees.

Credit card late fees totaled $14.5 billion

The Consumer Financial Protection Bureau (CFPB) releases a biennial report on the state of the consumer credit card market. These reports provide valuable data to show how U.S. consumers use credit cards.

One factor the CFPB examines is how much consumers pay in additional fees on top of the amounts they charge to their credit cards. The most recent report showed that card users were charged $14.5 billion in credit card late fees in 2022. This figure is significantly higher than the $11.3 billion in late fees reported in 2021.

When credit card users pay their bills late, issuers charge late fees. According to the study, the average late fee for all consumers in 2022 was $32, up $1 from 2021. These fees can quickly add up, so paying your bill on time every month is essential.

It can be easy to forget to pay your bill when life gets busy. You can avoid this fate by enabling automatic payments through your credit card account. Doing this can save you money on fees. Plus, avoiding late payments is a good move for your credit score.

Other fees totaled over $10 billion

Consumers also pay a hefty amount of money on annual fees. Many credit card issuers impose yearly fees in exchange for the card benefits that are offered. Since many issuers have also increased these fees in recent years, consumers are paying more despite a smaller percentage of them needing to pay annual fees in 2022.

Annual fee volume has more than doubled from $3 billion in 2015 to $6.4 billion in 2022. If you pay an annual fee to use your card, ensure you’re maximizing its perks so your money is not going to waste. Annual fees can be worthwhile if you’re getting value from your cards. But for those who want to avoid a yearly fee, there are no annual fee credit cards available.

The fees don’t stop there. Other credit card fees, like balance transfer fees, cash advance fees, and return payment fees, totaled over $4 billion in 2022. Every fee adds up and impacts the wallets of consumers like you.

Consumers paid over $105 billion in credit card interest

Interest continues to take the lead of additional fees paid by credit card users. In 2022, U.S. credit card consumers spent more than $105 billion in credit card interest fees, which is significantly more than the $87.6 billion paid by consumers in 2021.

Credit card interest rates continued to increase throughout 2021 and 2022, resulting in more interest fees being charged and higher credit card bills for consumers. Since credit card interest is high-interest debt, these fees can quickly worsen a consumer’s personal finance situation.

Credit cards are convenient. Using them for everyday purchases and paying your entire balance in full is the best way to use them. You can use one of the best rewards credit cards to earn valuable rewards on your spending. But make sure you only charge what you can afford and pay your credit card bill in full. Otherwise, you’ll be charged interest. You don’t want a costly credit card debt problem.

Use credit cards with care

Credit cards make it easier to pay for everyday purchases, offer fraud protection, and can provide valuable perks and rewards. But make sure you’re taking steps to avoid unnecessary credit card fees like late fees and credit card interest charges. Otherwise, you’ll throw your hard-earned money away and make credit card issuers richer.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

 Read More 

What’s in store for U.S. real estate next month? Read on to find out. 

It’s pretty fair to say that 2023 has been a difficult year to buy a home. The reason boils down to a few factors — sluggish inventory, expensive home prices, and high borrowing rates for people needing a mortgage.

December is unfortunately shaping up to be no exception. Here’s what buyers can expect in the coming month.

1. Mortgage rates will remain high

As of Nov. 16, the average 30-year mortgage rate was 7.44%, according to Freddie Mac. Considering that mortgage lenders were charging even more than that earlier in the month, 7.44% almost starts to read like a bargain — almost, but certainly not quite.

The reality is that mortgage rates have been elevated all year, and they’re unlikely to fall significantly in the near term. In 2024, things could change for the better if inflation continues to cool and the Federal Reserve opts to cut rates. But until that happens, buyers will probably be looking at costly mortgages.

Even if rates come down further in December, it’s likely that they’ll stay at or above 7% through the end of the year. That’s better than 7.44%, but not great.

2. Housing inventory will remain sluggish

As of the end of October, there were 1.15 million housing units available for sale, reports the National Association of Realtors (NAR). That represents a 3.6-month supply of available homes.

It usually takes a four- to six-month supply of homes for there to be enough inventory to fulfill buyer demand. But because mortgages are so expensive, existing homeowners aren’t so motivated to sell.

Many of these homeowners are sitting on 3% mortgages because they either signed their loans in 2020 or 2021, or refinanced when rates fell. So as long as mortgage rates remain stuck in the 7% range, housing inventory is unlikely to pick up.

3. Home prices will stay high

The NAR reports that as of October, home prices had risen on an annual basis for four consecutive months. And the median price for an existing home that was sold in October was $391,800 — a 3.4% increase from October 2022.

The reason home prices are so elevated boils down to inventory — or a lack thereof. Whenever there’s not enough supply of a given commodity to meet buyer demand, prices tend to increase. That’s the case today, which puts buyers in the double whammy situation of having to deal with elevated listing prices and higher mortgage rates.

Is it a good idea to buy a home in December?

It may be that despite today’s higher home prices and mortgage rates, you can swing a home that meets your needs. If that’s the case, go for it — especially if you can somehow manage to close on your mortgage and take ownership by Dec. 31. That could mean getting to enjoy some sweet tax breaks for 2023.

To be realistic, though, it usually takes at least 30 days to close on a mortgage. And things might run slower during the holidays. So unless you’re signing a mortgage on Dec. 1, you’re probably looking at closing at some point in January, or possibly beyond.

But either way, if you can find an affordable home this December, then it could pay to jump at that opportunity. And while inventory is low and will likely remain low, a lot of people may be inclined to put their home searches on pause in December to focus on the holidays. If you’re willing to power through, it could work to your benefit and result in less competition.

Either way, though, expect some challenges as a buyer. And make sure to partner with a great real estate agent to help you through the process.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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