Money Management

Car insurance can cost thousands or even tens of thousands per year. Here are three things drivers can do to ensure they pay as little as possible. 

The average car insurance premium in 2023 is $3,017 per year, and that number is likely to rise even higher in 2024 due to inflation. And for young drivers or those with an accident history, even a small rise in premiums can put a huge strain on their budgets.

Some drivers resort to forgoing insurance if they can’t afford a policy, but that’s a bad idea for many reasons, not least of which is that it’s illegal to drive while uninsured. Here are three better options for keeping auto insurance costs as low as possible in 2024.

1. Shop around

This is probably the most cliche advice ever when it comes to shopping for any type of insurance, but there’s a really good reason for it. Every insurance company considers different factors when deciding whether to work with a driver and how much to charge them. A lot of these factors are the same — the driver’s history, age, location, and vehicle make and model, to name a few — but different insurers weigh these factors differently.

One company might heavily penalize drivers with prior accidents, while another might not. Another might charge teen drivers astronomical rates, but offer really affordable rates to seniors. Insurers aren’t exactly forthcoming with how they calculate premium costs, so the only way to know what a company will charge a particular driver is to get quotes.

Most auto insurers enable drivers to get quotes online. Having the details of any prior accidents or traffic violations, the vehicle’s VIN, and driver’s license numbers at hand will speed up the process considerably.

Once presented with a quote, drivers can play around with coverage options to see what best fits their budget. They can also save quotes to return to later if they’d like to compare offers side by side from different companies.

2. Pay attention to discounts

Car insurance discounts can significantly reduce how much a driver pays for a policy, though it’s not always true that the company with the most discounts offers the lowest rate. Again, this is why it’s important to get quotes from multiple insurers to see what each has to offer.

Most of the time, the online quote tool will assess your responses and automatically apply discounts you qualify for. But there are some that drivers may have to opt into. For example, many insurers now give discounts to drivers who enroll in a monitoring program. They can’t force drivers to do this. But those who are comfortable with this could shave a significant amount off their premiums.

Those who fall into specific groups, like veterans or drivers of electric vehicles, may want to look specifically for auto insurers that offer savings to these groups. That’s not a guarantee that they’ll offer the best rates, but they might.

3. Choose a higher deductible

There’s an inverse relationship between insurance premiums and deductibles. Choose a low deductible and premiums are higher. Go with a higher deductible and premiums are lower. This is a simple way for drivers to reduce their monthly costs, but it’s important to understand the tradeoffs.

A higher deductible means greater out-of-pocket costs in the event of an accident. This could be problematic for those who are tight on cash. Before going this route, it’s important to have a plan for how to cover the deductible.

One way to do this is for the driver to take any money they’re saving on auto insurance premiums and put it into an emergency fund each month until they’ve saved enough to cover the deductible. Or drivers could try saving year-end bonuses, tax refunds, or other windfalls.

The above steps don’t take a lot of time, but they can make a significant difference to what a driver pays for car insurance annually. And if the best deal is still higher than what a driver hoped to pay, go ahead and repeat the process in a few months to see what else is out there.

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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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Online retailers are about to drop some of their biggest deals of the year. Here are three costly errors you don’t want to make when they do. 

Cyber Monday has exploded in popularity in recent years, and it’s a nice alternative for those who aren’t able to shop on Black Friday or don’t want to. But if you’ve ever tried to buy anything on Cyber Monday, you know the deals go fast. And this can cause some people to make snap decisions that could come back to bite them. Here are three costly mistakes you want to avoid when shopping online on Cyber Monday.

1. Not comparing prices from multiple retailers

Sometimes, you can only buy a product from a single retailer, but this isn’t true of all items. If you can buy something from more than one store, then it’s a good practice to compare prices from several companies before buying. Otherwise, you risk overpaying.

You could compare prices yourself by manually going to the various stores’ websites and noting the price on each. But you can save yourself a lot of time by automating this process with a price-tracking app.

There are a bunch of them out there, including Google Shopping and Keepa. You add products you like to your account, and these apps will item prices over time. This can help you find the best deal, even if it’s not with the retailer you were initially considering. Check out a budgeting app too, while you’re at it — this will help you track how much you can spend on gifts and still afford bills and savings goals.

2. Not reviewing shipping or return terms

An item might look pretty affordable, but when you tack on a shipping charge, it could get pretty expensive. This is especially true if the item is large or heavy. Always be sure to evaluate not just the listed price, but the shipping and tax costs as well.

It’s also a good idea to check into the store’s return policy, especially if you’ve never shopped there before. Even if you have, it’s worth reviewing one more time. Many stores have different terms in place during the holiday shopping season since they know many items are being bought as gifts that won’t reach their recipients for a month.

If a store has a difficult return policy — for example, one that only gives you a short return window or requires you to pay for them — you might want to consider shopping at a different store, even if that means paying a little more. You could also look into whether any of your credit cards have return protection. This could give you additional time to return items you purchase with that card.

3. Not protecting your credit card information

It’s important to be careful about who you share your personal and financial information with when shopping online. Don’t access any financial accounts or enter your credit card number on a site when connected to a public wifi network. It’s possible that someone could hack into your device and gain access to your accounts this way.

You also shouldn’t give your contact information or credit card number to any unsecured site. Always check to make sure the checkout page for the site you’re on has a little lock icon in the URL bar and that the URL begins with “https” instead of “http.” This indicates that your information is encrypted so others cannot steal it and use it to impersonate you.

Cyber Monday can be a great time to find holiday deals, but it’s important not to rush into purchases. Create a plan for yourself right now and begin researching those store return policies in advance. This way, you’ll know exactly where to go and what you need when the Cyber Monday deals finally go live.

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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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Kailey Hagen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

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Have home equity? Read on to see why tapping it for holiday purchases may not be your best bet. 

The holidays can be an expensive time. Between travel, gifts, decorations, and other purchases, you might easily end up spending more money in December than any other month of the year.

You may be reaching the point where you feel you need to take out a loan to cover your holiday purchases in the absence of having the cash. And in that regard, you have options.

You could turn to a personal loan, which lets you borrow money for any purpose. But if you own a home, you may be thinking of borrowing via a home equity loan or line of credit (HELOC).

As of a couple of months ago, U.S. homeowners, collectively, were sitting on nearly $30 trillion in home equity. So if you have plenty of equity in your home to tap, it might seem like an easy way to finance your holiday purchases. But borrowing against your home to pay for holiday expenses is a move you might sorely regret.

Don’t take on the debt — and the risk

If you have fair credit, you may have a much easier time getting a home equity loan than a personal loan. And the reason is that personal loans are unsecured, whereas home equity loans are secured by the homes borrowers put up as collateral.

But what this means is that if you fall behind on your home equity loan payments (or HELOC payments), you risk losing your home. This won’t happen after a single missed payment. But if the situation becomes extreme enough, that’s a risk you face — and all for the ability to cover expenses like holiday gifts.

Another issue you might run into is that lenders tend to set a borrowing minimum for home equity loans. And that minimum tends to be much higher than with personal loans.

So if you’re only looking to borrow, say, $1,500 to cover your holiday costs, borrowing against your home equity may not even be an option. On the other hand, if you’re planning to borrow $15,000 to redo your bathroom that desperately needs work, you could, conceivably, tack another $1,500 onto that sum.

It’s best to avoid holiday debt entirely

It’s one thing to take out a small personal loan to cover your holiday spending. But putting your home at risk is a whole different story.

Of course, your best bet is really to avoid taking on any sort of debt during the holidays. To do that, you may need to adjust your plans and priorities a bit.

Instead of giving a generous gift to everyone in your family this year, you may want to limit yourself to buying for close or immediate family members only, and explain to everyone else that money has gotten a bit tight. And if you’re normally the one to host a huge holiday party for your friends, tap someone else to do that this year, or make your event a potluck affair that everyone chips in for.

You may have plenty of equity in your home to tap. But borrowing against it to pay for holiday purchases is a move you might really kick yourself for after the fact, especially if your financial situation worsens and you’re unable to keep up with those payments.

Our picks for the best personal loans

Our team of independent experts pored over the fine print to find the select personal loans that offer competitive rates and low fees. Get started by reviewing our picks for the best personal loans.

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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