Money Management

Want good credit? Read on to see how some seemingly innocent moves may be harmful to it. 

The average American’s credit score is a 714. According to FICO, that falls into the “good” range.

But while there’s nothing wrong with having a credit score of 714, the reality is that raising your score could help you qualify for a loan more easily and at a more affordable rate. And part of raising your credit score is knowing what seemingly innocent behaviors could actually be damaging your score, like these.

1. Closing out old credit card accounts

When there’s a credit card you no longer use, you might assume that your best move is to close the account. After all, why keep it open if you don’t benefit from it? Doing so only means running the risk of your credit card number somehow getting into the wrong hands.

It’s easy to see why you’d think closing an old credit card would make sense. But the length of your credit history plays a role in calculating your credit score. So it can work to your benefit to keep older accounts open.

Now, if you have an older credit card that charges an annual fee and it really doesn’t benefit you, then in that case, closing it makes sense — even if your credit score temporarily takes a hit. But if you’re not losing out financially by keeping an older credit card account open, then you may be better off keeping that account active.

2. Applying for too many new credit cards in short order

When you see a string of credit card offers you want to capitalize on, you may be inclined to submit applications — even if that means applying for several credit cards within the same month or two. Unfortunately, though, that could hurt your credit score.

Each time you apply for a new credit card, a hard inquiry is done on your credit record. That will generally only drag your score down by a few points. But while a single hard inquiry isn’t such a big deal, multiple hits can add up.

Also, when you apply for too many new credit cards at once, it can make it seem like you’re suddenly desperate for credit, even if that’s not the case and your main motivation is simply to snag a bunch of sign-up bonuses. A better bet is to space out credit card applications by at least three months; six months would be even better.

3. Only making your minimum credit card payments

Your payment history carries more weight than any other factor when calculating your credit score, so it’s extremely important that you pay all of your bills and debts on time. If you make your credit card payments on time, it reflects positively on you, even if you’re only paying the minimum amount you’re required to.

But over time, only making your minimum payments could harm your credit score. That’s because you’re likely to keep racking up interest and growing your balance rather than whittling it down. And too large a balance relative to your total credit limit could cause your score to drop in a serious way.

Plus, if you get into the habit of only making your minimum payments on your credit cards, you’re going to set yourself up to accrue loads of credit card interest. And why throw your money away on that when there are so many other important things you can use it for?

You may be aware that not paying bills or paying them very late can harm your credit score. But you may not have realized that these moves could be hurting your credit score, too. So now that you’re in the loop, try your best to avoid them at all costs.

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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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Not all Black Friday “deals” are worth it. Take a look at some quick ways to figure out how much you’re actually saving. 

Black Friday is the biggest shopping day of the year, and retailers everywhere are soon going to offer their best deals to attract as many customers as possible — or at least, that’s how it’s supposed to work. But in reality, not all the deals you see are actually good ones.

Sometimes, companies inflate the “original” price to make the sale price seem more desirable. And the sense of urgency Black Friday creates stops some shoppers from looking closer to realize this. But there are actually some easy ways to tell if you’re getting a good deal or not. Here are two of them.

1. Go scouting before Black Friday

If you plan to shop locally, it’s a good idea to do a scouting mission or two in advance. Note the items you’re interested in buying and what their regular prices are right now. Write this information down so you can compare it to the listed prices you find on Black Friday.

If the sale price isn’t significantly different from the original price, you may choose to hold off on buying it. Or you could compare prices at other retailers to see if you can find a better deal elsewhere.

2. Use a price tracking tool

Another option is to hop on a price tracker tool or app to see how prices have changed on the items you’re interested in over time. There are plenty of options out there, including Google Shopping, Keepa, and CamelCamelCamel.

They all work similarly. You search the item you’re interested in and save it to the app or tool. Then, you’ll get notifications of price drops. You’ll also be able to view the item’s historical price data.

Use this information to your advantage when you go Black Friday shopping. Compare the store’s sale price to the price data in your app to see how much you’re actually saving.

What to do if the Black Friday deals aren’t great

Don’t feel pressured to buy something just because it’s Black Friday or because the holidays are coming up. If you aren’t able to find real savings on your wishlist items, try another day. Cyber Monday is also coming up, and it may offer better deals than Black Friday.

You may also be able to find better deals throughout December. Many retailers still run specials during this time. And if you can find a coupon or two, you might be able to save more than you could on Black Friday.

No matter when or how you shop, try to keep your budget in mind and avoid buying things that weren’t on your list. Staying patient and being flexible will help you find the things you want without straining your bank account.

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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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Investing is a marathon, not a sprint. Read on to learn more. 

Investing can be a frustrating experience, whether you’re new to it or are seasoned at it. Imagine you worked really hard to pump money into your brokerage account only to see its balance decline following a stock market downturn. That’s a tough situation.

Similarly, you may find that despite a fairly stable and even thriving market, your portfolio just isn’t gaining value as quickly as you would’ve hoped. That, too, can be a hard thing mentally.

If you’re frustrated with your portfolio, or with investing in general, you may be inclined to call it quits. But before you do, you may want to heed some important advice.

Patience is key when investing

In a recent Schwab survey, respondents were asked to identify the best investment advice they’ve received. And for 1 in 5, the answer was “be patient.”

That’s such an important thing when you’re investing, because you must realize that making money in stocks overnight is very difficult — so much so that most people fail at it. However, making money by investing over time is a different story.

Over the past 50 years, the stock market, as measured by the performance of the S&P 500 index, has generated an average annual return of 10%. But there were plenty of years during those five decades when the market did really poorly.

Between October 2007 and March 2009, the height of the Great Recession, stock values declined by about 50%. So let’s imagine you put $10,000 into a brokerage account in September 2007. Chances are, about a year and a half later, you would’ve been looking at a portfolio value of $5,000. That’s brutal. But remember this — the stock market managed to recover from the Great Recession and then some.

The 10% average annual return noted above accounts for years of strong performance as well as years of declines. That’s why it’s so important to be patient as an investor and keep your money in stocks over a lengthy period. If you give your money time to grow and your portfolio time to recover from periods of rockiness, you’re more likely to come out a winner.

But you can’t expect quick results. If that’s what you’re after, you should know that you risk taking serious losses.

Prepare to sit back and wait

It’s natural to want to see your efforts as an investor pay off. So if you put $10,000 into a portfolio a year ago and you haven’t made any money to date, it can be quite upsetting. But chances are, over time, your portfolio will gain value if it’s diversified. So don’t despair if you don’t see great results in the near term.

In fact, let’s say you invest $10,000 into an S&P 500 exchange traded fund (ETF) or a bunch of different S&P 500 stocks at age 25. If you manage to snag an average annual 10% return, you’re looking at a balance of about $453,000 in 40 years’ time.

But in five years’ time, you’re only going to be looking at about $16,000. That’s not such a huge gain. But you also shouldn’t expect large gains in short order.

All told, patience really is the key to being a successful investor. So if you’re hearing this advice now for the first time, take it to heart. And if you’re inclined to unload your stocks and stop investing because you’re not seeing results, don’t. Instead, pledge to wait things out. Chances are, you won’t regret it.

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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.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short December 2023 $52.50 puts on Charles Schwab. The Motley Fool has a disclosure policy.

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It’s natural to have an idyllic picture of the holidays in your head. See how Suze Orman recommends saving money this holiday season. 

Last year, shortly before the holiday season, financial guru Suze Orman offered holiday shoppers some truly solid advice. Orman’s suggestions were so helpful that we wanted to share them again here.

Do not forget about yourself

Orman says, “True generosity is when you are as generous to yourself as you are to others.” As much as you may dream of a holiday season straight out of a made-for-television movie, your first obligation is to yourself. If you’re having trouble paying bills or know that big bills are coming due in January, why make things harder on yourself?

Before you determine if you’re going to purchase gifts or entertain over the holidays, take a hard look at your monthly budget. No one who cares about you wants you to spend money you don’t have.

If you do have money available for the holidays, create a budget that you can stick with. You’ll thank yourself in January.

Think outside the gift box

Time is a non-renewable resource. Once it’s gone, it’s gone. Orman points out how valuable sharing your time with another person can be. Here are some of the ways you can provide the gift of time:

Offer to give an older adult a manicure or pedicure in the comfort of their home.Offer to babysit or dog sit so the gift recipient can get out for the day.If someone you care about has a DIY project coming up, offer to help them tackle it.

There’s no reason to take money from your savings account or move bills around so you can buy a material gift. What people really crave is connection, and you can provide that.

Include others in the conversation

If your friends or extended family have a gift exchange or routinely buy gifts for everyone in their orbit, ask about being budget-smart this year. That may mean that only kids exchange gifts, or there’s a strict price limit.

Don’t be embarrassed to ask. You never know who else in your family may need to take it easy with finances. And remember: You’re not asking for permission. You’re letting the people you care about know that you’re changing things up this year.

Consider needs

Inflation has been a bear for many for the entirety of 2023. While inflation appears to be cooling, that doesn’t mean people still don’t feel the pinch. If you’re buying gifts this holiday season, why not make them useful?

For example, a college student may appreciate a grocery store gift card. An older adult is likely to enjoy a gift card for gasoline or a drive-through car wash. Young children can almost always use things like pajamas, socks, and new tennis shoes.

Imagine how good you’ll feel about making life a little easier for someone you care about.

Avoid debt

Whether you’re tempted to pull out a credit card to cover the cost of gifts or take advantage of a buy now, pay later offer, avoid the urge.

Let’s say you put $500 in charges on a credit card over the holiday season. Unless you pay it off in full before the first billing cycle is up, you’ll owe money on that debt. For example, if the interest rate on your credit card is 18% and you pay only the minimum payment each month, it will take you 47 months to pay off, and you’ll fork over an extra $200 in interest.

Fill a future financial need

If you’re sitting pretty this holiday season and have a generous budget, take a look at the financial needs of each gift recipient. For example, if your grown child does not have an emergency savings account, consider setting one up for them. If you have nieces, nephews, or grandchildren, consider donating to their 529 plan or a Roth IRA.

If your budget is currently pretty bare-bones, that’s okay. You’re in the same boat as a whole lot of other people. However, being low on cash doesn’t mean you can’t enjoy the holidays. It just means you’ll need to approach this holiday season with a solid plan in place.

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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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Doors open early on Black Friday. Here are five reasons you may want to think about starting your shopping then. 

Black Friday is almost here, and soon millions of shoppers will be flooding local retailers in the hope of snagging holiday gifts at bargain prices. While most people will hit the stores during normal business hours, there are still plenty who wait in line before doors even open.

That might seem excessive to some, but there are actually some pretty big advantages to shopping early on Black Friday. Here are five of them.

1. You have a better chance of getting what you want

Inventory can disappear quickly on Black Friday with so many people out shopping. So the earlier you get to the store, the more likely you are to actually take home the items that are on your list.

This is especially true if you’re interested in doorbuster deals that are only available for a limited time on Black Friday or while supplies last. Aim to collect these items first before heading off to shop for other things, if you want the best odds of crossing them off your wishlist.

2. You have a better shot at finding a good deal

Piggybacking off the last point, when you begin shopping early, you have more time to visit different stores and compare prices before inventory drops too low. This might enable you to score a better deal than someone who waits until later.

If you arrive at the store and there’s only one of what you want left on the shelf, you either have to take it or risk it being gone when you return if you decide to check elsewhere first. This is still a risk for early birds, but the odds of missing out on something entirely are lower.

3. You may not have to wait in long lines

Long lines usually come with the territory of Black Friday shopping, but this depends somewhat on when you go shopping. Those who are up before the sun will probably get in and out more quickly than someone who heads to the shops in the afternoon.

If you’re not comfortable waiting in long lines, you might consider limiting your Black Friday shopping. Instead, look to Cyber Monday for deals you can snag from the comfort of your own home.

4. You may have a less stressful shopping experience

When there’s fewer people and more inventory in the store, you might find the shopping experience more like a typical outing rather than the feeding frenzy Black Friday can sometimes turn into.

But this depends on where you shop. We’ve all seen those videos of people sprinting into stores the moment the doors open only to get into fistfights over TVs just inside the entrance. If you’re afraid of this happening, you may want to wait a little while after doors open to begin shopping.

5. You’ll be done sooner

Black Friday is part of Thanksgiving weekend, when many of us are spending time with family and friends. You can always bring your family shopping with you, but not everyone will want to go. Shopping early means you can also finish early and then go back home to hang out with those you may not see that often.

It’s ultimately up to you to decide when and how much you want to shop on Black Friday. There’s more to think about than just your shopping list. You also have to think about what your checking account allows for. But having a plan in place before Black Friday can help you be efficient and stick to your budget.

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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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Travel credit cards can be useful, but they also have a rarely discussed downside. Find out what it is and how it could cost you. 

Lots of people enjoy traveling and would love to do it more often. Travel credit cards are one of the most common recommendations to make that happen. With these cards, you can earn points (or miles) that you put toward travel expenses, including airline tickets, hotel stays, and more.

It probably seems like a pretty good deal, and it is. Travel points can help you save money on your trips. Many of these cards offer excellent sign-up bonuses, too, so you can earn a large number of points in a few months.

However, there is a downside of travel credit cards that doesn’t get talked about much. If you’re not careful, it could end up costing you money.

Feature overload

There are plenty of features available through travel cards, particularly the cards with hefty annual fees. For example, you can find cards offering complimentary access to airport lounges, elite status in hotel loyalty programs, and free checked baggage.

An abundance of features is normally a good thing. The problem is that with most travel cards, benefits tend to be a mixed bag. There are some that you’ll love, and some that you may never use. For example, you might get a card with airport lounge access that comes in handy every time you travel. But that card might also have a $200 airline fee credit that you can’t find a way to use.

This is a common issue with travel cards, and it’s largely by design. The card issuer gets to advertise more features and say that a card has “over $1,000 in spending credits” or “over $1,200 in partner benefits.”

And if those spending credits or benefits aren’t that easy to use? All the better. If you don’t use them, they don’t cost the card issuer any money. That’s why a card issuer will offer an airline fee credit instead of a credit toward any type of travel purchase, or a dining credit doled out in $10 monthly increments instead of just $120 per year.

There are a few ways these features can end up costing you:

They make it harder to get your money’s worth. Most travel cards charge an annual fee, with the most expensive ones costing $450 to $695 per year. If you leave too many perks unused, you may be spending more on the card than it saves you each year.It’s more time consuming for you. Keeping track of credit card benefits is no small task. Your time is valuable, so it’s worth considering how much of it you want to spend managing your credit cards.Some benefits encourage you to spend more. Spending credits might seem like a perk that will save you money, but that isn’t always the case. Let’s say your card offers $10 in monthly DoorDash credits. You never previously used DoorDash, but you start ordering $30 to $40 worth of food on it per month. You’re not coming out ahead here, because even with the $10 credit, you’re still spending more than you used to.

Because no travel card has everything, it’s also easy to fall into the trap of opening too many cards. You might get one for its airport lounge access, one for elite status at your favorite hotel chain, one for upgrades with your favorite airline, and so on. Each card seems like a good deal when you apply for it. But you ultimately end up spending a lot more on annual fees and having more cards than you know what to do with.

Don’t overspend on travel credit cards

Overspending, in this case, refers to both your money and your time. It doesn’t make sense to pay for a travel card with a bunch of features you never use. It also doesn’t make sense to spend hours every month trying to use every spending credit and other perk in a wallet full of cards.

To avoid this, only apply for a travel card if you’re sure you’ll be able to get your money’s worth. You don’t need to use every single benefit. But you should be able to use enough, without any difficulties, to outweigh the annual fee.

Also, go over all your travel cards with annual fees at least once per year to make sure they’re worth keeping. If not, downgrade your credit card to one without an annual fee. This way, the only cards you’re paying for will be the ones that best fit you and your lifestyle.

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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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