Money Management

A no-cost mortgage refinance might seem appealing in some situations. Will it save you money, though? Here’s how to find out. 

Mortgage refinances were popular in 2020 and 2021 when lenders were offering up record-low rates to borrowers. But these days, refinance activity is down, and it’s largely because mortgage rates have been so high since the start of the year.

Refinance activity was 7% lower for the week ending Nov. 3, 2023, than it was a year ago, says the Mortgage Bankers Association. And that’s not surprising given that the average mortgage rate as of Nov. 9 was 7.5%, according to Freddie Mac.

But you still may be interested in refinancing your mortgage if you can do so at zero cost. Mortgage lenders have traditionally offered no-cost refinances to borrowers, and some are doing that today to drum up refinances in the midst of a slow streak.

But if you’re going to take advantage of a free mortgage refinance, you’ll need to make sure it’s really worth it. Here’s how to ensure that going this route will actually save you money.

1. Make sure you’re not swapping a no-cost refinance for a higher rate

Mortgage lenders that offer no-cost refinancing tend to make up for it in the form of higher interest rates. So if you’re interested in a free refinance, compare the rate you’ll be getting to the rate you’re offered by lenders that will charge you some closing costs. And then, do a comparison.

It may be that $3,000 in closing costs results in $100 in monthly mortgage savings, whereas $0 in closing costs only gives you $50 in monthly mortgage savings. If you plan to be in your home for a long time, the first offer might be your better choice even if you end up having to spend some money upfront on closing costs.

2. Make sure there’s a reason for refinancing your mortgage at a time when rates are high

A no-cost refinance can be very appealing at a time when borrowing rates are low. But right now, that’s not the case. If you’re going to pursue a no-cost refinance, you’ll need to make sure there’s a good reason to do so.

It’s the same concept as not rushing to buy an item at a store simply because it’s got a huge markdown. If a $100 kitchen gadget that normally sells for $99.99 is marked down to $29.99, you may be tempted to buy it and save $70. But if you don’t need that gadget and won’t ever use it, you won’t save $70 — you’ll waste $30.

Similarly, don’t just rush into a mortgage refinance because there are no closing costs involved. Instead, make sure you stand to benefit financially.

Perhaps you owe a lot of money in high-interest debt. Doing a cash-out refinance could help you pay off that debt in a more affordable manner even if you end up with a higher mortgage rate than what you locked in originally. But run those numbers to make sure (rather than assume) that you should sign a new mortgage simply because you can do so for free.

A no-cost mortgage refinance may or may not be a good idea for you right now. Take the time to think through that decision and compare alternative offers before making your choice.

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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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It’s possible to “book now, pay later” for travel. Is this a good idea, though? Keep reading to learn why you may want to think twice. 

Is there anything better than taking a much-needed vacation? It’s surely one of the biggest joys in life to pack a suitcase and hit the road. Paying for it can get a little sticky, though. You’ve likely heard of “buy now, pay later” (BNPL) services. This method of financing a purchase over several weeks or months has become quite popular, and a lot of merchants (online and in person) are offering it alongside options to pay with cash or credit card.

In brief, BNPL works by giving you the chance to pay for a purchase by splitting it into equal payments over a period of several weeks. Some services offer 0% APR, too, so using this payment option won’t cost you anything extra — assuming you can make the payments on time and in full. If you can’t, you might face interest charges, delinquent accounts, or major credit score damage (if the payment service reports to the credit bureaus; not all do). Some travel websites, like Expedia, are now offering BNPL to cover the cost of travel.

But before you rejoice and rush off to book flights and hotels and pay for them in installments, wait just one second. Personally, I wouldn’t use BNPL to cover vacation costs, and you might want to reconsider, too. Here’s why.

1. A vacation is not a necessity — it’s better to save ahead of time

First and foremost, I’d skip the BNPL for travel costs because a vacation isn’t a necessity. It’s really not a good idea to borrow money for a vacation — it’s best to avoid debt for all but necessary expenses. As good as it feels to plan a trip, it feels much better to do so knowing that you’re not committing your future self to make loan payments. It’s a much better idea for my personal finances (and perhaps also yours) to save money ahead of time to cover flights, hotel rooms, and beyond.

I’ve been saving for a big 40th birthday vacation for the last few months, and in addition to ensuring I pay myself first, I’m also keeping that money in a special place. I opened a high-yield savings account with an online bank last year, and I’ve seen my APY climb over that time, to the point that I’ve earned more than $1,000 this year on the money in the account — for doing absolutely nothing but keeping it in there. If a big vacation is in your future, I recommend taking a look at the best savings accounts and picking a winner.

2. I don’t want a credit score hit

Not all of these BNPL providers run a credit check, but some do, and depending on the provider, it could be either a soft or hard credit check. A soft credit check doesn’t impact your credit score, but a hard inquiry could ding your score by a few points. A hard inquiry is more likely if you’re borrowing over a longer period of time (which makes sense — more risk for the lender). For most people and in most situations, this isn’t really a big deal — your credit score will recover.

But if you’re already between two credit score ranges and have a big expense coming up (like buying a home with a mortgage loan), losing a few credit score points could be enough to impact your eligibility for the loan, as well as increase the interest rate you qualify for. Hard credit checks are impossible to avoid in most borrowing circumstances, be it for that mortgage loan or even a new credit card application. But I certainly wouldn’t want to lose a few points from my credit score because of a vacation.

3. There are better ways to pay for travel

When it comes time to start paying for more of the bits and pieces of my big trip, I’ll be leaning on my favorite travel rewards credit card (which I’ll be paying off using that aforementioned saved cash). Why bother paying with a credit card if I have the money put aside? Well, for starters, I can’t pay for online purchases with cash, and my debit card doesn’t come with as many robust fraud protections as credit cards do.

The best travel credit cards offer other benefits — I booked the flights through my card issuer’s travel portal, meaning I could use points to pay for part of the cost and also earn a higher rewards rate on the money I spent. My card also comes with rental car insurance — I hope not to need it, but since I’ll be booking a few daily car rentals, I will feel a lot better knowing I’m protected. Some travel credit cards also offer broader travel insurance, as well as free checked bags and status with airlines and hotels. No matter the kind of traveler you are, there’s a travel credit card out there for you.

Ultimately, BNPL is best approached with caution, no matter what you’re using it for. You should probably think twice before using it for a vacation. Explore other options to pay for your upcoming travels instead.

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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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Want a great credit score? Read on to see how to get and maintain one. 

Getting your credit score into top shape can be easier said than done. According to credit score research from The Ascent, the average U.S. credit score is 714. FICO, the most commonly used scoring model, considers this a good credit score. But many consumers have a much higher score than that, which means they’re in a great position to borrow money — and borrow affordably — when they want to.

Of course, it’s one thing to build up solid credit, but it’s another thing to maintain a higher score from year to year. Here’s how people with consistently high credit manage to pull that off.

1. They pay their bills on time

Payment history carries a lot of weight in calculating credit scores — it’s worth 35% of your FICO® Score. And paying bills on time is essential to maintaining a higher credit score.

Being timely with bills isn’t just a matter of remembering to pay them, though. It’s also a matter of taking on reasonable expenses given your budget, so you don’t risk falling behind or being late for financial reasons.

It’s also a good idea to maintain an emergency fund for unplanned bills. That way, you don’t have to be late paying one due to a lack of money.

2. They maintain low credit card balances

Credit utilization also plays a big role in maintaining strong credit. Your credit utilization ratio measures how much of your revolving credit you’re using at once. Keeping that ratio to 30% or less could help keep your score in good shape.

For the most part, this means making an effort to keep your credit card balances low. But if you run into a string of months where you need to carry a higher balance, one way to potentially avoid having it hurt your credit is to ask for a credit limit increase. As long as you then don’t go charging extra on your cards, you can keep your utilization to a moderate level.

3. They keep long-standing accounts open

The length of your credit history also factors into your credit score. Lenders like to see accounts open for many years. So if you have older credit card accounts, don’t close them unless they’re costing you money.

You might think that canceling a rarely used credit card is an innocent enough move. But if it’s your oldest credit card, closing it might cause your credit score to dip.

4. They’re judicious with new credit card applications

Applying for too many new credit cards in short order sends the message that you’re suddenly desperate to borrow. And it has the potential to bring down your credit score.

Now, just because you’re applying for multiple credit cards within the same few months doesn’t necessarily mean you’re in a bad place financially. It could be something as innocent as wanting to take advantage of great sign-up bonuses.

But from a credit score perspective, it can look bad. So aim to space out your credit card applications by roughly six months if possible.

5. They check their credit reports regularly

A credit report error could easily cause a higher credit score to take a plunge. That’s why it’s so important to access your credit report a few times a year and review it for mistakes.

You’re entitled to free copies of your credit report from each of the three major reporting bureaus — Experian, Equifax, and TransUnion. Request yours from AnnualCreditReport.com a few times a year, read them carefully, and follow up on mistakes or any information that looks questionable.

Maintaining great credit for years isn’t easy. But with these moves, it can be done. And from there, you’re putting yourself in a great position to be able to borrow money at competitive rates when you need to.

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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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Costco is offering $50 off $500 on qualifying items at Costco.com. Keep reading to learn how to snag this deal. 

Costco has tons of great Black Friday deals that will give your credit cards a workout. In fact, you can take advantage of some sales that have already started.

But, if you’re considering making a really big purchase at the warehouse club, you may want to keep the money in your bank account for a little longer and wait for Thanksgiving Day. Here’s why.

Could waiting help you score more savings on your Costco purchases?

If you want to maximize your savings on your big Costco purchase, waiting until Thanksgiving Day could pay off for a simple reason: Costco is running a special promotion.

Specifically, the warehouse club is offering $50 off of a $500 purchase. This deal is valid only on Nov. 23, 2023, though. This means you will not be able to use it until Thanksgiving Day.

Since Costco is closed on Thanksgiving, you need to use the $50 off coupon online. The coupon also indicates it is good for online purchases only. This is a bit of a bummer, since Costco’s online prices tend to be higher than those offered in-store.

Still, coupons like this aren’t super common at Costco and $50 off a $500 purchase is a pretty substantial amount of savings that may more than offset any added premium you pay for the privilege of buying online.

Costco has indicated that the $50 off coupon is good only on qualifying items and the website doesn’t yet specify exactly which items fall within that category. In the past, when Costco has offered similar coupons, some of the items excluded were:

New memberships and membership renewalsCostco gift cardsSame-day grocery deliveryPharmacy ordersTravel purchasesCustom installation servicesCostco business delivery

Most items you’re interested in buying will likely be fair game if Costco follows a similar policy. You are allowed just one coupon per member, though, so you’ll want to be smart about what big purchases you make so you can make the most of it.

If you were thinking of becoming a Costco member, joining to take advantage of this deal may also make sense if you’re going to immediately make a large purchase. After all, the entry-level Costco membership costs just $60 and if you get a $50 off $100 coupon, that $50 in savings would defray almost the entire cost of joining and you’d benefit from your membership for the next year.

Should you take advantage of Costco’s big coupon to save?

If you’re planning on buying more than $500 worth of Costco items, it makes little sense not to take advantage of this coupon — unless the items you’re purchasing are likely to be ineligible or a lot costlier online than at your local warehouse club.

You need to be aware, though, that Costco has some Black Friday deals going on already that come with deadlines. If you want to take advantage of any of Costco’s early Black Friday sales, check the dates for when those promotions end and make sure you won’t be passing up a special bargain by waiting.

The good news is, there are so many deals to be had this time of year, saving $50 off $500 is just the tip of the iceberg.

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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.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Costco has some amazing Black Friday sale items. Keep reading for non-member options for taking advantage of them. 

Costco is a great place to shop and save money throughout the year. But it doesn’t make sense for everyone to put a warehouse club membership on their credit cards — especially for people who don’t live near a Costco or who don’t often need to buy the items the store is selling.

If paying for a membership out of your bank account is not something you want to do, you may still be eyeing Costco’s great Black Friday deals with envy as the store has a lot of special bargains on this retail holiday.

The good news is there are ways to take advantage of those special prices, even if you aren’t a member. Here’s how.

1. Go shopping with a friend

The easiest way to take advantage of Costco Black Friday deals when you aren’t a member is to simply go shopping with someone who is. Any Costco member with a card is allowed to bring up to two people with them on each visit — including during special sales events, such as Black Friday.

Your friend will need to make the purchase for you, though, as only members can buy. And Costco has cracked down on using other people’s membership cards at the self-checkout, so don’t even consider borrowing a card unless you want to run into problems.

2. Get a Costco member to buy you gift cards

If a friend buys you a Costco Shop Card, you’re allowed to shop with it in the store even if you are not a member. Only members can buy these Shop Cards, though, so you will need someone to get it for you before Black Friday. The good news is, these can be e-delivered so you can receive it pretty quickly and may even be able to take advantage of some of Costco’s early Black Friday deals that are going on already.

This approach can work best if you have a good idea of how much you want to spend, so your friend can buy a gift card for the right amount. However, if the gift card isn’t enough to cover the full cost of whatever you are purchasing, you can pay the balance with cash or a debit card. You cannot, however, use a credit card to pay any outstanding amount due so come prepared for that.

3. Pay the surcharge and shop online

If you don’t have a friend willing to help you take advantage of their Costco membership, you can still score Black Friday deals by shopping online. You’ll have to pay a surcharge as a non-member and prices generally are higher online (sometimes up to 20% higher). And you won’t be able to take advantage of any in-store-only deals.

If you’re considering this approach, compare how much extra you’ll pay due to the surcharge with the cost of a Costco membership (which starts at $60). You may decide buying the membership is worth it, or if you won’t shop there at all for the next year, that paying the surcharge and higher price still makes more financial sense.

And of course, you will also want to compare the deals at Costco with those elsewhere to make sure you’re getting the best overall deals on the Black Friday products you’re buying.

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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.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Streaming services offer great entertainment options, but their costs add up quickly. Here are some tips to help you keep your expenses down. 

There’s a lot to love about streaming services. They give you access to your favorite shows, movies, and music from anywhere, and new content is added all the time. But as they’ve become more popular, streaming services have also gotten more expensive. Companies are also offering exclusive content only available on their platform in order to draw in new customers.

Even if you only subscribe to a few services, the costs add up quickly and before you know it, you’re spending more than you used to on cable to watch the same TV. It doesn’t have to be this way, though. The following tips can help you enjoy all the content you love at a budget-friendly price.

Be realistic about your needs

There are dozens of streaming services out there these days, but you don’t need all of them. Even if you had all day to relax and watch TV, there’s no way you could watch everything on all these platforms. And you probably wouldn’t want to anyway. You need to focus on what matters the most to you.

If you’re on Netflix daily, that’s probably a good sign you should keep that subscription for now. But if you pay for another service that you only use once or twice per month, you could probably cancel it without missing it.

One of the great things about streaming services is they don’t have contracts, so you can cancel and restart subscriptions as often as you need. If you’re really into one show on one service this month, consider canceling your other services and just using that one. Then, when you’re ready to move onto another platform, you can cancel the first one and switch to a different one. This minimizes how many subscriptions you’re paying for at any one time.

Look for bundles and discounts

Streaming service bundles give you access to multiple streaming services for a lower price than you’d pay for each service separately. One example is the Disney+ bundle, which includes Hulu and ESPN+. If you think you’d get some use out of all of these platforms, going with the bundle could save you money compared to paying for the standalone services.

You may also want to check with your cellphone provider to see if you receive any streaming services through it. Some offer free access to popular streaming platforms with a cellphone subscription. However, you should note that this usually only includes the platform’s most basic plan and you may have to pay if you’d like to upgrade to a higher tier.

Try before you buy

Most streaming services give you a free trial of at least a week before you have to pay for their services. Take advantage of these trials to explore the service and make sure it has content you’re actually interested in. Or if you just want to watch a single movie or show, try to squeeze it all into that week so you don’t have to pay for a whole month’s subscription.

Just be aware that you usually have to enter your credit card information to get the free trial, and the service will charge you automatically once the trial is up if you don’t cancel before then. So make a note of when the trial ends and cancel promptly if you don’t plan to continue using the service.

Share with friends and family

Netflix has taken steps in recent months to crack down on password sharing, and it wouldn’t be all that surprising if some other streaming platforms follow suit. But in the meantime, if the streaming service you’re using doesn’t have any rules preventing password sharing, it’s a great way to save.

Talk with friends and family to figure out which services everyone is interested in and see if you can come to an agreement about who will pay for each one. Check in with each other, every month or two to make sure you’re all still comfortable with the arrangement.

Don’t forget about old subscriptions

When you’re paying for multiple streaming services, it can be easy to lose track of them. And if you’re not keeping a close eye on your credit card bill, the charges could easily slip by unnoticed. But there are services now that can help you track all your subscriptions in one place and cancel them easily when you’re done with them. If you don’t use one of these, consider writing down each of your subscriptions and their renewal dates so you can keep track.

Ultimately, how much you pay for streaming each month is totally up to you. Even ditching one streaming service could put some extra cash in your checking account each month, so it’s definitely worth reviewing your streaming situation and scheduling future check-ins with yourself to ensure you’re paying as little as possible.

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.Kailey Hagen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

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