Money Management

A high-deductible health insurance plan could be a cost-effective choice for you. Read on to find out why. 

Open enrollment has been in the news a lot in the context of Medicare, because from Oct. 15 through Dec. 7, seniors on the program can make changes to their existing coverage. But even if you’re years away from being on Medicare, you might still have to make an open enrollment decision shortly.

October and November are when workplace open enrollment periods commonly kick off. And so at this point, your employer may have already presented you with options so you can choose your benefits for 2024.

One big decision you’ll have to make is signing up for a health insurance plan, assuming your employer provides that benefit. It’s common for employers to subsidize the cost of health insurance for employees, making premiums more affordable.

But even so, you may be looking at premiums that are higher than you want to pay. And that’s one reason to consider a high-deductible plan.

Why a high-deductible plan might benefit you

When you sign up for health insurance, you pay a premium to put that coverage in place. You don’t pay things like copays or deductibles until you actually get sick or need a doctor. That’s why a high-deductible health plan could work to your benefit.

High-deductible plans tend to offer lower premiums than low-deductible plans do. And if you’re someone who doesn’t tend to get sick or see a doctor all that often, that could work to your benefit.

Let’s say you’re given the choice between a plan with a $2,000 annual premium and a $500 deductible versus one with an $800 premium and a $2,000 deductible. The plan with the higher deductible might seem more expensive at first, but that assumes you’re forced to actually cover that $2,000 deductible.

Let’s say you choose the plan with the higher deductible but only end up paying $500 of it. Between that and your $800 premium, you’re at $1,300. With the other plan, you’re looking at $2,000 just to have coverage, regardless of how often you use it.

An HSA is a great perk to have, too

Another good reason to choose a high-deductible plan? You may be eligible to participate in a health savings account, also known as an HSA.

To qualify for an HSA in 2024, your health insurance plan needs to have a minimum deductible of $1,600 for self-only coverage, or a minimum deductible of $3,200 for family coverage. From there, you can contribute up to $4,150 to an HSA next year individually, or up to $8,300 if you have family coverage. If you’re 55 or older, you get an extra $1,000 added to whichever limit applies to you.

The HSA contribution you make shields that much of your income from taxes. So if you put in $1,000, the IRS won’t tax $1,000 of your earnings.

Plus, HSAs let you invest funds you don’t need right away to grow your balance even more. And withdrawals are tax-free when used for medical spending.

Now, if you decide that a high-deductible health insurance plan doesn’t make sense for you, you can open a flexible spending account (FSA) if your employer offers one in conjunction with a lower deductible plan. But FSAs make you spend down your plan balance every year, while HSAs let you carry funds forward indefinitely. As such, it generally pays to err on the side of underfunding an FSA and just padding your regular savings account instead to cover healthcare costs.

You might assume that choosing health insurance with a higher deductible is a bad thing. But in some situations, it could end up being a very smart financial decision.

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Mortgage rates are high right now. Will that change in the new year? Read on to find out. 

Today’s elevated mortgage rates are making life very difficult for prospective home buyers. They’re also taking refinancing off the table for a lot of mortgage holders.

As of this writing, the average interest rate on a 30-year mortgage is 7.57%, according to Freddie Mac. But the reality is that mortgage rates have been elevated since the start of the year, and they’ll likely remain high for the remainder of 2023.

But will things be any different in 2024? Or will borrowers be facing the same exorbitant rates next year that they’re looking at right now?

There may be some relief in sight

A lot of people are blaming today’s higher mortgage rates on the interest rate hikes that have been implemented by the Federal Reserve since early 2022. Now, the reality is that the Fed does not set any borrowing rates for consumers. Rather, it oversees the federal funds rate, which is what financial institutions charge one another for short-term loans.

But when that benchmark interest rate goes up, lenders tend to pass the cost onto consumers. That explains why it’s more expensive these days to sign an auto loan, home equity loan, or personal loan.

While general borrowing conditions can impact mortgage rates, borrowing rates for home buyers tend to be more influenced by the 10-year Treasury. Right now, the yield on the 10-year Treasury is high, but it’s expected to drop in 2024. If that happens, mortgage rates could follow suit.

However, it’s important to have realistic expectations about how low mortgage rates will get. We could see rates drop into the 6% range, or even lower. But if you’re looking to buy a home, don’t expect to see the same 3% interest rates borrowers got to enjoy in 2020 and 2021. We may not see rates that low again for many years.

How to save on a mortgage when rates are high

These days, even prospective home buyers with excellent credit are looking at higher mortgage rates due to market conditions. But there are a few steps you can take to walk away with a lower rate on a mortgage.

First, try to get your credit score as high as possible. If you can get your score into the 800s by paying all bills on time and keeping revolving credit card balances down, you might snag a discount on your mortgage rate (with the understanding that your rate might be high to begin with).

It also pays to shop around with different mortgage lenders and compare offers. You may find that one lender is willing to come in at a lower rate than another.

Finally, if you can afford a shorter-term mortgage, you might lower your borrowing rate in the process. The average rate on a 15-year loan today is 6.89%, according to Freddie Mac. A 15-year mortgage will leave you with higher monthly payments, but if you’re buying a home that’s well below your budget, that may be manageable.

In time, mortgage rates should come down. And that may happen in 2023. But don’t expect rates to fall back to 3%. Those rates are unlikely to be available anytime soon.

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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.
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Certain habits could wreak havoc on your finances. Read on to learn about three habits it’s best to break sooner rather than later. 

It’s hard to believe that we’re nearing the tail end of 2023. But seeing as how the weather’s turned cool (or even downright cold) in much of the country, and stores already have their Christmas displays out, it’s fair to commence the countdown into 2024.

Now, it’s pretty common for people to make a list of New Year’s resolutions. And some of those might be financial in nature. But if you’re someone who can own up to three habits, you should know that breaking them ASAP is a far better bet than waiting until 2024.

1. Adding to your credit card balance

During the second quarter of 2023, U.S. credit card balances rose $45 billion to a high of $1.03 trillion, according to data from the Federal Reserve Bank of New York. If you owe money on your credit cards, you’re clearly not alone.

But one thing you don’t want to do is keep adding to that debt. Doing so might only cause you to lose more money to interest.

If anything, you should be taking steps to whittle down those balances. So if you’re already in debt, try your best to stop using your credit cards and come up with a debt payoff plan.

One option you may want to look into is a balance transfer. If you’re able to move your existing balances over to a new credit card with a low or 0% interest rate, you may have an easier time getting ahead on your payments.

You can also try consolidating your credit card debt into a personal loan. That way, you’ll get the benefit of a fixed interest rate on your debt and predictable monthly payments — plus a set timeline for getting out of debt.

2. Paying for services you don’t really use

Services like subscription boxes and streaming services can make life more pleasant. And if you can afford them, you might think it’s no big deal to keep having those charges recur.

But while it’s one thing to pay for a service you get enjoyment from, it’s another thing to pay for a service you hardly ever use. So take the time to look at your bank and credit card statements to get a full list of the services you’re signed up for. And then make cuts based on usage or a lack thereof.

Perhaps a given streaming service only costs you $15 a month. But if you’re not using it, why not put that $180 a year in your savings account?

3. Ordering takeout when you’re not in the mood to cook

Life has a tendency to get busy. And if you’re someone who’s not all that comfortable in the kitchen, it’s natural to fall back on takeout when the last thing you want to do is cook a meal.

But takeout can be really expensive. And while it’s totally okay to order takeout once a week, or to save it for those nights when you’re downright exhausted, ordering takeout multiple nights a week could put a huge strain on your finances.

Instead, figure out cheaper alternatives that don’t require a lot of effort on your part. Some meal delivery services will send frozen, pre-cooked entrees to your door at a lower price point than fresh takeout from an area restaurant. So it’s worth pricing those options out to see what makes the most financial sense.

You could also spend a little time researching one-pot recipes that yield multiple servings of food without a lot of effort. When you have a free hour on a weekend, throw those ingredients together for a week’s worth of leftovers.

Many people see the start of a new year as an opportunity to rethink and refresh their financial habits. But if these things apply to you, it’s best to kick those habits immediately rather than wait until the start of 2024.

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Real estate listings aren’t always accurate. But read on to see what happens when you act on a listing that contains blatant misinformation. 

If you’re buying a home, you may be gearing up for the largest purchase of your life. So it’s important to do plenty of research before making an offer and going through the process of applying for a mortgage.

One thing you’re likely to do when researching properties is look at their MLS listings. But what if you decide to move forward with an offer on a home whose listing contains a lie? Or, worse yet, what if you actually sign your mortgage and move into that home, only to then realize you were lied to?

The good news is that it’s illegal to produce a real estate listing with false information. So if you can prove that you were lied to, you may have recourse.

You’re entitled to the truth

Misinformation on a real estate listing could end up costing you money as a buyer in one way or another. So you’re entitled to an accurate listing.

If you were lied to in a listing and you haven’t yet closed on your home, that may be grounds to walk away from that purchase without losing the deposit you put down at the time of your offer. You’ll need to consult your real estate attorney to see what rights you have.

If you’ve already moved into your home and uncovered a lie, that’s a trickier situation. But even then, you may have recourse. If you can prove there was a blatant lie in the listing you relied on, you may be able to sue your seller for misrepresenting their property. Again, talking to a lawyer is going to be your best bet here, because they’ll be able to tell you what avenues to pursue.

You should also know that it may be possible to take legal action against a real estate agent who played a role in producing a listing with a lie. Whitney, LLP, a Maryland law firm, says that “real estate agents on both sides of a transaction have a duty to disclose all material facts to the buyer.”

So, let’s say a real estate agent puts together a listing that clearly misrepresents the condition of a given property. That misrepresentation may not be immediately obvious. But if you suffer a financial loss because of that lie, you may have grounds to sue.

What about an as-is property?

Some sellers like to cover their tails by listing their property “as is.” When you see a listing like this, it’s basically a sign the property in question has some issues, and the seller is not willing to fix them.

You may have less of a leg to stand on if you buy an as-is property and it turns out to have more issues than you expected after you move in. But again, sellers and their agents are required to disclose certain information on listings. So if there’s a blatant omission, you might still have a case.

Unfortunately, you can’t always count on a seller or their agent to be truthful when putting together a real estate listing. It’s really important to have a thorough home inspection when you’re buying a home. This way, if the seller in question did lie, you’re more likely to discover it. And then, you’ll hopefully be in a position to either back out of the deal or demand compensation for the issue at hand.

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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.Discover Financial Services 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 Discover Financial Services. The Motley Fool has a disclosure policy.

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It can be tempting to buy airfare using a third-party site, especially if it’s a cheap ticket. But it can be risky. Find out what extra costs you could pay. 

When you love to travel but have limited funds in your bank account, you might find yourself doing whatever it takes to knock off as many dollar signs as possible. Like, taking a 6 a.m. flight, traveling with only a small backpack, and using a third-party booking site to buy airfare.

That’s what my sister recently did and it impacted her finances. With the help of technology, it’s easy to book travel online. But you should consider the potential risks before booking travel using a third-party platform. Keep reading to find out what NOT to do when buying airfare online.

Booking flights using a third-party platform can be risky

Since my sister lives in Paris, she met me for a weekend while I was traveling around Budapest, Hungary. She works as an au pair, so finding a great deal was necessary due to her limited budget. After researching prices, my sister booked flights using a third-party travel website.

She felt comfortable doing this because the brand was reputable and featured airlines she recognized. She would fly with two separate airlines for a reasonable price. But the plan quickly went from no problem to a big problem.

On our last evening in Budapest, after happily skipping off our bottomless Prosecco boat cruise, chaos ensued. A text from one of the airlines alerted my sister that her early morning flight was delayed by seven hours. Not having to wake up at 3 a.m. would usually be a blessing, but the delay would result in my sister missing her second connecting flight in Milan.

Since she had to return to Paris for work, my sister was left to make alternative travel plans at the last moment. Because she had booked her tickets using a third-party website, there was little recourse, and we were left to quickly strategize how to handle the dilemma. Did I mention it was almost midnight at this point, and we had just enjoyed a lot of bubbly?

But dear reader, I have good news. My sister made it to Paris, and you can learn from her mistake to avoid making a similar error the next time you book flights online. Here are three ways booking flights using a third-party website could cost you more than planned.

1. Money lost on the original flight

After learning about the delay, a representative from the third-party website called my sister. She was told she could receive a small refund if she agreed to cancel the delayed flight. But only $40 of the $173 was eligible for reimbursement.

Even worse, only $3 would be refunded to her credit card, and the remaining $37 would be refunded as a voucher. She also had no choice but to cancel the second flight, but since it departed on time, she was ineligible for a refund.

2. Money spent buying a new airline ticket

My sister ended up booking a new direct flight from Budapest to Paris. It cost $300. This was the most logical choice because it ensured she’d return home in time for work. But, the extra expense negatively impacted her personal finances. She had other trips planned for later this year, and her now-depleted travel budget jeopardized her future travel plans.

3. Additional travel costs

Not only did she pay an additional $300 for the new flight, but she also needed to remain in the city until her evening flight departed, which was longer than planned. Additional travel expenses like food and transit dug further into her budget. If you have to make last-minute alternate travel arrangements like my sister did, the extra costs can quickly add up.

Set yourself up for success when booking travel online

Flights sold on third-party booking platforms may be cheaper, but there is risk involved. It’s worth spending the extra money to book flights directly with an airline. You’ll likely have more flexibility with refunds if delays or cancellations occur, and you’ll deal directly with the airline if you need customer service support.

Another important tip: Don’t skip reviewing booking terms. Always check the booking terms in detail, whether you make reservations using a third-party website or directly with an airline. You want to know what to expect if something goes wrong. My sister got some money refunded, but that’s not always possible. It pays to take extra care when booking travel arrangements online.

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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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Many people put their cellphone payments on autopilot. Read on to see why that may no longer be as lucrative for you. 

When you have a bill you’re on the hook for every month, setting it up to get paid automatically can be a smart choice. For one thing, it’s a huge time saver. But also, it can help you avoid a situation where you pay late due to sheer forgetfulness.

Being late with certain bills has the potential to damage your credit score. And even if that doesn’t happen, you don’t want to get hit with pesky late fees. So it’s a good idea to take advantage of autopay options when they’re made available to you.

Cellphone companies generally let you set up your account to autopay. And you may be in line for a discount if you go this route. But be careful — if you use a credit card to autopay your cellphone, you might lose out on that break.

When using a credit card doesn’t pay

It’s easy to see why you’d be inclined to use a credit card to autopay your cellphone bill. Many credit cards offer rewards or cash back on purchases like that, so if you’re paying a bill, you might as well get a little something extra out of it.

But a growing number of cellphone service providers have been requiring customers to switch to a debit card or bank account to get an autopay discount. And if yours has adopted that rule, you may want to follow it. Chances are, the discount you’re being offered is greater than the amount of cash back you’ll get from your credit card.

Verizon has actually required autopay customers to use a bank account or debit card for years to get a discount. But recently, AT&T and T-Mobile have followed its lead.

This shift makes sense. Like all merchants, cellphone companies pay processing fees when they accept credit cards, and those eat into their profits. So those companies are no doubt implementing this change to conserve costs, kind of like how restaurants have taken to tacking on a surcharge for customers who use a credit card to pay for a meal.

But if you’re in the habit of autopaying your cellphone bill with a credit card, you may want to make a change. Or, more specifically, you should read through the terms of your provider’s autopay agreement and see if using a credit card means you don’t get to enjoy a discount. If so, a switch to a bank account or debit card could be smart.

Other ways to save on your cellphone bill

Even though you may not be able to snag a discount by autopaying your cellphone bill with a credit card, the opportunity to get that discount still exists. And that’s good, seeing as how cellular service is one of those expenses most of us can’t do without.

There are also other steps you may be able to take to lower your cellphone costs. One option to consider is forgoing a cellphone upgrade the next time you’re eligible. Often, upgrading will mean locking yourself into an extended payment plan that results in higher monthly bills. If your current cellphone is working just fine at the time you’re eligible for an upgrade, don’t rush to take it.

It also pays to see if you’re eligible for a discount based on being a student or a current or former member of the U.S. military. Cellphone providers commonly offer special rates to people in these categories.

Finally, talk to your spouse, parents, or siblings about getting onto a family plan and splitting the cost. It could be cheaper than each of you having your own plan.

It’s unfortunate that a number of cellphone companies will no longer give you a discount for autopaying your bill with a credit card. But hey, at least that discount is still on the table. That’s something to be grateful for.

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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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