Money Management

American Express is changing the type of credit score it provides to cardholders. Get more details on this change and learn why it’s so important. 

If you have any American Express cards, you probably received an email recently about changes to its credit score service. You’ll still be able to view your credit score free of charge with American Express MyCredit Guide. It just won’t be the same credit score as before.

American Express MyCredit Guide will provide your FICO® Score instead of your VantageScore. To view your credit score from your American Express account, open the menu and select “Free Credit Score & Report.” The credit score tool is still providing a VantageScore at the time of this writing, but that will change soon, according to American Express.

At first, this might not seem like a big deal. FICO® Score, VantageScore — they’re both credit scores, right? While that’s true, there’s actually a sizable difference in how useful these credit scores are.

Your FICO® Score is more important than your VantageScore

When it comes to credit scoring systems, FICO is the clear leader, and it’s not a close race. FICO was the first to introduce a consumer credit score, which it did in 1989. Nowadays, 90% of top lenders use FICO® Scores. So, when you apply for a loan or credit card, odds are that the lender will check your FICO® Score.

VantageScore was introduced in 2006. It was created by the three consumer credit bureaus (Equifax, Experian, and TransUnion) as an alternative to FICO® Scores. This was in large part because the credit bureaus needed to pay FICO to use its scoring system. By getting lenders to use the VantageScore system, the credit bureaus can save money.

Most lenders and credit card companies don’t use VantageScore, though. For that reason, some people derisively refer to it as a “FAKO Score.” Sure, it’s a credit score, but it’s not one that a whole lot of lenders are going to see when they check your credit.

However, many free credit score tools provide your VantageScore instead of your FICO® Score. The most likely reason for this is because VantageScore is cheaper for companies to provide. But your VantageScore and your FICO® Score can be different. For example, my most recent VantageScore is 802, and my most recent FICO® Score is 758, a difference of 44 points.

This leads to confusion for consumers. Your free credit score tool shows you one score (your VantageScore), but when you fill out a credit card or loan application, the lender checks another score (your FICO® Score). If your FICO® Score is lower, which is often the case, then your application could be denied even if you thought it was a sure thing.

How to stay on top of your credit score

VantageScore has its uses. It gives you a general idea of your credit and the factors affecting it. Credit score tools that provide your VantageScore also normally give you helpful information on improving your credit score. Following these tips can improve your FICO® Score, too. After all, there’s quite a bit of overlap in the credit scoring systems and what they value.

Still, it’s a good idea to use a service that provides access to your FICO® Score, especially before applying for credit cards and loans. It’s normally different from your VantageScore, and that difference can sometimes be enough to affect whether your application is approved or denied.

For example, if you plan to apply for any of the best credit cards, most of those are aimed at consumers with a credit score of 670 or higher. If your VantageScore is 690, but your FICO® Score is 660, you may want to work on your credit first. The credit card issuer will most likely check your FICO® Score, which won’t quite meet the requirements.

While most free credit score tools provide your VantageScore, there are exceptions. American Express MyCredit Guide is one option, and it’s not just for cardholders. You can still sign up even if you don’t have an American Express card, and it’s a well-designed credit score service. It provides your credit score, gives you the option to set score goals, and has several other tools to help you get a higher score.

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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.American Express is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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You work hard for your money. Read on for ways you might accidentally be forfeiting money that’s yours. 

How often have you found yourself walking down the street and a random stranger slipped you a $100 bill with no strings attached? Chances are, that’s never happened.

At best, these days, the most you can really hope for is to land in a pay-it-forward line where a stranger covers the cost of your coffee to go. And even then, it’s questionable as to whether you’re getting something for free, because the general convention is that the right thing to do is to buy a coffee for the car or person behind you.

But believe it or not, there are some opportunities in life to get your hands on free money. These mistakes, however, could cause you to miss out on it.

1. Not claiming your full 401(k) match

If you’re saving for retirement in an IRA, you won’t be entitled to an employer match, since these accounts are self-funded and self-managed. But if you have a 401(k) plan through work, then it pays to see what matching incentive it comes with.

It’s common for companies to match workers’ contributions to 401(k)s to some degree. Fidelity reports that among its plans, the average overall average employer contribution is 4.8%.

If your company is willing to give you a 4.8% match and you earn $60,000 a year, contributing $2,880 out of your own paychecks to your 401(k) would mean snagging a free $2,880 from your employer. But if you don’t put that money in, you won’t get that match.

2. Not using credit card rewards before they expire

Many issuers offer flexible credit card reward programs that give you plenty of opportunity to take advantage of the points you’ve banked. But if you have a store credit card, your rewards might expire somewhat shortly after you earn them. And if you don’t use your rewards on time, you’ll effectively be giving up free cash.

So don’t let that happen. Mark the expiration date of your rewards on your calendar and make a point to use them before they’re no good.

And if your rewards come in the form of, say, a $10 credit to your go-to retail store, don’t assume that $10 is useless just because it’s a small amount. You could always use it to buy staples like socks and underwear — stuff you’re going to have to replace eventually.

3. Not taking advantage of tax breaks

The U.S. tax code is loaded with tax breaks that can save people money. But if you don’t know where to look, you might miss out on major cash to add to your savings account.

The Earned Income Tax Credit, for example, is a fully refundable credit that can put a nice sum of money into your pocket if you’re eligible. And if you’re working a side hustle, you should know that you’re allowed to claim a deduction for the costs you incur, whether it’s paying for gas to get to a gig or buying supplies.

If you want to make sure you’re not missing out on lucrative tax breaks, sit down with an accountant so they can review your finances and tell you what benefits to jump on. You might have to pay that person a modest fee, but the savings you reap could more than make up for it.

Free money is one of those things that’s generally hard to get. So it pays to do whatever you can to capitalize on it when it comes your way. That means putting money into your 401(k) to get your employer match, using up credit card rewards, and making sure the IRS isn’t keeping so much as a single extra dollar of your earnings.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Credit cards offer different benefits. Read on to learn about one so-called perk that could be costly — and how to set yourself up so you won’t need it. 

There are different perks you might enjoy as a credit card user. Getting to earn rewards or cash back on your purchases, for example, is a good thing, because that’s free money for the things you were already planning to buy.

But not every benefit that comes with your credit card is actually a benefit. Case in point: Your credit card might give you the option to take a cash advance. And you may be tempted to do that when you have a need for money.

But taking a cash advance is something I’ve always managed to avoid. And I highly recommend that you try to do the same.

The problem with cash advances

Taking a cash advance might seem like a simple extension of using your credit card. But cash advances are highly problematic for a couple of reasons.

First, the interest you’re charged on a cash advance may be higher than the general interest rate on your credit card. The result? You’re spending a lot more to get access to money.

Plus, cash advances usually don’t give you a grace period when it comes to interest accumulating. When you put expenses on a credit card, you get a full billing cycle to pay off your balance before you rack up interest charges. But interest will generally start to accrue from the moment you take a cash advance.

It’s for these reasons that I’ve always made a point to avoid taking a cash advance. But I actively took steps so I wouldn’t need to by building an emergency fund over time.

These days, when I need money in a pinch, whether it’s for a home repair or a new tire for my car, I don’t turn to my credit cards. Instead, I dip into my savings account because that’s what that money is there for. And that way, I’m not paying extra to access money when I need it.

A good way to build an emergency fund

The emergency fund I have now took years to build. So I won’t pretend that going from $30 in the bank to having a large enough sum to potentially avoid needing a cash advance is easy.

But remember, if you contribute steadily to your savings, then over time, you might end up with a nice sum of money that can bail you out of a jam. And if you want to stay on track with that emergency fund, put the process on autopilot.

Arrange for a portion of each paycheck you receive to land in your savings account every month. It can be $15, $20, $50, or whatever you can swing. Over time, it’ll add up.

Unfortunately, a good 63% of Americans don’t have enough savings to cover a $500 emergency expense, reports SecureSave. So it’s people in that boat who might end up needing to turn to their credit cards for money. But if you build yourself an emergency fund, you won’t have to get caught in the trap of paying a fortune’s worth of interest when you need help covering a surprise bill.

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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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You could keep more money in your pocket by shopping the early Halloween sales. Discover why else it could pay to do your spooky season shopping now. 

Halloween will be here before you know it, and now is the perfect time to get your shopping done well before the holiday arrives. Doing your shopping within the next few days could be a win for your personal finances. Many retailers are running early Halloween sales that could result in significant savings. Find out why you may want to shop the early Halloween sales now.

1. Get the best deals

Life is expensive, and we’re all looking for ways to save money, so don’t miss out on the chance to find the best deals. If you shop Halloween sales early, you could get a better deal. You’ll have more time to research sales and compare deals between retailers. By taking some time to compare discounts, you could keep more cash in your bank account.

2. Better selection

When you shop early, you’ll have a better selection available to you. Whether you’re looking to pick up costumes for your kids, candy to give to trick-or-treaters, or party supplies and decorations, it can be beneficial to shop early. Otherwise, you may end up with a more limited or picked-over selection.

3. Plenty of time to shop online

Since online shopping is so convenient, you may find yourself placing some online orders as you shop for the upcoming holiday. When you take advantage of early Halloween sales, you’ll give yourself more time to allow for your shipped items to arrive. Not every retailer offers fast shipping — and even if they do, shipping delays can happen. Shopping in advance can ensure you get your Halloween essentials well before the end of the month.

4. Save time and minimize stress

By doing your shopping early, you can also save time. When you wait until the last minute to buy your Halloween essentials, there is a chance it’ll be harder to find everything you need. You may need more time to visit additional retailers to complete your shopping. You can avoid wasting time and eliminate stress by handling all your shopping earlier in the month.

Follow these shopping strategies to stretch your money further

Whether you’re shopping in-store or online, there are some techniques you can follow to save more money and boost the rewards you earn. Here are a few tips for success:

Use coupon apps. Before checking out online, check to see if you can save money using coupon apps. You can use one of the best coupon apps or websites to find active promo codes for your favorite retailers.Review and compare sales fliers. Throughout the fall, many popular retailers promote Halloween sales. You can find the best sales worth shopping for by comparing multiple retailers’ fliers. Don’t forget to do this before you go to the store, so you don’t overspend. Pay with a rewards credit card. Rewards credit cards allow shoppers like you to earn valuable rewards, like cash back, when paying with a credit card. Check out our list of the best cash back credit cards to learn more about the benefits of these cards. Use cash back apps. Another way to earn rewards is by using cash back apps and browser extensions. You can earn cash back or gift cards when you shop. If you’re not using these tools, you’re missing out on easy-to-earn rewards.

If you still need to take care of your Halloween shopping, don’t delay! You may be able to save money and time and avoid added stress by completing your shopping sooner rather than later.

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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.

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Want to pay less tax for 2023? Read on to see what move you’ll want to make ASAP. 

Taxes are an unavoidable expense for working Americans. And heck, even retirees without jobs have tax bills to cover.

But just because you have to pay taxes doesn’t mean you can’t take steps to keep yours as low as possible. And there are different ways to go about that.

For one thing, you could be strategic about claiming the right credits and deductions on your tax return. But contributing to a traditional retirement savings plan like an IRA or 401(k) is another good way to lower your tax bill, since the money that goes into these accounts represents income the IRS can’t tax you on.

But if you’re saving for your retirement in a 401(k) plan, you should know that you only have between now and the end of the year to finish making your 2023 contribution. So if you’re looking to increase that contribution, get moving ASAP.

Know the rules of 401(k) contributions

If this is your first time saving in a 401(k) and you’ve previously stuck with IRAs for retirement savings, you might think you have until next year’s tax-filing deadline to make contributions that count for 2023 purposes. With an IRA, that’s true. But with a 401(k), you only have until Dec. 31, 2023, to contribute money to that account and have it count for 2023 tax purposes. So the time to increase your contributions, if you’re able to, is now.

You should also remember that 401(k) contributions are deducted from your paychecks directly. Any change to your 401(k) contribution for 2023 has to be processed through your company’s payroll department.

It can take time to do that. So even though you have until Dec. 31, 2023, to increase your 401(k) contribution for 2023, if you wait until December to put in for that change, it may not happen in time.

Know the limits for 401(k)s

With a traditional 401(k), every dollar you put in is a dollar the IRS can’t tax you on, up to an annual limit. But it’s important to know what limit applies to you.

If you’re under the age of 50, your 401(k) limit is $22,500 for 2023. If you’re 50 or older, it’s $30,000 thanks to a $7,500 catch-up.

Now, let’s be real — most of us cannot afford to part with anywhere from $22,500 to $30,000. If you’re someone who makes $50,000 a year, for example, and you’re 30 years old, maxing out your 401(k) will mean socking away almost half of your annual income.

But let’s say you’ve only put $4,000 into your 401(k) to date and you’re able to increase your savings rate to get another $2,000 into that account before the end of the year. The sooner you inform your payroll department, the more likely you are to make that contribution in time.

Pumping money into a 401(k) is one of the easiest ways to lower your tax bill. Plus, you get the added benefit of setting yourself up with more retirement income down the line. So if you think you can swing a higher contribution this year than you initially planned for, take action quickly to get that money into your account.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 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