Money Management

Do you keep all of your money in your checking account? Find out why you may want to stash your savings in a bank account that earns interest. 

A bank account is an excellent place to keep your money so it’s organized and readily available when needed. Many people keep their cash in a checking account. But, while you want to stash enough money in your checking account to cover your bills and everyday expenses, you want to avoid keeping all of your cash there. I’ll explain why here, and suggest a better place to stash your extra savings.

Don’t miss out on interest

The average checking account doesn’t accrue interest. That means you won’t get rewarded for keeping money in your bank account. Instead of keeping all your cash in your checking account, you should only keep enough to cover your monthly expenses.

You may want to keep a bit more than just enough to cover your bills. That way, you’ll be covered if you have an unexpected charge or a more costly bill than anticipated. How much extra should you have? It depends. For some people, a couple hundred extra dollars may be ideal. But for others, it may be a good idea to include a few hundred or up to an extra $1,000 in their checking accounts for extra wiggle room.

But don’t keep every last dollar you have in your checking account. If you do, you’ll miss out on interest. Instead, move your extra savings into a bank account that accrues interest. With an interest-earning bank account, you’ll get rewarded as your cash sits in the bank.

You could earn money with a savings account

Many people keep extra cash in a savings account. Review the bank’s annual percentage yield (APY) when considering a new savings account. This rate is the amount of money or interest you’ll earn over a year. The higher the APY, the more money you can make.

You can take advantage of an attractive interest rate by opening a high-yield savings account. At the time of writing, the bank accounts on our best high-yield savings accounts list offer APYs ranging from 4.30% to 5.26%. If you have a significant amount of extra cash and keep it in an account like this, you can earn money without doing extra work.

$5,000 in savings accumulates this much interest

To determine how much interest you can earn by moving your extra cash to a savings account, multiply your initial deposit by the APY your bank account offers. This will show you how much interest you can earn by keeping your money in the bank for a year.

Let’s imagine you have $5,000 extra sitting in your checking account right now. If you instead move that money to a high-yield savings account with an APY of 5% and you keep it in the bank for an entire year (and your APY doesn’t change; note that banks can raise or lower APYs at any time), you’ll earn $250. That’s much better than making $0 by keeping your savings in a checking account that doesn’t accrue interest.

Now you can see why it pays to avoid keeping all your money in a checking account. You can earn extra money from interest by keeping your spare cash in a savings account that offers interest. For additional tips like this, check out our free personal finance resources.

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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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If you’re trying to save on Halloween expenses this year, Dollar Tree and Costco could help you save. Find out which is cheaper for your budget here. 

In 2023, Americans are expected to spend a record-breaking $12.2 billion on Halloween, which is more than the GDPs of 37 countries and almost six times as much as the projected gross sales of Taylor Swift’s Eras Tour ($2.2 billion and counting). That’s a lot of pumpkins, styrofoam tombstones, and hayrides.

This might be the most expensive Halloween on record, but that doesn’t mean you have to overspend to get into the season. If you want to celebrate without going over budget, buying your Halloween supplies at Costco and Dollar Tree could be your best bet. Both stores offer a variety of stuff. But if you had to pick one which one will save you more? To find out, let’s compare both stores on candy, costumes, and yard decorations.

Candy

Winner: Costco

Costco has low prices for most Halloween candy, but it’s not a knock-out winner. For some candy, Dollar Tree will actually give you more value for your dollar. To give you an idea, here’s how they compare on similar candy products:

The prices are close, but Costco takes the lead for most popular candies. It also has a 90 ounce variety pack of candies, including M&Ms, Twix, Snickers, and seven other types of candy, for $22.99. Dollar Tree doesn’t have a variety pack online that can compare with this.

It’s important to know that Dollar Tree sells candy in bulk online. For instance, you would have to buy $60 worth of Tootsie Pops, or about 16 pounds, to get it at that $3.70 per pound price. Costco also sells its candy in bulk, but in much more reasonable quantities. If you’re feeding a neighborhood or two, ordering your candy through Dollar Tree’s website might give you the best value for your dollar — that is, where it beats Costco (like on Tootsie Pops). For smaller quantities, you can buy your candy at a Dollar Tree store, or purchase it in smaller bulk packages from Costco.

Costumes

Winner: No contest

Comparing costumes from Dollar Tree with those at Costco isn’t apples to apples. In fact, Dollar Tree doesn’t sell costumes but rather accessories, while Costco does sell costumes for kids and dogs.

I’d say, if you want to buy your kid a costume for Halloween, Costco will sell you one for a very low price. Even though we can’t compare Costco with Dollar Tree for this category, we can definitely compare it with Amazon, especially since both brands sell many of the same Teetot costumes. For perspective on how low its prices are, here’s how Costco and Amazon compare:

Not every kid needs a full costume. In fact, it can be wasteful, as your kid will likely grow out of it before next Halloween. A DIY costume, on the other hand, could be more sustainable — both for your budget and waste management. If you can make a costume yourself, Dollar Tree could give you the cheapest materials. Most of what you find at Dollar Tree are accessories, like witch caps, wands, toy swords, and plastic tiaras. Truthfully, all you need do is crown a kid with a tiara and most people will get the idea.

Yard decorations

Winner: Dollar Tree

As with costumes, comparing Costco and Dollar Tree on yard decor isn’t exactly a fair matchup, since Costco sells only premium and large decorations, like pumpkin luminaries and a seven-foot animated mummy. If you already have Halloween decor, Costco may offer you some unique yard decorations to add to your collection. Otherwise, you might want to shop at Dollar Tree.

Dollar Tree’s Halloween decor is mostly small, cheap stuff, like skeleton hands, plastic witch cauldrons, lawn stakes, gel window clings, barricade tape — you know, the typical Halloween stuff. On the whole, it’s mostly lame, but it’s cheap and can put you and your neighbors in the Halloween spirit.

Which is better?

If personal finances are on your mind and you’re looking for a one-stop Halloween shop, it’s hard to beat Costco on candy and costumes. Its yard decorations are a bit pricey, however, and the variety is a little meh. Dollar Tree’s decorations aren’t the most unusual, extraordinary, or frightening, but you can at least buy more trinkets and cheap decor there.

Ultimately, if you’re trying to avoid getting carried away in the expected $12.2 billion Halloween onslaught, shopping at both Dollar Tree and Costco could give you the best bang for your buck. You might want to compare them to other retailers, too, like Walmart and Amazon, to see which has the best prices. In general, I’d stay away from Halloween outlet stores (like the ones haunting the buildings where a Bed, Bath, and Beyond used to be). Their stuff might be trendy, but it’s usually expensive and not often the best value.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool recommends Amazon.com, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.

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Tipping is a hotly debated subject. Check out how much Americans tip on average for a reasonable guideline you can use. 

Tipping can be stressful. It shouldn’t be, since the whole idea is that you’re giving something extra in appreciation of good service. But servers in the United States usually live off tips. Tips aren’t just a token of people’s appreciation; they’re often the bulk of those workers’ salaries.

It makes paying the check a lot more complicated, especially if you’re not sure of proper tipping etiquette. What’s a reasonable amount? Should you tip when you’re getting takeout? Fortunately, we have recent data on how much Americans tip and some helpful tipping rules you can follow.

The average tip amounts in the United States

Toast, a company that provides point-of-sale platforms and other products for restaurants, has been keeping track of tip amounts on its platform since 2018. Here’s the latest data taken from its Q2 2023 Restaurant Trends Report:

The average tip is 18.9% of the total check amount. That’s a slight decrease from the start of the year.The average tip at full-service restaurants is 19.4%. A full-service restaurant is one that provides table service and where tipped employees may make less than the minimum wage.The average tip at quick-service restaurants is 16.1%. A quick-service restaurant is a restaurant with minimal or no table service.

When should you tip — and how much?

One of the causes of “tipping fatigue” is that more and more businesses are asking for tips, to the point where it has a serious impact on people’s personal finances. Transactions that never used to involve a tip now do, often with oh-so-helpful suggestions of 20% to 30% as you go through the payment process with your credit card.

While a tip is never required, there are many situations where it’s expected and the right thing to do. Here are some of the most common situations where you should tip and the amounts recommended by the Emily Post Institute:

Sit-down dining: 15% to 20%Food delivery: 10% to 15% (this is also a good guideline for other types of delivery orders, such as Postmates and Instacart)Bartender: 15% to 20% or $1 to $2 per drinkSalon/spa services (hair cuts, massages, manicures, etc.): 15% to 20%Hotel housekeeping: $2 to $5 per day

Before you tip, make sure there’s not a gratuity already included. Some restaurants and bars automatically charge a gratuity, but also leave a tip field (pretty shady, in my opinion). You already paid a tip in this case, so there’s no need to pay another.

Keep in mind that when tipping based on the bill amount, you don’t need to include the tax. For example, if dinner at a restaurant costs $100 and the tax is $9, base your tip on the $100 meal and not the $109 total with tax.

There are also situations where you may have the option to tip, but it’s not a big deal if you don’t. Takeout orders and cafes are two of the most common examples.

Do what feels right, and don’t let tipping stress you out

There are general guidelines for tipping, but ultimately, it’s up to you. Tip what you feel comfortable giving and what works for your savings, and don’t feel pressured to tip if you don’t think it’s warranted. If the service is horrible, you aren’t obligated to tip.

Also, while certain tipping guidelines are widely accepted, others are debatable. For example, the Emily Post Institute suggests tipping $0.50 to $3 for restroom attendants. To be honest, the last thing I want in a bar bathroom is some stranger handing me a paper towel, and I’m not digging out my cash for that. I’m usually a generous tipper, but I have my limits.

When you go out for food or drinks, 15% to 20% is an easy rule of thumb. If you’re ever unsure of how much to tip and want to get it right, you can always look it up online for a quick answer.

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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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Are you dreaming of having better credit by next year? Read on for a couple key moves to focus on to make your dream a reality. 

Raising your credit score (and keeping it up) is often a long game. I recently saw mine jump by 100 points — but that increase took eight months of hard work and dedication to good credit habits.

Your credit score is based on five different factors, and for your FICO® Score (the one used by 90% of lenders), the most impactful one is absolutely a reflection of that long game. Payment history accounts for a whopping 35% of your FICO® Score. However, there are two other ways to get your credit score up significantly before 2024, and both of them address your credit utilization ratio.

Wait, what’s a credit utilization ratio?

I’m glad you asked! (After all, it’s my job to answer questions like this one.) Your credit utilization ratio is the percentage of revolving credit (like on a credit card) you are using relative to how much total revolving credit you have.

As an example, let’s say you have three credit cards — one with a credit limit of $7,000, one with a limit of $5,000, and one with a limit of $3,000. Your total credit limit across these three cards is $15,000. But you’re carrying a balance of $2,000 on the first card, $1,800 on the second, and $1,200 on the third. Your total usage is $5,000, and you have a credit utilization ratio of 33%.

That 33% is a little high; it’s recommended that you keep your credit utilization ratio below 30%. And coincidentally, this number is reflected in your FICO® Score to the tune of 30%. It’s the second-most significant factor, after payment history. It makes sense that it would be so heavily weighted, too. If you’re carrying a higher percentage of debt, it could mean that you’re struggling to cover your everyday expenses with cash and must rely on credit, and this could make lenders nervous about extending you additional credit. If you want to see a credit score bump sooner rather than later, try these ways to improve your credit utilization ratio.

1. Focus on paying down your debt

Paying down existing debt is a very impactful means of improving your credit score — it’s what I did to get my credit score to “exceptional.” It’s not easy to pay off debt, and unless you can somehow cut out all your nonessential spending (and it totals a big part of your budget), you’ll most likely have to increase your income to do it.

This could mean getting a significant raise at your current job, taking on a side hustle (and cutting into your free time), or changing jobs altogether. But if you can do it, this is a productive way to boost your credit score. And if you can start now (and be aggressive), you may see that 50-point increase before 2024 arrives. In our example above, if you manage to pay off half of your existing debt ($2,500), you’ll take your credit utilization ratio down to about 17%.

2. Increase your available credit

This means of boosting your credit score more quickly might be more available to you, but it will likely depend a great deal on your current credit score. If you’re already in good shape, a credit card issuer will probably be more willing to consider increasing your credit limit. You can request an increase in your card issuer’s mobile app or on its website, or you can call customer service.

Be careful though, as in some cases a credit card issuer will do a hard credit check to determine eligibility, and this will ding your credit score. This isn’t always required for an increase, though, and you’ll be informed if it is. From our example above, if you can get your $7,000 credit card increased to $9,000, your new total credit limit will be $17,000 and your new credit utilization ratio (with $5,000 owed between cards) will be 29%.

If you paid off half of your debt and got the increase, your credit utilization ratio will be about 15%. Just be sure you don’t add any more debt to your current load to feel the best impact from a credit limit increase.

Got more time to boost your credit?

Since building and maintaining a solid credit score is best done over the long term, you could start making these moves now and keep them up:

Focus on those on-time payments: Every month, every time. If you struggle to remember due dates, consider automating your payments.Apply for new credit sparingly: Remember, applying for a new loan or credit card lowers your credit score by a few points (because of a hard credit check). For this reason, it’s best to spread out your applications.Keep old accounts open: If you have old credit cards you don’t really use anymore, keep them open anyway (especially if they don’t charge annual fees). Length of credit history makes up 15% of your FICO® Score. Plus, they’ll add to your available credit and improve your credit utilization ratio.

Ultimately, if you can improve your credit utilization ratio in short order, that will be the best way to markedly boost your credit score between now and 2024. This isn’t going to be possible for everyone, sadly. But if you focus on the long game, you can boost your credit score over time.

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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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