Money Management

Costco members get exclusive deals on car insurance from CONNECT. Find out how much you could save. 

Costco members who are looking to save money on car insurance without sacrificing coverage will be pleased to know the warehouse retailer sells insurance. While Costco doesn’t package insurance policies itself, it can give members deals through CONNECT, which is backed by American Family Auto.

If you’re shopping for the best car insurance — or just looking for a deal — let’s take a look at what perks Costco car insurance has to offer.

Costco members get exclusive savings

When members apply through Costco for car insurance, CONNECT will automatically give them a “members-only” discount on their premium. This is in addition to any other car insurance discounts they may qualify for, like good driving or paperless billing.

As far as how much you could save, Costco says its members save on average $595.86 in the first year they switch to CONNECT. The insurance site The Zebra went even further than that. According to its study, Costco was cheaper than seven major insurance companies, including:

AllstateFarmersGeicoNationwideProgressiveState FarmUSAA

What’s even more astonishing is that the difference between the most expensive policy on this list (Farmers at $2,790) and Costco ($1,068) amounted to roughly $1,700.

Whether you save this much, however, will depend on your driving record, the car you’re insuring, where you live, and how much coverage you plan on buying. Even if Costco is the cheapest generally, it’s still worth comparing your Costco quote with other car insurance companies, just to see which is offering you the best rate.

Executive Costco members get additional benefits

Those with an Executive membership ($120 annually) will be offered additional car insurance perks. These include:

Lifetime renewability: Under this provision, Costco Executive members never have to worry about CONNECT dropping coverage after an accident, no matter how costly. As long as the driver doesn’t have major traffic violations, pays their premium on time, and doesn’t live in Maryland or Maine, they’re guaranteed continuous coverage.Roadside assistance: Executive members will be compensated up to $75 when they’re stranded on the road, whether from dead batteries, flat tires, or locked keys.

In addition to these perks, you could also get Stolen Key Expense coverage if you buy comprehensive coverage. This will replace any stolen keys and locks with a deductible waiver so long as it costs $250 or less.

Costco car insurance may be the cheapest, but it might not be the best overall

One potential downside to Costco car insurance is the customer service at American Family Auto.

While Costco itself claims that roughly 89% of its members were satisfied with its car insurance, American Family Auto’s National Complaint Index — which measures how many complaints an insurance company receives to its share of market premiums — is fairly high. Its NAIC is currently at 4.74, which means it receives more than 4 times the volume of complaints compared to the market. For perspective, Geico’s NAIC is 1.21 and Allstate’s is 0.

That might not be a dealbreaker. But it’s certainly important to keep in mind, especially as you shop for car insurance at different companies. At the end of the day, however, if price is most important to you, it’s worth getting a free quote to see how much Costco’s car insurance could save you.

Our best car insurance companies for 2022

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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 positions in and recommends Costco Wholesale. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

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Work for yourself? Read on to learn about a near-term deadline you don’t want to miss. 

Self-employment can really be a mixed bag. On the one hand, it’s nice to set your own hours and, in some cases, work from anywhere.

On the other hand, being self-employed means grappling with an income that might vary substantially from one month to the next. That could make it difficult to keep up with recurring expenses like car and mortgage payments. And it could also make it tougher to save up for different goals.

Another challenge of being self-employed is not having taxes withheld from your earnings. When you’re a salaried employee, the paycheck you receive represents your after-tax earnings. So if you get a check for $2,000, you can rest assured that the IRS has already been given its share.

If you’re self-employed and get a $2,000 check, the IRS still needs to be paid a piece of that sum. And figuring out how much of that sum you owe the IRS can be tricky, as your total tax bill will hinge on your total earnings and deductible expenses for the year.

Unfortunately, you can’t just wait until the end of the year, or until the tax-filing season, to pay the IRS what you owe. Self-employed people have to pay the IRS quarterly or otherwise risk penalties.

Meanwhile, if you’re self-employed, you should know that your next estimated quarterly payment is due on Sept. 15, 2023. So now’s a good time to start figuring out what you owe — and setting money aside to pay the IRS.

Don’t get caught by surprise

Some people realize a few days before their estimated quarterly taxes are due that they have to send in a payment — and then have to scramble because they’re already spent the money on something else. So now’s a good time to crunch some numbers — ideally with the help of an accountant — to figure out what type of check you might be sending the IRS in mid-September. If your income didn’t change very much from the previous quarter, then you can generally just plan to send the same amount.

The good news is that the IRS won’t penalize you for getting your estimated tax payments wrong provided that you’re not off by a huge amount. Generally, if you underpay the IRS by less than $1,000, or if you pay at least 90% of your tax bill, you can avoid a penalty.

So if you’re supposed to send the IRS a check for $2,400 each quarter based on your earnings but you only send $2,220, you can generally expect to avoid a penalty. It doesn’t mean you won’t owe the extra money in taxes — you just won’t be penalized for underpaying by so little.

It pays to put the process on autopilot

It’s not always easy to remember to pay estimated taxes. But not making a quarterly payment at all could leave you facing penalties. So if you want to avoid those, it could make sense to set up automatic payments so money is sent to the IRS on time four times a year.

Your accountant should be able to help you determine what amounts to pay to avoid a penalty. And that’ll give you one less thing to worry about.

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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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Buying a home isn’t the easiest prospect these days. Keep reading for finance expert Suze Orman’s take on mortgage loans right now and going forward. 

If you’ve been watching your local housing market, eagerly hoping for the chance to pounce on the home of your dreams, the current conditions are no doubt depressing. I originally hoped to buy a home myself this year, but decided instead to pin my hopes on 2024 and spend 2023 saving money and otherwise putting myself in the best possible position to buy (more on that below).

Today’s market is ruled by a few factors: low housing inventory, higher prices, and much higher mortgage rates than we’ve seen in several years.

On a recent episode of her podcast Women & Money, finance expert Suze Orman took a closer look at the current conditions and offered some insight into why potential home buyers are having a hard time and what we can expect going forward. Let’s take a closer look.

Rates remain high…

As Orman discussed, the federal funds rate was bumped up again at the end of last month, and now stands at 5.25%–5.50%. It’s important to remember that this is the interest rate for banks and credit unions to lend to each other, and isn’t a direct reflection of consumer interest rates on credit cards, personal loans, and mortgage loans. But when this rate is up, other rates tend to rise as well.

Mortgage loans are special in that their rates are tied to the bond market, and the demand for mortgage-backed securities impacts mortgage rates. It’s a terrible time to get a mortgage, as rates are currently more than double what they were before they started climbing early last year — 6.96% is the average rate on a 30-year fixed-rate mortgage loan, per Freddie Mac.

…while inventory remains low

Orman points out that these higher rates are having a definite impact on the supply of homes available. As she pointed out, 92% of Americans with a mortgage have a rate under 6% — and of those, 61% have a rate under 4%, and 23% have a rate under 3%. Under the current conditions, no one wants to sell a home and take on a much higher mortgage interest rate to buy a new one. Hence, low inventory — existing home sales declined 3.3% in June, according to NAR.

And the homes that are for sale are going for higher prices. Per the St. Louis Fed, the price of houses is rising again, from a dip in January 2023. In that month, the median price of a home sold was $361,200. But as of June 2023, that median price was $410,200. Ouch.

Is there any hope for the future?

So all of this is quite discouraging for wannabe buyers like you and me. And Orman doesn’t think we’re going to see plummeting mortgage rates anytime soon. She did note that this current situation is well outside the norm. This is perhaps not so surprising, since we all lived through a once-in-a-century global public health crisis and we’re all still very much feeling the effects, financially and otherwise.

As Orman put it, “It seems like real estate prices are here to stay for a while yet. I don’t know what would bring them down, to tell you the truth, besides a recession.” Whether we’ll see a recession this year or next remains to be seen, but so far, the economy is humming along.

How can you get ready to buy a home?

Want to buy a home anyway? I’m with you — I’m excited that my renting days could soon be behind me. Here’s what I’ve been doing, and what you should do, too, if you want to be in the best position possible to get a mortgage loan.

Save money: A home is likely to be the biggest purchase you’ll ever make, so the more cash you can put aside for it, the better. Remember, not only do you need a down payment and money for closing costs, but also for the other costs of homeownership.Boost your credit: The stronger your credit score, the better the mortgage rate you can qualify for. So it’s worth making a new commitment to pay all bills on time every month and go through your credit report to see if there are errors you can have removed.Pay down debt: Got existing debt? If you can improve your earnings and pay down some current debt, you’ll not only improve your credit score, but you’ll free up wiggle room in your budget for those new costs you’ll be taking on.Shop around for a mortgage: When it’s time to buy, get rate quotes from multiple mortgage lenders. This’ll give you the best shot at getting your best possible rate.

It’s not an easy housing market these days. Stay positive, friends — and take the time to make yourself the best buyer possible.

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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 positions in and recommends Best Buy. The Motley Fool has a disclosure policy.

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Keeping a credit card for a long time can be good for your credit score. Read on to learn what else to expect if you’ve got very old credit card accounts. 

Have you ever been in a long-term relationship with a credit card? While I recently closed my oldest active credit card, I have another account that’s been open for nearly as long, and I intend to keep it that way. The overall net effect of keeping a credit card account open for a decade or longer is positive, but a lot can change in that period — for both you and the credit card. Here’s what you should consider if you too want a long and fulfilling relationship with a credit card.

It could improve your credit score

Put simply, keeping an old account open and in good standing is good for your credit score. Your length of credit history matters — in fact, it makes up 15% of your FICO® Score. When you apply for new credit, a lender will pull your credit report, and having a longer credit history is preferred. After all, if someone is going to loan you money (be it in the form of a credit card, personal loan, or even something major like a mortgage), they want to be assured you’ll pay them back. If you’ve kept a credit card account open for a long time and also made your payments on time, that speaks well of you as a borrower.

Consequently, think long and hard before you close that old credit card. If it’s not costing you any money (say, in the form of an annual fee), why not keep it open? You’ll likely need to use it every so often to keep the account active (and to keep the issuer from lowering your credit limit), but that doesn’t have to be a hardship. You might consider putting a regular monthly charge (perhaps a streaming service?) on the card and setting up autopay, so you can effortlessly keep it active and also paid off.

You could outgrow the card

Your life could change quite a bit in the space of 10 years, so it stands to reason that the credit card that was a perfect fit for your wallet a decade ago might not be anymore. For example, if your credit score has grown by leaps and bounds since you got the old card, you might now be able to qualify for a credit card that offers better perks and a higher credit limit. While you were once too broke to do much traveling, maybe now you’re in a better position to take frequent trips and would rather have a travel credit card that earns points toward the cost of future flights, hotel stays, and other travel expenses.

You can certainly apply for a new card that comes with more bells and whistles, and keep your old card active. According to research by The Ascent, 50% of Americans have at least two credit cards. Even if you’re not using it for everyday spending now that your financial picture has changed, that credit score boost is still worth hanging onto.

The issuer might change the card

But what if it isn’t you who’s changed, but the credit card itself? Over time, credit card issuers introduce new products and retire old ones. So if you keep a credit card for long enough, you may get a letter in the mail from the issuer announcing that your old card is defunct, and your account has transitioned to a new card altogether.

I’ve had this happen with old credit cards (both the one I canceled and the one that’s still active), and it hasn’t really had an impact on me. It is important to keep tabs on all your credit card accounts, however, so you know if a change is happening. The last thing you want is to miss a new card that’s been mailed to you — don’t fall victim to fraud by letting a scammer steal a credit card out of your mailbox.

Here’s when it might not pay to keep an old card active

I’ve probably convinced you that keeping an old credit card is a good idea, but there is one instance in which you might want to close that golden oldie. The reason I closed my oldest credit card earlier this year was because it had an annual fee, and I wasn’t using the card. I have a few other cards with annual fees, but they’re loaded with benefits and I get more than enough value from the cards to justify the fees.

If you’ve got an old credit card with an annual fee that doesn’t benefit you, then you could consider closing it. However, I recommend waiting to do so until your credit score is in good shape and you have a high enough credit limit across other accounts to avoid dinging your credit utilization ratio in the process.

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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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