Money Management

I often purchase items from Amazon even if I could get them cheaper elsewhere. Keep reading to learn why. 

When I shop for items online, Amazon is almost always the place where I end up buying them. In some circumstances, I will even opt to purchase an item from Amazon if another website or a local store might have the product for a cheaper price.

While this can mean a little bit of extra money coming out of my checking account, there are four reasons why I opt to use Amazon almost every time — even sometimes at the expense of rock-bottom pricing.

1. To take advantage of free shipping

Free shipping is really important to me — and I’m not alone. In fact, 84% of respondents to a 2019 survey from BigCommerce say they’ve made a purchase with a particular retailer due to free shipping, and 77% have walked away from a purchase because they weren’t satisfied with the shipping options available to them.

The reality is, Amazon’s free shipping often ends up making the product cheaper when total costs are considered — especially given the fact that most items come the same day or the next day at no extra costs. Meanwhile, other retailers might charge a hefty premium for next-day shipping.

When you’re shopping, don’t just look at the product page when deciding if you should opt for Amazon or a different retailer. Add the item to your cart and see how much shipping adds to determine what’s the best deal overall. And if you have to add extra items to your cart with another retailer to make shipping free (and you don’t need those items), then take those costs into account too.

2. I get 5% cash back on Amazon purchases

Another big reason why I sometimes choose Amazon for a purchase even if it is more expensive is because my credit card provides me with 5% cash back for Amazon purchases. This is essentially like getting a 5% discount.

If an item costs slightly less at another retailer but I would only end up getting 1% back, then the Amazon product may actually end up being cheaper in the end.

If you also have cards that offer differing levels of rewards at different retailers, take this into account as well. If you have a RedCard and can save 5% at Target, for example, then an item at Walmart that’s 1% cheaper than Target’s price wouldn’t be as good of a buy for you.

3. The item will come quickly

Amazon’s same day or next day shipping is a huge draw for me, and it is one big reason why I will pay a premium even if an item could be purchased cheaper elsewhere. There are a lot of situations where I realize at the last minute I need something — like when I’m running out of diapers or wipes for my kids or our favorite drink mixes.

Rather than being out of an essential or having to run to the store — thus wasting time and gas — I may pay a premium to purchase something at Amazon. If you also need something quickly, consider whether it’s worth your time and travel expenses to go buy it elsewhere at a lower cost or if you’d be better off paying a dollar or two extra from Amazon.

4. Amazon is convenient

Finally, convenience is the last big reason I’ll sometimes opt to purchase from Amazon even if I have to pay a price premium. Not only can I avoid those last-minute trips to the store, but my Amazon account is set up for one-click purchasing. I don’t have to enter my payment method or shipping info, it’s all there for me.

It’s worth considering how big of a price you’re willing to pay for convenience, though. You may decide it’s worth an extra $1 or $2 not to have to retype all of your information into a new site to buy an item for less money — but probably not worth an extra $5 or $10.

The bottom line is there’s a lot of factors that go into purchasing decisions. So, think about what your priorities are when it comes to shopping — saving money, convenience, speedy delivery, or all of the above. By deciding what’s most important to you, you can make your purchases at the places that make the most sense for your needs and your budget.

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

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Rewards credit cards can be complicated to understand. Find out if 3 points is equal to earning 3% back on a cash back card. 

If you’re used to earning cash back on a credit card, you might be caught off guard by the points system on a rewards or travel credit card. Indeed, you might look at a card that earns 3 points back for every dollar and wonder if it’s not the same as earning 3% cash back. In a nutshell, no, 3% on a cash back card isn’t always equal to 3 points on a rewards card. With that in mind, let’s dig deeper into both card types to find out why this is true.

Cash back cards: A fixed percentage back

The rewards system on a cash back credit card is fairly straightforward. Your card has an earn rate (or multiple earn rates), which determines how much cash back you’ll earn for each purchase, and you can redeem your earnings for statement credits, deposits into your checking account, and gift cards, among other cash-related choices.

For instance, let’s say you have the Capital One SavorOne Cash Rewards Credit Card. This grocery cash back card earns 3% back on food categories (like restaurants and groceries), select streaming services, and entertainment purchases, while also earning 1% everywhere else. So if you use this card to buy $300 of groceries at Trader Joe’s, you would earn 3% of $300, or $9.

Click here to apply now for the Capital One SavorOne Cash Rewards Credit Card.

Of course, some cards have more than one earn rate and may have higher rates for different spending categories, such as groceries and gas. For example, the Bank of America® Customized Cash Rewards credit card earns 3% back on a category of your choice (gas, online shopping, dining, travel, home improvement, or drug stores), while also earning 2% back at grocery stores and wholesale clubs. Cards with multiple earn rates might require some strategy to get the most out of them, but are generally less complicated to manage than rewards and travel cards.

Click here to apply now for the Bank of America® Customized Cash Rewards credit card.

Rewards cards: The value of your points depends on how you redeem them

Like cash back cards, rewards cards also return a percentage of your spending back to you. But instead of giving you cash, these cards give you points or miles. The ratio of points to dollars depends on the credit card but will generally be higher when you redeem them for certain things, like travel.

For example, let’s look at a popular rewards credit card — the Chase Sapphire Preferred® Card. This card earns a slew of points for different spending categories: 5 points per dollar for travel booked through Chase’s travel portal, 3 points on select streaming, 3 points at supermarkets, and 2 points for non-Chase related travel purchases. So, if you use this card to buy $300 of groceries at Trader Joe’s, you would be left with 900 Ultimate Rewards points.

Click here to apply now for the Chase Sapphire Preferred® Card.

If you wanted to redeem those 900 points as a statement credit, Chase would give you $0.01 per point. In this regard, the Chase Sapphire Preferred isn’t much different than the Capital One SavorOne Cash Rewards Credit Card from above: 900 points would earn you $9 when redeemed in this way.

But where this travel card differs is in the value you get in booking travel through Chase. When you book travel this way, Chase will give you $0.0125 for each point. This would make your 900 points worth $11.25 — $2.25 more than a statement credit. With this redemption, your 3 points aren’t equal to 3% but rather 3.75%.

It’s this point-value system that makes 3 points on a rewards card not quite the same as 3% back. While 3 points could be equal to 3% back (if the redemption value is $0.01 for every point), they can sometimes be worth more when redeemed in the right way. Understanding how a rewards credit card works, then, can go a long way in helping you squeeze out the most value.

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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a disclosure policy.

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Yes, it’s possible to have too much in your savings account. Keep reading to learn how to tell, and what to do with excess saved cash. 

Having money in a savings account is important. You’ll want to keep some emergency money in a high-yield savings account so it’s accessible in case an unexpected expense pops up. And you may also need money saved for other things, such as when you’re making a big purchase you don’t want to put on a credit card.

But while you do want to have a healthy savings account balance, you don’t want too much cash in this account because the potential ROI (return on investment) it can provide is much lower than you could get if you invested the money elsewhere. In fact, the average savings account interest rate is consistently less than 0.50%, which is well below the typical rate of inflation. It’s also much less than the 10% average annual returns you could expect if you invested in the S&P 500.

The big question, though, is how do you know if you have too much in savings? While this can be tricky to answer, you should watch out for these three signs that your savings account balance may be too big.

1. You haven’t calculated your savings needs

You should have money in savings if you need it for specific things, such as:

You are going to use it for a big purchase you can’t afford right away but plan to make in the next few years (such as a home down payment).You are saving the money for emergencies, so you need to be able to access it at any time.

You should calculate exactly how much to put into savings accounts for each of these purposes in order to avoid ending up with an account balance that is larger than you need it to be.

So, for example, if you want to buy a $350,000 home with a 20% down payment, you would calculate that you need a balance of $70,000. If you want to take a $5,000 vacation, then you’d need to add that to your desired savings balance. And if you spend $4,500 a month and want an emergency fund with six months of living expenses, you would need an additional $27,000. If your savings account balance exceeded $102,000, you would have too much.

If you haven’t actually gone through the process of identifying a purpose for your saved funds, then you may end up with more than you need sitting in this account slowly losing value. In fact, it might be a better idea to set up different savings accounts for each goal and establish a desired balance for each account. That way, you can monitor how you’re doing on hitting that target and avoid having too much or too little in savings.

2. You have money in savings you aren’t planning to need soon

If you have money in savings that you do not plan to use for five or more years (say, retirement savings), you have too much money in savings. Those funds should move into an investment account where you can earn reasonable returns on them, so you don’t lose buying power by having your money just sitting there.

If you have an extra $5,000 in savings, even if you have it in a high-yield savings account, at best you’d probably earn around 4.00% per year, or $200, in interest. You’d lose out on $300 in interest compared with what you could earn if you earned a 10% return in an S&P fund. And the more extra money you have in savings and the longer it sits there, the more you lose out.

Take a look at your account balances and see how much is in savings and why. If you have money in savings you’re planning on using for a long-term goal, move it into a brokerage account.

3. You’re afraid to open an investment account

Finally, the last red flag suggesting you have too much in savings is if you are afraid to open a brokerage account at all. After all, for most people, their spare cash will either go into savings or be invested — and you need a brokerage account to invest.

The good news is, getting started with investing doesn’t have to be frightening. There are many great brokerage firms that have no minimum deposit requirements and that charge no commission fees.

Many of these firms also make it very simple to buy shares in an exchange-traded fund (ETF) that tracks the performance of the S&P 500, like the SPDR S&P 500 ETF, the Vanguard S&P 500 ETF, or the iShares Core S&P 500 ETF.

These funds track the performance of a financial index made up of around 500 large U.S. companies, so you get instant diversification and very limited risk of loss. You don’t need any specialized knowledge to make this investment, you can expect pretty consistent returns if you invest for a long time, and S&P 500 ETFs have very low fees.

Do not be afraid to get your money into the market where it can work for you. Put the amount you need in savings based on goals you have calculated, and then invest the rest. You’ll end up a lot better off in the end.

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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 Target. The Motley Fool has a disclosure policy.

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The average monthly car payment is now $733. Read on to find out how to manage expensive car payments. 

If you’re looking for a few tips on managing a high car payment, you’re not alone. The average monthly car payment is now a record $733, according to Edmunds. And even if your monthly auto loan payments are around $500 per month, that still may be uncomfortably high.

And that’s before adding up the cost of maintenance, fuel, and auto insurance. When you add in inflation and the rising cost of auto insurance, there’s no getting around the fact that owning a car is getting more expensive.

Keeping up with these expenses and a $500 automotive payment can be a lot to handle, so here are a few tips to help you manage your monthly payments.

1. Consider refinancing your auto loan

If you want to lower your monthly car payment, one good option is to refinance the loan. If your credit score is better than when you first applied for your auto loan, you may be able to get a better interest rate. Improving your interest rate could help reduce your monthly car payment.

Even if your credit score hasn’t improved, you may still be able to refinance the loan at a better rate if you have equity in the vehicle. For example, let’s say your original loan was for $40,000, and you have $20,000 left on the loan. If the bank values your vehicle at $30,000, you may have $10,000 in equity.

Having more equity in the vehicle may help you get a lower interest rate, but keep in mind that if you have too much equity, you may not be able to refinance the loan.

2. Map out a budget

Budgeting may be universally despised, but knowing where your money goes every month is the best way to find and cut unwanted expenses.

If you’re having trouble making your monthly car payment, setting up a budget to track your expenses is a great first step toward managing your money. Luckily, it’s easier than ever to track expenses using budgeting apps.

These apps can gather your credit card payments, bank statements, and other financial information to give you a complete picture of where your money is going. Once you know that, you can hone in on a few expenses to cut — like unnecessary subscriptions or extra meals dining out — to make it easier to cover your monthly car payment.

3. Consider consolidating your debt

If you already have the lowest automotive interest rate and have done everything you can with your monthly budget, another way to help with your car payment may be to consider consolidating your debt.

For example, if you have credit card debt in addition to your car payment, consolidating all of your loans with one personal loan could lower your monthly payments. It can also make managing your money easier by having one payment to make each month. It’s important to shop around if you’re considering this option to ensure you’re getting a better interest rate on a personal loan than what you’re currently paying.

Even if you don’t end up going this route, looking at all of your current debts, their interest rates, and what options you may have to improve your monthly payment amounts can give you a better idea of how to manage your money.

Don’t be discouraged

It’s easy to think that you’re the only one trying to figure out how to manage your money better. Believe me; we’re all still learning. If you need some extra help, check out some financial literacy apps that can teach you about budgeting, investing, paying off debt, and much more.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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 has many great deals, but it can be easy to miss them while shopping. Check out these accounts that will help you score the best deals at Costco. 

Having a Costco membership card in your wallet can be an excellent way to unlock additional savings. The warehouse club is full of everyday items and often has significantly lower prices than other major retailers. The savings can add up the more you shop.

Whether you’re a new member or longtime member and want to get the most out of your membership perks, you may want to follow social media accounts sharing the best deals at Costco. Find out which accounts to follow to maximize your savings at the warehouse club.

1. CostcoDeals on Instagram

With over 1 million followers, the @CostcoDeals Instagram account is clearly a favorite among Costco shoppers. The account features the best deals available at Costco (including the best savings book sale finds) and highlights must-buy new items. If you like shopping at Costco and want to keep more money in your checking account, give this account a follow.

2. CostcoGuide on TikTok

@CostcoGuide is another social media account worth following. Through her videos, Angela shares the best Costco deals she discovers as she shops. She also reviews some of the items she buys and gives recipes for her favorite meals that she creates using items from Costco. Her account can help you avoid a big credit card bill the next time you shop.

3. TheKrazyCouponLady on TikTok

If you love to save money, check out @TheKrazyCouponLady on TikTok. The account is run by couponing experts Joanie Demer and Heather Wheeler. While this account isn’t exclusive to Costco deals, you’ll find plenty of deals from the warehouse club. Joanie and Heather also share the best money-saving finds at other popular retailers like Walmart, Five Below, Target, and Walgreens. Now you know where to learn more about the best deals at Costco.

4. Costco97 on Instagram

If you’re a Costco regular, you may know that the retailer distinguishes its clearance items with price tags ending in $0.97. Watch for price tags like this while shopping to score bigger savings. The Instagram account @Costco97 discsusses the best clearance finds available at Costco. By following this account, you can ensure you don’t miss out on the best discounts.

5. CostcoCouture on TikTok

If you’re into fashion, you don’t want to miss @CostcoCouture on TikTok. This account highlights affordable fashion finds at Costco. You’ll love the deals mentioned in these videos if you want to look your best but don’t like pricey clothing items. It’s an ideal account to follow for back-to-school clothing finds before the new school year begins.

6. CostcoSisters on Instagram

Another way to discover the best ways to save money at Costco is by following the @CostcoSisters account on Instagram. Run by Yessenia and Evelyn, two sisters living in California, you can learn more about the best products and deals at the warehouse club. It’s an excellent account to check out if you need inspiration for your next Costco haul.

Shopping discounts can help you stay on budget

You’re not alone if you’re working hard to reach your personal finance goals. You can better honor your budget by looking for the best discounts and deals when you shop. If you’re not yet a Costco member, you might consider joining your local club to keep more money in your pocket while you load up on all the everyday essentials you need. Discover some of the little-known Costco membership perks to learn more.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Target, and Walmart. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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