Money Management

We all need a way to get around. Read on to learn why getting an auto loan to buy a car of your own could be superior to leasing one. 

Earlier this year, I took a trip to the U.K. For most of my trip, my host and I got around via public transportation. As an American who lives in an area with subpar public transit options, I was envious. It’s far too likely to be the case that if you live in the U.S., you need to own a vehicle of your own.

Owning a car isn’t cheap. In addition to purchasing the car itself, you’ll have to pay for maintenance and repairs, auto insurance, and registration/taxes owed to your state. And whether your car is electric or gas-powered, you’ll have to pay for fuel (be it by buying gas or the electricity that comes from a charging station).

In fact, you may be considering sidestepping some of these costs and opting to lease a car instead. Here’s why it might make sense to take on an auto loan and just purchase your vehicle.

1. You’ll end up owning the car outright

Despite the many costs that come with owning a car, it’s actually a pretty sweet deal. You build equity in the car as you make payments, and speaking from experience, it’s very exciting to make that final payment. The car becomes yours free and clear, and you can do whatever you want with it. Want to drive for a ride-share service? You can take on that side hustle if you’re financing a car, but may not be able to if you’re leasing one.

If you want to sell it later down the road, you’ll get cash for it — or you could trade it in toward a new vehicle purchase. Want to paint it or otherwise add custom features? Go for it. Leasing a car still has you making monthly payments for it, but you’ll never own it outright, and when you turn it in to the dealer at the end of your lease, you could end up owing surprise fees, or extra money if the car isn’t in pristine condition.

2. You can drive as much as you want

When you lease a car, you’ll get a mileage limit. These can vary, but often range from 10,000-15,000 miles per year. If you exceed your mileage, you’ll be charged perhaps $0.15 to $0.40 per mile. This can add up fast. Buying a car is a better choice if you prefer to be free and unrestricted in how much you can drive. Buying is also a good idea if you don’t know what your future usage of a car will be — perhaps you move often, and may end up farther away from work, adding more miles onto your commute.

3. Buying saves you money over the long term

The best reason to buy a car is if you intend to keep it for a long time, because those higher costs upfront will pay off. I’m still driving the car I bought in 2009. These days, my car spends a lot of time parked in front of my apartment because I work from home and don’t use it daily. But it fits the bill for trips to the grocery store or to hang out with friends locally — and it performed beautifully on the international road trip I took in May.

I haven’t had a car payment in nine years, and my insurance premiums on it are quite reasonable. Because it is so old, weird things have broken on it (for example, the trunk hinges are shot, and you have to be extremely careful to put the trunk all the way open, lest it slam shut on your fingers). But at this point, the car’s idiosyncrasies are part of its charm — and I love not having a car payment.

A few ways to save money on a car purchase

If I’ve convinced you that buying a car is the way to go, here are a few tips to cut your costs:

Buying a used car could save you money, but only if you buy one that is in sound mechanical condition. Get a vehicle history report of any used vehicle you’re considering.Shop around for an auto loan, rather than accepting whatever financing a dealership will offer you. A bank or other financial institution you already do business with likely offers loans, or you can check out our list of the best personal loans.Take on the shortest loan you can afford. Borrowing over a longer period of time means lower payments, but it also could mean you end up owing more on the car than it’s worth.Make a substantial down payment to bring your monthly payments down.Stay up to date on maintenance — this is one of the ways I’ve been able to keep my car for so long.Keep the car for as long as you can. You’ll have to work out your own priorities here, but I’ve heard enough people complain about their car’s key fob, touchscreen, or Bluetooth connection to be thrilled that my elderly car has none of these bells and whistles.

It’s likely that you need a vehicle to get to work, run errands, and complete other perfectly mundane everyday tasks. If you’re torn between financing a car and leasing one, check your own needs and wants against this list — and I know you’ll make the right decision for you.

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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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Generally, your student checking account will eventually convert to a regular account. Here’s what this change could mean and how to prepare. 

Student checking accounts are offered by many banks. Often, you can get a checking account that comes with special features, such as waived fees. This can make using a student account really attractive if you are earning your degree.

But what happens to your student account once you’ve graduated and are no longer in the academic world? Can you keep the money in your current account or do you need to make a change?

Here are the rules for student checking accounts

Student checking accounts are, as the name suggests, intended for people who are in school. Once you’re out of school, you typically will not be able to keep the specialized bank account any longer.

Different banks have different rules on exactly how and when they determine you have graduated and have aged out of maintaining a student account. Banks could decide you are no longer eligible for this kind of account based on the following factors:

When you graduate: Banks may be aware of when you graduate if you provided this information when you opened an account or if you are expected to report your graduation. Your age: With some banks, once you reach a certain age, you may not be eligible for the student account any more. The bank may set the cutoff at an age when most people move on from being a full-time student. How old the account is: Most people don’t go to school forever. As a result, the bank may cut you off from using a student checking account after a certain amount of time has passed, such as four years or five years.

Whatever the specifics, there will come a point when you can’t keep your student checking account any longer. The fine print on your specific bank account should tell you when this happens — and what comes next.

Typically, your bank will convert your student account into a standard checking account once you have hit the cutoff point when you are no longer considered to be in school and thus are no longer eligible for the specialized account.

Once this conversion happens, your account will be subject to different rules — and sometimes, you could find yourself facing a fee or being forced to meet certain requirements to avoid monthly maintenance charges. Your bank should notify you when it makes the change to your account, so this hopefully won’t come as a surprise.

How to find a new account after graduation

When you lose access to a student checking account, you may not want to just switch to the standard account that your bank offers. In fact, since regular accounts have different features and fee structures, the account you’re switched over to may not be a good fit at all.

Instead of just sticking with the default, you should research different bank account options before graduation or when you leave school so you can find the right new account for you. Pay attention to factors like:

Monthly maintenance feesWhether you can avoid those fees by meeting certain requirements such as maintaining a certain average daily balanceOther fees such as ATM fees or overdraft feesWhether the financial institution also offers a savings account at a competitive rate that you could link to your bank account if you want to keep your money with the same financial institutionHow convenient the bank makes managing your money

By taking the time to research new offerings, instead of just accepting the converted account your current bank offers, you can make sure a switch from student checking doesn’t leave you banking at a place that hasn’t earned your business.

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

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There are lots of methods to earn more credit card rewards. Find out which ones could do more harm than good, so you know what moves to avoid. 

Who doesn’t love rewards? Most people do, which is why rewards credit cards are so popular. Over two-thirds (68%) of Americans have cash back cards, and nearly one-third (32%) have travel cards, according to a credit card study by The Motley Fool Ascent.

With these types of cards, the more rewards you earn, the more money you save. It’s no surprise then that some people look for every potential method to earn as much as possible.

Now, there are plenty of smart ways to maximize credit card rewards. But there are also some that aren’t a good idea and can even be a huge financial risk. Before you go too far in pursuit of rewards, here are the methods to avoid.

1. Buying groups

Buying groups are one of the more underground ways to earn rewards. Here’s how it works — the company running the buying group provides a list of products it’s currently buying, with a payout for each one. Members of the group buy products from online retailers and ship them to the company’s address. The company then pays members for those products.

For example, let’s say you send a $1,000 MacBook Air to a buying group. You make the purchase on your rewards card to earn cash back or points. The buying group pays you $1,000, and presumably goes on to resell the product. You’ve earned rewards without spending any money.

There’s just one problem. What if the buying group says it didn’t receive that expensive product? You won’t get reimbursed. You can contact the retailer, but if the tracking shows that the order was delivered, you may not have any luck getting a refund, either.

I used buying groups in the past, but they just aren’t worth it. There are too many stories of lost packages from members, and if that happens to you even once, it can wipe out all your profits.

2. Purchases you weren’t going to make otherwise

This is probably the most common, everyday mistake that people make with their rewards credit cards. They convince themselves to make purchases because of the rewards they’re going to earn. Here are a few examples of this logic in action:

You know that you don’t need new $500 shoes, but you’ll earn 5 points per $1 on them with your store credit card.You’d normally choose between Netflix and Hulu, but you have a credit card for streaming services that earns 3% cash back, so you get both.You start going out to eat more often because you have a dining rewards credit card and are earning 4 points per $1.

Don’t let your credit card dictate your spending habits. The rewards you earn are never going to outweigh what you spend on a purchase.

For example, if your card earns 4% back at restaurants, a $100 dinner will net you $4. That’s great if you were planning to go to dinner anyway. But if not, then you’re really just spending $100 more than usual. After your $4 in rewards, you’re still out $96.

3. Transactions with fees that outweigh the rewards

On most purchases and bill payments, the price is the same no matter how you pay. There are exceptions, though. Some types of transactions charge extra for credit card payments because of the payment processing fees.

For example, when you pay rent with a credit card, there’s usually a transaction fee. There’s also a transaction fee for paying your taxes with a credit card. You’ll be able to see the fee amount before you make your payment.

Make sure to check if the fee is more than the rewards you’ll earn. If there’s a 3% processing fee, and your credit card earns 2% back, then there’s no reason to pay that way. It’s still costing you 1%, so you’re better off paying with a debit card or any other method that doesn’t carry a fee.

It’s fun to find ways to earn extra rewards and boost your cash back or travel points. Just make sure that there aren’t any risks to the methods you choose, and that they don’t require you to spend more money than usual.

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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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A pause in rate hikes could be good news for those seeking out personal loans. Read on to see why. 

The Federal Reserve has been on a mission to cool inflation since early 2022. In fact, the central bank raised interest rates 10 times between March of 2022 and mid-2023, driving up the cost of borrowing for products ranging from auto loans to credit cards.

But at its June meeting, the Fed finally decided to pump the brakes on interest rate hikes after 10 consecutive increases. And that’s something many consumers are no doubt grateful for. You might be especially grateful if you’re thinking of signing a personal loan in the near future.

You may be able to borrow at a reasonable rate

Personal loans appeal to consumers because they can be used for any purpose (whereas mortgages, for example, can only be used to finance the purchase of a home). Also, personal loans tend to close pretty quickly.

It can easily take 30 to 60 days, and sometimes longer, to close on a mortgage. But with a personal loan, you might submit your application, be approved, and receive your loan proceeds within days.

Unfortunately, the Federal Reserve’s recent string of interest rate hikes has driven up the cost of personal loan borrowing. But because the central bank didn’t raise rates again last month, you may find that you can still borrow via a personal loan at a fairly reasonable rate. Had the Fed raised interest rates again, you’d potentially be looking at a higher borrowing rate in the coming weeks.

Will the Fed stop raising rates?

The fact that the Fed paused its rate hikes in June is a good thing not just for personal loan borrowers, but borrowers across the board. But will the Fed continue to hold off on rate hikes this year? That’s the big question.

In June, the Consumer Price Index, which measures changes in the cost of consumer goods and services, was up 3% on an annual basis. That’s fairly close to the 2% inflation the Fed consistently targets. (And if you’re wondering why the Fed is fixated on 2%, it’s that the central bank acknowledges that some amount of annual inflation is natural, but 2% is a reasonable increase that can lend to a steady, thriving economy.)

In light of that, there’s a good chance the Fed will decide that it’s making good progress in the fight against inflation, and that it will continue to leave interest rates where they are. But if the Fed raises rates at its next meeting in late July, that could drive up the cost of borrowing yet again.

As such, if you’re ready to take out a personal loan, you may want to apply for one very soon. That way, you won’t run the risk of seeing interest rates rise again.

That said, don’t rush into your personal loan application, but rather, shop around with different lenders. Each lender ultimately sets its own rate based on factors such as your credit score and the sum you’re looking to borrow. And comparing offers is a good way to snag the best deal you can.

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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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Even if you don’t want to spend $60 or more on an annual membership, you can still score a few Costco deals if you’re not a member. Here’s what you can buy. 

A Costco membership comes with countless amazing benefits. You get low prices when you buy everyday items in bulk, discounted travel and insurance, and free same-day grocery delivery. But to access these perks, you’ll need to shell out $60 to $120 for an annual membership.

For many people, paying for a membership is an easy call. But if you’re on the fence about whether the cost makes sense for your financial situation, there are a few things you can buy from Costco without a membership.

1. Prescriptions

You don’t need to be a Costco member to get prescriptions filled online or at warehouses. Have your doctor send the prescription to Costco, just as they would with any other pharmacy. Tell the employee at the door that you’re picking up a prescription, and they’ll tell you where to go. You can pay with cash, a credit card or debit card, a Costco Shop Card, a Visa card, or an HSA/FSA card.

One thing to note: You need a membership to access the Costco Membership Prescription Program, which offers exclusive discounts on prescription drugs. You can also use the prescription program to get discounts on prescriptions for your dependent children under 18 and even your pets.

2. Alcohol (in some states)

Fourteen states have laws that prohibit retailers from requiring a membership to buy alcohol. Costco doesn’t advertise the states where non-members are allowed to buy booze from its warehouses. But it’s been widely reported that if you’re in one of the following states, you can buy alcohol from Costco without a membership card:

Arizona California ColoradoConnecticutDelawareHawaiiIndianaKentuckyMassachusettsMichiganMinnesotaNew YorkTexasVermont

Tell the employee at the store entrance that you’re purchasing alcohol. Some shoppers report that employees aren’t always aware that non-members can buy alcohol in select states, so they may need to ask a manager.

3. Eye exams

You can make an appointment with a Costco optometrist even if you’re not a member. However, a membership is required to buy eyeglasses or contact lenses through Costco’s optical center. Because the Federal Trade Commission (FTC) requires that eye-care professionals offer you a copy of your prescription for free, you can get your glasses or contact lenses made by another provider.

4. Costco.com purchases

You can shop online at Costco.com by creating an account, even if you’re not a member. But you’ll pay a 5% non-member surcharge, plus you won’t have access to exclusive member discounts. (Note that the 5% non-member surcharge doesn’t apply to prescriptions.)

Is a Costco membership worth it?

Paying $60 for a Costco membership is a great deal for a lot of people, but of course, it doesn’t make sense for every situation. Here are some general rules of thumb about when a Costco membership is worth it:

A Costco membership probably makes sense if:

You live in a multi-person household and would use items you purchase in bulk before they expire.You need to fuel up regularly and live close enough to Costco to regularly fill up at its gas stations.You have pets. Pet parents can often save on supplies, food, and medications for their furry friends.

A Costco membership may not make sense if:

You live alone and don’t need to buy in bulk.Your living space is small and doesn’t have much storage space.Shopping at Costco isn’t convenient. If you live far away from a warehouse, paying $60 may not be worth the savings, since you’ll spend more time and add miles to your vehicle getting there.

Consider your own needs and situation to decide whether to join Costco, but remember that you can scoop up these perks without doing so.

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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.Robin Hartill, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Visa. The Motley Fool has a disclosure policy.

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Cooling inflation could lead the Federal Reserve to stop raising interest rates. Read on to see how that might impact people looking for personal loans. 

Inflation has been a problem for consumers since mid-2021. And about a year ago, in June 2022, it peaked at 9.1%, as measured by the Consumer Price Index (CPI).

But this past June’s CPI reading was far more favorable. It had annual inflation measured at just 3%.

Now, that’s still higher than what the Federal Reserve wants to see. The Fed has long targeted 2% inflation because it feels that this level is most conducive to a stable, secure economy. But since 3% inflation also isn’t so far off from 2%, the Fed may decide to hit pause on interest rate hikes in the near term. And that could be a very good thing for consumers looking to take out personal loans.

Consumers need some relief from high borrowing costs

The Federal Reserve has raised interest rates 10 times since March 2022. Last month, it hit pause on interest rate hikes in light of cooling inflation. And given June’s CPI reading, it might agree to not raise interest rates at its upcoming July meeting, either.

That could do a world of good for consumers looking for personal loans.

The Fed’s recent string of interest rate hikes has made borrowing expensive across the board. These days, it costs more money to carry a credit card balance, finance a car, and tap home equity via home equity loans and lines of credit. So if the Fed hits the brakes on interest rate hikes, consumers needing to borrow money in the coming months may not see their costs of doing so rise compared to where things stand now.

Of course, a pause in interest rate hikes won’t impact current personal loan borrowers. Unlike credit cards and HELOCs, where interest rates can be variable, personal loans are generally locked in at a fixed interest rate. So someone who’s in the middle of paying one off won’t see their rate drop if the Fed pauses rates or even cuts rates as inflation moderates. Rather, a lack of continued rate hikes could benefit people who are thinking of signing a personal loan this summer.

Should you take out a personal loan?

The upside of getting a personal loan is that you can borrow money for any purpose. And if you have strong credit, you may find that it’s easy to qualify for one.

But remember, it’s still more expensive to take out a personal loan today than it was a few years ago. And at the end of the day, you’ll need to make sure you can pay that loan back. So before you sign one, think about why you’re borrowing in the first place and run some numbers to make sure the monthly payments you’ll be looking at are affordable to you.

Also, make sure to explore other borrowing choices that might be more cost-effective. If you have equity in your home, a home equity loan might result in a lower interest rate on the sum you’re borrowing. You’ll need to do some research to find out, but it’s worth making the effort if your goal is to borrow as inexpensively as possible.

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.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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