Money Management

Weddings are expensive. But read on to see why using home equity to pay for one may not be your best bet. 

The Knot says that the average cost of a wedding is $30,000. If you’re lucky, you might have generous parents or soon-to-be in-laws who can help you foot the bill for your big day. But if you and your partner have to pick up the tab on your own, you may be wondering how on earth you’re going to pull off your dream wedding.

Some people take out personal loans to cover their wedding expenses. Others whip out a string of credit cards and hope for the best.

But if you happen to own a home, there’s another option you can look at — borrowing against the equity you have in your property via a home equity loan or line of credit (HELOC). Doing so might be your most affordable bet in the context of borrowing for a wedding. But it’s a move you might also end up regretting.

The danger of borrowing against your home

Any time you’re tempted to borrow money, whether for a big event like a wedding or something less expensive like new dining room furniture, a home equity loan or HELOC can seem like a good bet. That’s because home equity loans and HELOCs are generally pretty easy to qualify for if the equity in your home is there and your credit score is in reasonably good shape.

Plus, you might snag a lower interest rate on a home equity loan than a personal loan. The reason? Personal loans are unsecured, so lenders take on a lot of risk when they give them out.

With a home equity loan, your loan is secured by your home itself. Your lender is protected because if needed, they could force the sale of your home to get repaid should you fall behind on your obligation.

But it’s for this very reason that you may want to think twice before tapping your home equity to cover the cost of your wedding. You may not have a problem borrowing that money — but it may not be so easy to pay it back. And the last thing you want is to start off your marriage with the threat of foreclosure looming over you and your future spouse.

Consider scaling back

Getting married is something you may only end up doing once. So it’s easy to see why you’d want your big day to be perfect.

But taking on debt to throw a wedding could put a strain on your marriage early on, and that’s not something you want. It might also make it difficult for you and your partner to meet other financial goals. So before you borrow against your home to fund your wedding, consider ways to make it a less expensive affair.

For one thing, consider trimming your guest list. It’s nice to invite distant cousins and old friends from college. But if these are people you don’t see or speak to regularly, you may not want to pay to have them join you.

Next, think about the aspects of your wedding that are most important to you and eliminate things you can live without. You may have dreamed of dancing to the tunes of your favorite local jazz band. If that’s extremely important to you, pay their fee. But then find something less expensive than flowers to use for centerpieces if you don’t care about that as much. Or, skip the centerpieces altogether.

Another way you can save some money? Send an electronic invite rather than formal invitations in the mail. It might even make life easier for you and your guests.

Borrowing against home equity is an option you may want to pursue if you have a wedding to pay for. But before you sign a home equity loan or tap a HELOC, think about the risks involved, and ask yourself if ongoing debt is really worth a one-time celebration.

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Publishers Clearing House (PCH) is accused of deceptive business practices and has been ordered to pay $18.5 million in customer refunds. Find out more. 

You probably remember the Publishers Clearing House (PCH) commercials where winners were presented with giant checks after winning the sweepstakes. The company is the subject of a recent lawsuit due to its business practices. The Federal Trade Commission (FTC) has been investigating PCH for suspected deceptive consumer practices. PCH has agreed to pay $18.5 million to consumers who spent money to try to win the sweepstakes.

The lawsuit alleges PCH used detective tactics to trick customers

A recent lawsuit against PCH alleges that the company used “dark patterns” and deceptive strategies to mislead customers about how to enter its sweepstakes drawings. By using manipulative phrases and website design, the company tricked customers. Many impacted customers were older, lower-income adults.

The FTC’s complaint notes that when the company included disclaimers or qualifying information, it was done with small, light font below call-to-action buttons. Because of this, the disclaimers were often overlooked by customers.

The lawsuit claims that PCH misled consumers in the following ways:

PCh misled people to believe they needed to buy something to win or that a purchase would increase their chances of winning the sweepstakes. People were made to believe their sweepstakes entries were incomplete, even when they weren’t. The company sent emails with deceptive subject lines that led people to waste time and money by clicking on links. PCH added surprise shipping and handling fees that increase the price of customers’ orders by an average of 40%.The company charged customers shipping fees to return products, despite stating that the ordering process was “risk-free.”

PCH will provide customer refunds

PCH has agreed to settle the FTC’s charges. The company agreed to an $18.5 million settlement to provide customer refunds. But it’s worth noting that not every customer will be eligible for a refund. As part of the settlement, PCH will be required to overhaul its sweepstakes entry and sales process and agreed to make the following changes:

No longer imply that a purchase is required to enter the sweepstakes.Clearly distinguish the entering and ordering process on all entry and order forms.Make clear, unavoidable disclosures on every shopping page that a purchase isn’t required to enter the sweepstakes and that purchasing will not help a consumer win, and include a link that takes consumers directly to a page where they can enter the sweepstakes. Clearly disclose the total price of an item for sale, including shipping and handling fees.Clearly disclose cancellation and return policies. Stop sending emails with deceptive subject lines.Delete all consumer data collected before Jan. 1, 2019, and be clear about how consumer data is collected and shared. Preserve records related to market, behavioral, and psychological research or user, consumer, or usability testing.

What you need to know about refunds

Any customer interested in a refund should await further instruction from the FTC. The agency warns consumers not to pay anyone who promises a refund and cautions them from providing personal information to anyone contacting them about a refund.

Unfortunately, some scammers may take advantage of the situation by trying to get consumers to give their personal information or provide their credit card details to pay a fee for a refund. The FTC never charges a fee to get a refund. It’s essential to be alert so you don’t fall victim to a scam that negatively impacts your personal finances.

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Though it’s rare, banks can close your accounts if you’re guilty of certain activities. Here’s what you need to know. 

It’s easy to think that all the power is in your hands when it comes to your bank accounts. You choose which bank you want to work with, what type of account you need, how much you keep there, and when you take it out.

Banks are eager to hold onto your money, so that’s usually how it works. But there are a few situations where your bank may decide it no longer wants to do business with you. Below, we’ll look at three of them and what you can do if your bank closes your account.

Three reasons your bank might close your account

Here are three common reasons your bank might close your accounts without your permission.

Inactivity

One of the most common reasons banks close accounts is because you’re not using them. If you haven’t deposited or withdrawn money from the account in months or years, your bank may decide to shut it down so it doesn’t have to maintain it anymore. Alternatively, they may charge you a fee for inactivity.

Each bank sets its own rules for determining when an account becomes inactive. If you have any questions about this, you can always reach out to your bank to learn more.

Excessive overdrafts

Overdrafts — withdrawing more money than you have in your bank account — can result in fees if you have overdraft protection enabled. Doing this once in a while may not raise any red flags with your bank, but if you do so often or you aren’t able to get your account back into the positive, your bank may decide to cut its losses and close your account.

This isn’t something you usually have to worry about if you don’t use overdraft protection, though. In this case, the bank will decline any transactions you attempt to make that exceed your current account balance. However, if the account charges monthly fees you fail to pay, you could find yourself in a similar situation.

Fraud

If your bank catches wind of the fact that you’re using your account to scam others out of their hard-earned cash, they’ll almost certainly close your account. And that may not be the worst of your problems. This one is pretty straightforward. Don’t try to cheat anyone and you won’t have to worry about this.

What to do if your bank closes your account

The way you handle a closed bank account will depend in part on why the bank closed it. If it was a simple matter of inactivity, you may be able to contact the bank to negotiate or to open a new account with them. Shopping around for a new account at a different bank is also an option.

Things are more complicated if the bank closed your account due to unpaid maintenance and overdraft fees or because of allegations of fraud. Your bank will probably be reluctant to work with you again, and other institutions might be as well.

Banks report the reason for account closures to an agency known as ChexSystems. This enables other institutions to learn more about your banking history before deciding whether to give you an account.

In the worst-case scenario, traditional banks and credit unions may not want to work with you based on your past banking behavior. If this happens, you may have no choice but to seek out a second-chance checking account.

These are accounts specifically tailored to people who have had bank accounts closed on them in the past. The idea is similar to a secured credit card for those with poor credit histories. They typically carry more restrictions than a standard checking account, including monthly fees you cannot waive. But if you avoid fraudulent activity or negative balances, the bank may invite you to upgrade to one of its regular bank accounts in six months to a year.

Hopefully, you never find yourself in a situation where you need one of these, but it doesn’t hurt to understand these rules anyway. And as always, if you have any questions about your bank account’s rules, don’t be afraid to reach out to the institution and ask. A quick call or email could save you a lot of confusion.

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Little financial changes don’t necessarily mean little savings. Find out how much a few small tweaks can save you each year. 

There are lots of moves you can make to manage your personal finances, with varying degrees of effort required. In general, it seems like the bigger the move you make (like staying out of credit card debt or getting a higher-paying job), the bigger the payoff for your finances. But I like to remind myself that the smaller moves I make can also add up to big things over time.

I’m not a proponent of cutting out the little joys in your life just to save a buck, but I am here to say that there may be some easy changes you can make to save a substantial amount of money without affecting the quality of your life.

Recently, I did the math on a few money moves I’ve made to find out how much they save me, and I was pleasantly surprised to learn I was up several thousand dollars — without even noticing how it happened. Here’s a look at four of them.

1. Clip grocery store coupons

I shop at the same grocery store almost every week, and I signed up for the free shopper’s membership card. This gives me easy access to discounts, and a way to track how much I save by seeing the amount printed on my receipts each week. My store makes it really simple to scan coupons while I’m shopping or ahead of time on the app or website, and it’s saved me a significant amount of money.

By purchasing items with eligible coupons or that are marked down when using my shopper’s card, I regularly save 10% to 15% off my total on each shopping trip. (Full disclosure: It’s been a little less lately thanks to the inflation we’ve all been dealing with, but I’ve started to see the savings trend back up again.)

My husband and I spend somewhere around $400 each month on groceries. If I apply an average of 12% savings on those bills, I come out ahead about $576 each year.

2. Work an extra 30 minutes each day

As a freelancer, I have a lot of control over when and how much I work. Around the beginning of 2022, I tried an experiment: I started my work day 30 minutes earlier than usual, effectively working eight and a half hours each day. I quickly realized that I didn’t even notice the extra 30 minutes, and I’ve continued doing it ever since.

My average hourly rate on those 30 minutes of work is $37. Accounting for a few weeks off each year, this adds up to an extra $4,440 annually.

3. Check out books and movies from the library

I finagled my way into a career where I get paid to read books, but I still enjoy reading in my free time, too. In recent years, I’ve come to rely on my local library to keep my bookshelf full. I just looked at my library history, and I’ve checked out 26 books and ebooks in the past 12 months. The average price to buy a new book is $23.90, so I’ve saved more than $621 on books alone.

My husband and I used to go to the movies at least once a month before the pandemic, but over the past few years, we’ve relied on streaming services and checking out movies from the library. An average ticket at my local theater costs $12.92. By visiting the library for blockbusters once a month instead of the theater, I save about $155 each year on just the cost of my tickets.

4. Use credit card rewards to pay for travel

I keep a few credit cards in my wallet that I like to use for different purchases. One of them is a travel credit card that earns rewards I can apply to future travel spending. By using a card that earns a higher rate on a particular type of spending rather than paying for things in cash, I’m able to supplement my vacations without spending more money.

I took a look at my account recently and saw that I’ve redeemed 22,792 rewards points in the past year. By booking through my credit card’s travel portal, those points are worth 1.25 cents each, which gives me a total savings of $284.90.

Spend wisely and well

All of these changes have been so small that I don’t even notice them, yet they’ve helped me add a total of $6,076.90 to my wallet over the course of a year. I recognize they may not all work for you, though, and that’s okay. But I hope you’ll at least feel encouraged to take a look at your own finances and see what little tweaks you can make. You may be surprised by how big of a win they turn out to be.

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Timing the market could backfire on you. Read on to learn more. 

Your goal as an investor is to make money — clearly. And to that end, it helps to buy stocks when their share price is down and sell stocks when their share price is much higher. But if you focus on trying to time the market, you might end up missing out on prime wealth-building opportunities.

What is timing the market?

Timing the market means trying to time your investments to when the stock market is at its best or worst. That generally means trying to add stocks to your brokerage account when their price is at a low, and then trying to sell your shares when their value has peaked.

Timing the market might seem like something that makes sense at first. There’s just one problem: Even seasoned investors tend to be really bad at it. In fact, through the years, countless studies have shown that timing the market just plain doesn’t work.

What happens when you try to time the market?

When you try to time the market, you often miss out on opportunities to load up on quality investments at a good price — even if it’s not the best price. Here’s an example.

Let’s say you’re looking to buy shares of a given company that are trading for $90 apiece. You might track that stock continuously to get in at the right time.

Those shares might drop down to $70, and you might pass on the opportunity to buy them thinking they’ll go even lower. Only if those shares then climb back up to $90 apiece, you’ll have missed out on the chance to scoop them up at a discount.

This is a pretty simplified example. The point, however, is that if you try to buy investments at a low — whether you’re doing so for individual companies or broad market ETFs — you might end up missing out on opportunities instead.

And you should also be careful when it comes to selling stocks at a high. Say you bought shares of a given company at $40 apiece and their value shoots up to $80. You might rush to sell so you can basically double your money. But holding those stocks another few years might make it so that they’re eventually worth $120. That’s a much sweeter profit to enjoy.

Invest consistently instead

You may be someone who knows a lot about investing and is willing to track the stock market day in, day out. But even so, timing the market is generally not recommended by financial experts.

In fact, Schwab says, “Our research shows that the cost of waiting for the perfect moment to invest typically exceeds the benefit of even perfect timing. And because timing the market perfectly is nearly impossible, the best strategy for most of us is not to try to market-time at all.”

So what investing approach should you take? One strategy is to simply invest as soon as extra money comes your way. The sooner you put your money to work, the more wealth you have the potential to build — even if you’re not buying a given stock at a low.

Now, this doesn’t mean you should throw money at a given stock regardless of its price when you have a one-time windfall to invest with. But you also shouldn’t necessarily wait for a given stock’s price to drop to its absolute lowest point. So instead of asking yourself, “Is this really the low?,” ask yourself, “Is this stock likely to go higher?” If the answer is yes, that means it’s probably a good time to buy it.

Another strategy worth considering in the long term is dollar-cost averaging. What you do here is commit to buying certain investments at preset intervals, regardless of their price.

Many people who try to time the market end up disappointed. So rather than stress yourself out to follow their lead, invest steadily and consistently, and aim to hold your investments for a long time so you can maximize your profits.

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A credit freeze is a security measure to protect against identity theft. Decide if you should use it by learning what happens when you freeze your credit. 

Identity theft is a concern for every consumer, and unfortunately, it’s on the rise. There were nearly 1.7 million reports of identity theft in 2021, up about 300,000 from 2020. It’s also estimated to have caused $56 billion in losses in 2021.

While there’s no way to guarantee you’re safe from identity theft, there are methods to reduce your risk. One of the more robust options is a credit freeze, which prevents lenders and other third parties from accessing your credit report. You can freeze your credit for free with each of the three consumer credit bureaus: Equifax, Experian, and TransUnion.

You can set up a credit freeze online, by phone, or by mail, and you need to do it with each credit bureau separately. If you’re interested in this security measure, here’s what happens when you freeze your credit.

New credit accounts can’t be opened in your name

The benefit of a credit freeze is that identity thieves can’t open fraudulent credit accounts in your name. When applying for any type of credit, such as a credit card or loan, the lender runs a credit check on the applicant. If your credit is frozen, lenders can’t check it, so they won’t be able to approve applications made using your information.

Keep in mind that you won’t be able to open new accounts, either. Before you apply for anything, you would need to unfreeze your credit. You could also thaw it, which is when you temporarily unfreeze your credit.

It’s also worth noting that a credit freeze could block any process that requires a credit check. That includes more than just credit cards and loans. Another common example would be renting a home. Many landlords run credit checks on prospective tenants. You would need to unfreeze or thaw your credit before filling out a rental application to avoid potential issues.

It protects you from some types of fraud, but not everything

A credit freeze is excellent at preventing new account fraud, where criminals open credit accounts in your name. This is the most common type of credit card fraud. A scammer uses your information to open a credit card and rack up debt, defaults, and it’s your credit score that takes the hit.

But don’t let this give you a false sense of security. There are many forms of fraud out there, and a credit freeze doesn’t protect against all of them.

For example, if a criminal gets their hands on your credit or debit card information, they could use it to make fraudulent purchases. This is called existing account fraud. A credit freeze doesn’t help here, because it involves an account that’s already open.

Criminals could also still use your information to open accounts that don’t require a credit check. For example, scammers can open fraudulent bank accounts despite a credit freeze. That’s because many bank accounts don’t require a credit check to open.

You can thaw or unfreeze your credit at any time

There are two options if you want to lift a credit freeze:

Thaw your credit: Temporarily lift the freeze for a period of time that you specify.Unfreeze your credit: Remove the freeze from your credit.

Just like when you freeze your credit, you can thaw or unfreeze it online, by phone, or by mail. Doing it online is a convenient option, because each credit bureau lets you set up an account and manage credit freezes through it.

It’s also the fastest option, according to the Consumer Financial Protection Bureau. Credit bureaus have one hour to thaw or unfreeze your credit after receiving the request online or by phone. If you make the request by mail, they have up to three business days.

Should you freeze your credit?

A credit freeze is a good security measure if you have an elevated risk of identity theft. If you’ve been a victim of identity theft before, or you’ve learned that your information was compromised, then a credit freeze could be a way to proactively protect yourself.

It can be inconvenient, though. If you aren’t at a higher risk of identity theft, you may want to start with other measures, such as a credit monitoring service. Some credit card companies offer these services, including identity theft protection, free of charge.

You could also put a fraud alert on your credit file. This requires lenders to take additional steps to verify your identity before approving credit applications in your name. You get extra protection this way, without the inconvenience of a credit freeze.

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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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