Money Management

Buy now, pay later is a popular and convenient way to finance purchases. Read on to see what not to do when using it. 

More and more merchants now offer buy now, pay later (BNPL) financing plans. And more and more consumers are using it. The Motley Fool Ascent found that 50% of Americans have used BNPL, according to its research on average household debt. They use it for all types of purchases, too, as payment amounts range from under $50 to over $1,000.

BNPL can be useful if you need to pay off a purchase over time. Unfortunately, research also found that one-third of the people who use BNPL make a potentially costly mistake.

Pay later, but don’t pay late

Among Americans who have used BNPL, one-third have made a late payment or incurred a late fee. Not all BNPL services charge late fees, but some do. For example, Afterpay charges up to $8 and Klarna charges up to $7.

Paying late is problematic for a few reasons. Even though late fees from BNPL plans typically aren’t a huge financial hit, they’re still an unnecessary extra expense. The biggest benefit of BNPL is that you can pay off your purchase over time without any interest charges. You miss out on those financial benefits if you end up paying late fees.

It’s also possible that the late payment could eventually affect your credit score. Luckily, most BNPL services don’t report late payments to the credit bureaus. For those that do, the payment must be at least 30 days late to count against your credit score. But if you go too long without making your payment, the debt could eventually get sent to collections, which will heavily damage your credit.

How much of an issue a late payment is will depend on why you paid late and if you’re able to get caught up. If you simply forgot to make your payment on time, that’s easily fixable. But if you can’t afford to make your payments, that’s a much larger issue, and a sign you likely need to reevaluate how you use BNPL.

Be selective about how you use BNPL

BNPL is a convenient way to finance purchases if you can’t pay the full amount upfront, or if you just don’t want to part with that much money all at once. Many retailers have BNPL readily available as a payment option. Some of these payment plans don’t even require a credit check. The convenience also means that it’s very easy to overuse BNPL.

Even if you’re not getting charged interest, you’re still taking on debt and a new monthly payment. That monthly payment is money you won’t be able to use for personal finance goals, such as building your retirement fund or saving for a home.

There’s nothing wrong with using BNPL, but do so sparingly. When possible, save up the money you need and pay for purchases in full. If you are going to use BNPL, use it for purchases you really need ASAP. For example, if you need a new computer for work because yours broke, that’d be a good use of BNPL. With anything you don’t need that urgently, it’s better to save and buy it outright once you have the money.

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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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Summer is a great time to be out and about. However, keep your eyes peeled for these options that may encourage you to spend unnecessarily. 

Remember when you were a kid and it was the last day of school? It felt like you’d been set free, sent off to enjoy a summer that stretched on for eternity. As adults, some of us have retained a bit of that “woo-hoo” spirit as summer rolls around, and we’re suddenly eager to cram as much fun as possible into three months.

While fun and relaxation are worth pursuing, they come at a cost. Here are four ways you may be tempted to deplete your checking account.

1. Eating out

According to research conducted by Statista, 48% of survey respondents say they eat out most often in the summer. And while inflation has impacted the price we pay for food at a grocery store, it’s also impacted how much we pay to eat out.

In 2022, we spent nearly 21% more eating at restaurants than on food purchased in stores. By early 2023, the percentage had grown to 30% more.

Chances are, you have things you’d rather be doing than standing in a kitchen on a warm summer evening. However, if you’re going to eat out, here are steps you can take to spend less:

Cut back on how many drinks you order.Share a meal when you’re not hungry enough for an entire plate of your own.Skip dessert. Instead, make a fun dessert at home.Dine early. Many restaurants offer specials during happy hour, making it a great time to order apps and drinks at a discount.Set a limit. Look at your monthly budget to determine how often you can reasonably afford to eat out each month, then make that your limit.

2. Loading up on junk food

If the pandemic taught us anything, it’s that comfort food often comes in the form of salty snacks and sweet treats. However, if your family fills up on junk food throughout the summer, you’re more likely to throw away the healthy stuff, like fruits and vegetables.

Americans waste around 20% of the food we buy. Either we wait too long to eat it and it goes bad, or we forget we have it and it expires. Minimizing the amount of junk food in your home this summer could prevent food waste.

3. Spending more than you should on vacation

Another way to stretch your budget is to spend more than necessary on vacation. For example, if you’re going on a cruise or to a world-famous amusement park, you will probably spend very little time in your cabin or room. So why pay a premium price for a place you’ll only hang out in when it’s time to sleep?

And if you have kids with you, there’s a good chance you’ll spend more than budgeted. Before you leave on vacation, set a budget for each child. Once they’ve spent the money allotted, they’re done buying toys, t-shirts, and souvenirs. There’s no reason to feel like the Grinch. If it makes you feel better, invest the money you save in an IRA or another investment account for the kids.

4. Paying too much to entertain the kids

I realize I sound like Ma Ingalls, but I cannot recall emptying our savings account to keep our kids entertained all summer. They loved playing with each other and with their friends. A stick instantly became a Jedi lightsaber, and they spent entire afternoons making up their games (with abnormally complex rules).

And yet, practically every young family I know spent springtime this year planning for enrichment camps and other ways to keep the children occupied throughout the summer.

Sure, plan a few special outings with your kids, but also don’t be afraid to give them space to use their imaginations. It’s good for their minds and your wallet.

If you’re tempted to overspend this summer, remember: Less than four months after the kids go back to school, the holidays will be on your doorstep and you’ll be glad you saved a few dollars to buy gifts.

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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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Many homeowners aren’t equipped to pay for repairs. Read on to see why that’s a problem — and what to do about it. 

When you buy a home, you don’t just take on a monthly mortgage payment; you also bear the expense of added costs like property taxes, homeowners insurance, maintenance, and repairs.

The latter, however, is something many homeowners may not be prepared for. In a recent survey by All Star Home, one in four homeowners said they’re not equipped to cover a $1,000 home repair. And that’s a big problem.

Home repairs can pop up out of nowhere

The problem with home repairs is that they can be very hard to plan for. Maintenance is more predictable. You know you need to seal your wooden deck, pressure-wash your siding, and have your gutters cleaned at certain intervals. And it’s easy enough to price out the cost of those maintenance items and work those figures into your budget.

But it’s hard to predict when you might need to repair your roof, replace your heater, or fix an appliance. That’s why it’s best to assume a home repair might strike tomorrow. And it’s just as important to be prepared for one.

Have an emergency fund at the ready

It’s important to have money set aside for emergency expenses whether you’re a homeowner or not. But if you own a home, it’s especially important to have enough money in savings to cover three full months of living expenses. That way, if you’re forced to shell out $1,000 to fix something in your home, you won’t immediately have to resort to costly credit card debt and lose lots of money to interest charges.

Why three months’ worth of expenses? The reason financial experts recommend that as a minimum emergency fund is that if you were to lose your job, it might take three months (at least) to find a new one. So if you have enough money in the bank to cover three months of non-negotiable bills, a brief period of unemployment wouldn’t necessarily land you in debt.

Also, there’s a good chance that if you have enough money in savings to cover three months of essential bills, you also have enough to cover a more substantial home repair. Recent Ascent research on household expenses found that the typical U.S. household spends $5,577 a month. So if you have $17,000 in the bank, which is about three times that sum, but you wind up facing a $5,000 home repair, you’d have enough cash to cover it outright.

The fact that 25% of homeowners can’t cover a $1,000 home repair is pretty scary — especially since many home repairs have the potential to cost a lot more money than that. If your savings can’t help you get through a $1,000 repair, do your best to boost your cash reserves, with the goal of eventually socking away enough to pay for three full months of essential bills. You’re not going to amass that sum in weeks. But no matter how long it takes to reach that point, it’s worth pushing yourself to get there.

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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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Some credit cards include food delivery app credits as a perk. Keep reading to learn how to get more value from these credits. 

Many people use credit cards to earn rewards and enjoy credit card perks. One perk that some rewards credit cards have is delivery app credits. You can use these credits to purchase food through delivery apps like Grubhub and DoorDash, and these credits can make ordering delivery more affordable. Now that food costs are higher, you’re likely seeking ways to stretch your credits further. We’ve outlined a few tips below to help you get the most out of your delivery app credits.

1. Order off the lunch menu

You’ll likely pay higher prices for your food when you order off the dinner menu. If you love a good deal and don’t mind a slightly smaller portion, ordering off the lunch menu is a great way to keep your spending in check and stretch the value from your delivery app credits. The next time you’re considering ordering food delivery, compare the lunch and dinner prices first. It may surprise you how much more expensive it is to get dinner delivered.

2. Look for restaurant-specific coupons and deals

It’s worthwhile to pay attention to restaurant-specific deals when using food delivery apps like Grubhub, Uber Eats, or DoorDash. Some eateries have limited-time coupons available in these apps. By using one of these deals or ordering when there’s a money-saving promotion, you can get more food for less money.

3. Order for pick up instead of delivery

Delivery fees can add up quickly, making your takeout night more expensive and negatively impacting your personal finances. If you dislike paying extra fees and want to keep more money in your checking account, consider ordering from restaurants closer to your home placing a pickup order. This will save you money and help squeeze more value from your delivery app credits.

4. If possible, stack your credits

Depending on the card in your wallet, you may be able to stack your delivery app credits. If you’re only getting a $10 monthly credit from your credit card issuer, you won’t be able to buy much when placing an order. But if you stack your credits, or let them collect until you’re ready to place a larger order, you can save more on that order. Before placing your next foot order, check whether you can do this. If so, you may want to wait to hold off using a credit for now.

5. Invest in a delivery app subscription to avoid delivery fees

Another technique that may help you stretch your delivery app credits further is to invest in a delivery app subscription. Subscriptions like Grubhub+ and DashPass promise no delivery fees on eligible orders. If you order delivery often, these subscriptions may be worth the cost. By avoiding delivery fees, you can get more from your delivery app credits. Before paying for a food delivery app subscription yourself, check to see if your credit card provides a subscription for free.

Don’t let your credit card benefits go to waste

Make an effort to use your credit card benefits, especially if you’re paying annual fees to use your cards. Remember, you can get more value from your credit cards by using all the available perks. If you receive food delivery app credits, don’t let them go to waste. You can stretch your credits further by getting creative and using strategies like the ones above. If you order delivery often, check out our list of the best credit cards for dining and restaurants.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash and Uber Technologies. The Motley Fool has a disclosure policy.

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California residents could see a change in their electric bills. Learn how the state plans to adopt a fixed-rate fee based on income for electric bills. 

Most people in the United States are charged for utility usage — when you receive your electric bill, the cost is based on how much you used. But that will soon change in California. Residents of the Golden State will be charged fixed-rate fees based on income and will also be billed for their electricity usage. This change is due to a state law aimed at simplifying billing and addressing equity. Low-income households are expected to save money on electricity costs once the changes are implemented. Here’s how it will work.

Electricity billing changes are coming for California residents

Changes are coming to how residential electric customers are charged for electric service in the state of California. Assembly Bill 205 requires California’s three investor-owned utility companies to adopt income-based fixed-rate fees for all residential electricity bills.

Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric have submitted a fixed-rate fee structure proposal. The proposed flat-rate fees would be added to customer bills, in addition to usage charges, to cover maintenance and operational costs for the state’s electric grid. It’s worth noting that these fees have not yet been finalized.

The following per-month, fixed-rate fee structure has been proposed:

Lower-income households could save $300 a year

Many utility companies across the country charge additional fees on top of electricity usage costs, but an income-based structure for these fees is not the norm. Not every Californian is happy about the proposed fee rates.

Some higher earners argue that they’re more likely to spend more on energy-efficient home upgrades, yet will pay more in fees. Some who disagree with the proposal feel they would be unfairly penalized with a flat-rate fee despite making efforts to conserve energy.

How much could these proposed fee changes impact the checking accounts of Californians? According to a recent article from The Washington Post, California households earning more than $180,000 could pay an average of $500 more on their yearly electricity bills. The lowest-income residents would save an estimated $300 yearly on electricity costs.

While higher-income residents would see an increase in their electricity bills, residents at all income levels could benefit from reduced usage rates. With an income-based fixed-rate fee structure, electricity companies could reduce usage rates for all customers.

Lower fees could be a win for some Californians’ wallets

The California Public Utilities Commission has until July 2024 to make an official decision regarding these fixed-rate fees. If such fixed-rate fees were approved, many lower income California residents could benefit financially by freeing up more income for other goals.

As living costs continue to rise throughout the country, any money saved can make a difference in improving one’s personal finance situation. Residents paying lower fixed-rate fees could have greater flexibility to tackle other financial goals, like paying off debt or putting more money toward building a solid emergency fund.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

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 until 2024, 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.

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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.

 Read More