Money Management

Owe money on your credit cards? Read on for a few ways to pay it off quickly and efficiently. 

Because inflation has been surging for the past two years, credit card debt has become a part of life for a lot of people. But a Motley Fool survey reveals that people who identify as LGBTQ+ are more likely to have credit card debt than Americans overall.

If you owe money on your credit cards, that alone could be causing you to lose sleep. But there are steps you can take to break the cycle of debt and get to a better place financially.

1. Start buckling down on spending

You won’t be able to pay off your credit card debt if you spend your entire paycheck month after month. So if that’s a pattern you’ve fallen into (perhaps due to inflation), try your best to get on a budget that allows you to track and limit your spending.

You may also need to prepare to cut some spending, like canceling streaming services, until you’re able to make headway on your debt. Order your non-essential expenses by priority so you’ll have an easier time figuring out which ones to trim and which ones to keep paying for (since you can’t reasonably eliminate every expense that brings you joy).

2. Give your income a boost

If you’re not spending very much these days on non-essentials, then cutting back on things like Netflix may only go so far in freeing up cash for debt payoff purposes. If that’s the case, then you may want to look to a side hustle to boost your income. Since that money won’t be earmarked for current bills, you should be able to take all of it, minus what you might owe in taxes, and apply it to your credit card balances.

3. Put a stop to accruing interest

One reason so many people end up stuck in a cycle of credit card is that interest can accrue on your balance as you’re trying to pay it off. So even if you’re chipping away at your principal balance, your total balance might continue to grow due to the interest you’re being charged.

If you’re eager to shed your credit card debt for good, one thing you may want to do is transfer your various balances over to a new card with a 0% introductory APR. That will give you a reprieve on the interest front for a period of time.

That period will be limited. Some 0% introductory offers only last for 12 months before interest begins to accrue on your balance. But if you find a card with a longer introductory period and manage to pay off your debt within that time frame, you might manage to get out of debt for good.

Owing money on credit cards can be extremely stressful, not to mention costly. So it’s important to do what you can to shed that debt in short order. By curbing spending and budgeting carefully, boosting your income, and transferring your balances onto the right card, you can hopefully make great progress on your debt, and ideally eliminate it for good.

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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 banks have no physical presence at all. Read on to learn how your banking will change if you get an account with an online-only bank. 

Banking has changed by leaps and bounds over the years, and despite recent hiccups like big-name bank failures, I’d argue that banks have gotten better over time. One of the clearest examples of this is how much easier it’s gotten to manage your money from wherever you are, rather than having to make a trip to a bank branch to deposit money, check your balance, or move cash around in your accounts.

In fact, technology has evolved so much that there are now online-only banks that exist only in cyberspace. Let’s take a look at what happens when you open an account with one of these futuristic banks.

You’ll get a range of account options

If you decide to join an online-only bank, you have choices right from the start. Online banks usually offer the same types of accounts you’ll find at brick-and-mortar banks, including checking accounts, CDs, and money market accounts. But online-only banks really shine when it comes to savings accounts.

You’ll earn a higher APY on your savings

If you decide to open a savings account with an online-only bank, you’ll be opening yourself to the opportunity to earn more money on your money. Many of the best savings accounts available right now are offered by online banks, who pass their lower operating costs on to account holders in the form of a higher APY than you’ll find with a traditional bank.

“APY” stands for annual percentage yield, and refers to how much interest you’ll earn on money stored in a bank account. So if you’ve got a chunk of money saved up, it’s worth finding a savings account with an online-only bank to house it and help it grow.

You’ll enjoy a robust mobile app and banking tools

One of the pros of online-only banks is their investment in technology. If you’re currently using a traditional bank (particularly a smaller one), you might be disappointed by its mobile app or website. But if you opt for an online-only bank account, you might be delighted by all the tools at your disposal, like growth projection charts for your savings, budgeting tools, and beyond.

You won’t be able to directly deposit cash

It’s not all sunshine and roses with online-only banks, and one difficulty you might encounter is an inability to deposit cash directly into your account. So if you tend to receive a lot of cash payments, this is something to be aware of. This doesn’t mean there’s no way to get cash into that account, though.

If you have an account with a bank that has physical branches (or offers the opportunity to deposit cash via ATM), you can deposit cash into that account, then transfer it to your online account (either by bank transfer or a payment app). It’s an extra step, but if you don’t deal in cash often, it shouldn’t be enough of a reason to forgo the other perks of online banks.

You may have limited direct withdrawal options

Another thing to know about your new online bank account is that you might not easily be able to withdraw money. You don’t have a physical bank branch to visit to take out cash, and it may take some research to find the best ATM to use. Online-only banks often have networks of ATMs that you can use for free (check your bank’s website for locations), or they may reimburse ATM fees you pay at out-of-network ATMs.

Of course, to be able to use an ATM at all, you need an ATM card, and if you open only a savings account, you might not receive one. As an example, when I opened my online-only savings account, I knew I’d want periodic access to ATMs, so I opened a linked checking account, which came with a debit card. Getting access to your money might involve a workaround like this.

You’ll pay no or few fees

Another big perk of online-only bank accounts is that they often come with fewer fees or even none at all. Since online banks don’t have physical branches to maintain, they generally don’t charge monthly maintenance fees on bank accounts. This is great news if you’ve ever been seriously annoyed that you’re having to pay just to keep your account open. Some online-only banks are even doing away with overdraft fees. This is also wonderful, because when you’ve overdrafted your account, the last thing you need is more fees to pay on top of that.

Congratulations on your new online-only bank account! Download your bank’s mobile app, enjoy a higher APY on your savings and fewer (or no) fees, and keep in mind that getting cash in or out of your account might require a bit more legwork than you’re used to.

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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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Mortgage rates are higher now than they were during the pandemic, but there’s an important thing to remember if you’re worried about it. Find out more. 

Mortgage rates are pretty high right now compared with recent years. While rates dipped below 3% for a 30-year fixed-rate mortgage during the pandemic, the weekly average rate for a 30-year mortgage was 6.79% as of June 1, 2023, according to Freddie Mac.

This can be a huge discouragement if you are hoping to buy a property without putting too much pressure on your bank account. But, if you find yourself upset by the fact that rates are higher, there’s one key thing to remember.

Your mortgage rate today doesn’t have to be your rate forever

While it may seem frustrating to see that rates are so much higher now than they were a short time ago, you need to remember that the rate you get on your home loan now does not necessarily need to be the rate you are stuck with for the life of the loan.

See, when you take out a mortgage loan, you typically have the option to refinance it whenever you want to (as long as you don’t owe more on your home than it is worth, maintain good credit, and have enough income to qualify for a refinance loan). If your finances are in reasonable shape, you should be able to refinance the loan with either your current lender or with a new lender of your choosing including a bank, credit union, or online lender.

Refinancing means you get a new loan and use it to pay your current mortgage. When you do this, you change the terms of your home loan to whatever the new loan’s interest rate and payment are. So if rates drop and you refinance to a new loan with a lower rate, you will now be able to pay interest at a reduced rate once you’ve completed the refinance process. You’ll trade your old high-interest loan for a new low-interest one instead.

Since you can refinance, you don’t have to worry about being stuck with your costly loan forever if rates happen to drop again.

There’s a one-way risk when you borrow to buy a home

The fact that you can refinance your loan if rates drop is extremely important because it makes taking out a mortgage a one-way risk.

When you borrow with a fixed-rate loan, the mortgage lender you have your loan from can’t just change your rate or payment if rates keep going up. It is stuck loaning you the money at the agreed-upon rate. But you do have the chance to change your loan if rates go down and you choose to refinance. So the lender takes on all the risk of rising rates.

Say you’re concerned about borrowing at today’s average rate of 6.79% and are thinking about waiting until rates fall. If you instead opted to go forward with borrowing and rates did decline, you could refinance. But if rates instead went up even higher, to 8% or 9% or more, you would benefit from the fact you’ve locked in at today’s rates.

Because there’s no way to tell if rates will rise or fall, you may want to move forward with a home purchase now as long as you can easily pay the monthly bills — even if the rate is higher than you prefer. That way, you lock in what you have access to now to protect yourself from rising rates while keeping the door open to reducing borrowing costs by refinancing in the future.

Our picks for the best credit cards

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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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Car ownership gives college students greater access to job opportunities. Find out how to save on car expenses. 

How do you make the most of your sophomore year of college? Your second year is typically when you and your peers begin to venture off campus. You might travel to rival schools, visit high school friends across the country, or wean yourself off the mandatory college meal plan.

Every one of those things is a million times more doable with a car. A car makes travel easier. It makes you the “go-to” person for off-campus events you can’t reach by bus. A vehicle also allows students to work off-campus jobs.

Many first-year students may fail to take advantage of a car because, let’s face it, car ownership is expensive. When paired with the other expenses of college, it can seem downright unappealing. But car ownership could end up paying dividends to those who can afford it upfront.

Here’s why owning a car in college is worth the upfront expense.

1. College is about networking

According to recent Pew Research data, 44% of college graduates think college is very helpful for finding job opportunities. Make friends in college, and they’ll hook you up with decent jobs. I’ve experienced this firsthand, having referred a close college friend to her current position.

It’s all about networking, also known as making friends.

Car ownership can help. Volunteer as a driver, and you’ll have students falling over themselves to catch a ride to the nearest Costco location (always popular) or an off-campus event. Getting around without a car is typically a hassle, putting drivers in high demand.

In college, I had to schedule an Uber or beg a carpool to get anywhere out of town; I even planned weekly grocery runs around my roommate’s schedule. Unlike me, she owned a car and could frequently give rides to friends — easy networking.

2. You can work off-campus

According to Capital One survey data, 84% of lower-middle income, non-car owners turned down a job opportunity due to a lack of car ownership. Owning a car broadens work opportunities — especially high-paying ones.

It’s true: Campuses typically offer on-campus employment through Federal Work-Study programs. While many of these jobs essentially pay you to make friends, wages are typically low. Higher-paying jobs, including those that come with tips, can be found off-campus.

You’ll want convenient public transport or a car to access off-campus jobs. Because I didn’t own a car, I was reluctant to search for work opportunities that weren’t on-campus or within walking distance of my apartment. A vehicle makes off-campus jobs easily accessible.

How to save on car expenses

Despite the perks, car ownership comes with significant upfront costs. On campus, you’ll often hear student drivers complain about traffic, gas expenses, and limited parking spots. According to AAA data, the average monthly cost of owning a new car is about $894, including insurance.

Chances are, you’ll want to cut those costs way down.

Split bills with a roomie to halve the cost of car ownership. Chances are, your roommate wants in on that car. You can save big by drawing up an agreement to split the cost of fuel, lease/loan payments, parking fees, and car insurance.

Other small ways to cut costs:

Search for off-campus parking to avoid parking fees.Use a gas and grocery credit card for cash back at the pump.Purchase a used car for cheap — your parents might be willing to sell you theirs.

Old cars can be cheap, but they’re also high maintenance. While it may be tempting to ignore the warning signs, consider keeping your car well-maintained to save on repair fees. You can also snag gas at Costco gas stations, which are typically cheaper than competitors.

Ultimately, car ownership makes making friends and working off-campus easier, expanding student work opportunities. Save on the significant expense by splitting costs with a roommate, and combine car ownership with a thrifty Costco membership to save on groceries — your housemates will thank you.

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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.

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.Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Uber Technologies. The Motley Fool has a disclosure policy.

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It’s important to make informed choices to get the right insurance protection. Check out three myths consumers can’t afford to believe when getting covered. 

Buying insurance can be confusing, especially since many people have misconceptions about getting covered that can lead them astray. It’s very important to make the right choices when putting insurance policies in place, as mistakes about coverage could do serious damage to a checking account balance.

Consumers should make sure they are not falling for these three big myths when they’re buying insurance, so they aren’t left with regrets.

1. Insurance policies always cover everything that goes wrong

One common misconception is that a particular kind of insurance will cover most everything that goes wrong. For example, a homeowner who is buying home insurance might assume they are protected against all kinds of disasters, from fires to floods to earthquakes and more.

The reality is, this is often not the case.

Most insurance policies have exclusions and provide protection only from certain covered losses. Named peril policies list the specific kinds of events that will result in an insurance payout, but even so-called “all risk” policies still have limitations and won’t pay for damage resulting from an excluded cause.

Anyone buying insurance should read the fine print to find out when an insurer will pay and what types of damage an insurer will exclude. That’s because it’s sometimes possible to buy specific coverage for things that are commonly excluded.

For example, most home insurers won’t pay for flood damage caused by weather, but separate flood insurance is typically available through FEMA. Unfortunately, those getting covered won’t know they need it unless they know their coverage details.

2. Loyalty to an insurance carrier can pay off for policyholders

It’s tempting to believe that sticking with the same insurer year in and year out will come with financial rewards. But, in fact, the opposite may be true. In many states, insurers can set prices based on any criteria they want. And some insurers actually evaluate who is least likely to shop around and compare costs — and then they charge those people a higher premium.

Rather than getting stuck paying more for insurance by keeping the same coverage forever, consumers should shop around for policies about once a year. There may be a better and less expensive option out there, especially since insurance companies don’t usually give special discounts to their repeat customers who stick with them year after year.

There is one caveat to the general rule that loyalty doesn’t pay, though. Many insurers do offer discounts for bundling coverage, so being brand loyal and buying multiple policies from the same carrier can make sense. But even with bundled policies, it pays to shop around and check rates each year to confirm that the policies are being offered at competitive prices.

3. Buying the minimum amount of insurance coverage is a great way to save money

Finally, one last myth relates to how much insurance to buy. Some consumers think they’re better off saving on premiums by buying the bare minimum amount of insurance required by their state. But while this can seem smart if nothing goes wrong, it can lead to financial disaster in the event a home, vehicle, or other insured property is damaged.

Everyone buying insurance should make sure they are transferring an appropriate amount of risk to an insurer. If a policyholder couldn’t pay for out-of-pocket losses if something goes wrong, more insurance is needed.

Fortunately, those who know the truth about these three myths can make sure they have the right protection in place. This is great for their finances, and for their peace of mind.

Our best car insurance companies for 2022

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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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