If you’re not using these tips, you’re paying 10-30% too much. Voyagerix / Shutterstock.com
Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend. Everybody has one: A friend who’s always finding screaming deals on everything they buy. What do they know that we don’t? As it turns out, plenty. Read on…in about three minutes, you’re going to become a shopping pro…
If you use your credit card frequently, it might not take long for the balance to pile up. Read on for the pros and cons of transferring your credit card balance.
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Credit card debt is one of the most common types of debt in the world. Many people find themselves struggling to pay their debt off, especially when they have high interest rates. This is where transferring credit card balances come in, by moving your debt to a low or 0% APR credit card. Here are the pros and cons of transferring your credit card balance.
The process is relatively simple. You need to apply for a new credit card with a lower interest rate. Many credit cards offer a balance transfer promotion. Once approved, you will be given a credit limit, and the new credit card company will pay off the balance on your old credit card or cards.
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Your debt amount stays the same, but you may be charged a balance transfer fee by the new card. You’ll still be responsible for paying off the balance on the new credit card, but you will save money on interest payments moving forward.
The main benefit of transferring your credit card balance is saving money on interest charges. For instance, assuming you have a $10,000 debt on a 20% interest credit card, you would be paying $2,000 yearly in interest charges.
However, transferring this balance to another card with a 5% interest rate means you only pay $500 annually, saving you $1,500 per year on that balance.
A balance transfer has the potential to boost your credit score by allowing you to pay off your debts sooner than you would on your own. However, it’s important to stay focused and committed to paying down your debts once the transfer has been made.
If you have multiple credit card debts, consolidating them through a balance transfer can simplify everything. Instead of making separate payments to various lenders, consolidating all your debts means you’ll only have one payment to make every month.
There are also some potential risks to be aware of. One risk is that you could end up accumulating more debt. If you transfer your credit card balance to a new credit card, but continue to use your old credit cards, you could end up with even more debt. It’s important to have a plan to pay off your debt and avoid accumulating more debt in the future.
Another risk of a balance transfer is that you could damage your credit score if you don’t manage your debt properly. When you apply for a new credit card, it can have a temporary negative impact on your credit score.
Additionally, if you close the old credit card account after transferring the balance to a card with a lower limit, this can further reduce your available credit and increase your credit utilization ratio. It could also lower the average age of your accounts. These factors can negatively impact your credit score.
Transferring your credit card balance can be a smart move if you have a plan to pay off your debt and avoid accumulating more debt. By taking advantage of a lower interest rate, you can save money on interest charges and pay off your debt faster. The new card may also come with a sign-up bonus, such as a chunk of cash back or extra points you can earn by completing a minimum spend in a given period of time after account opening. However, it’s important to weigh the potential risks and benefits before making a decision. If you are considering transferring your credit card balance, make sure to do your research, compare different credit card offers, and have a plan in place to pay off your debt.
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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.
In the U.S., homeownership has been an important strategy for middle-income households to build wealth. Find out why, and how you can become a homeowner.
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For many Americans, homeownership is more than just having a place to live — it’s also a key way to build wealth. Studies show that home equity is the single largest financial asset for households in the three middle-income quintiles, representing between 50% and 70% of their wealth.
Owning a home has several financial advantages that make it an attractive wealth-building tool. Here’s what homeownership provides and what you can do to start building your own wealth through buying a home.
When you buy a home, you’re typically only required to put down a small percentage of the total purchase price. This means that you’re making an investment with a high degree of leverage — your down payment is a fraction of the total value of the property. If you’re buying with an FHA loan, it can be as low as 3%.
As you pay off your mortgage loan, your equity in the home grows, and any increase in the home’s value also adds to your net worth. This means that even a small increase in the value of your home can have a big impact on your net worth.
When you make your monthly mortgage payments, a portion of that payment goes toward paying off the principal balance of the loan. This means that each month, you’re building equity in your home.
Over time, as you continue to pay off your mortgage, your equity in your home grows, and your net worth increases. This is a powerful way to build wealth because it’s automatic — you don’t have to think about saving; it happens as you pay off your mortgage.
Mortgages typically have lower interest rates than other types of loans, such as credit cards or personal loans. This means that homeowners can borrow money at a lower cost than renters can, which can be especially powerful when it comes to buying a home.
In addition, owning a home can provide you with a source of low-cost funding. For example, you can use a HELOC to fund a business venture or home expansion.
Rents tend to go up over time, meaning that renting becomes more expensive as time goes on. When you own your home, you’re locking in your housing costs for the long term. If you have a fixed-rate mortgage, your principal and interest payments will remain the same for the life of the loan.
This means that as rents go up, the cost of owning your home remains the same. This can be a powerful way to protect yourself against rising housing costs.
Owning a home can have a positive impact on your life in ways that go beyond just building wealth. These are known as spillover effects. Homeowners tend to maintain their homes, leading to increased property values for their neighbors.
Homeowners are also more likely to invest in their children’s education, vote, and engage in activities with civic organizations. Homeownership benefits not just the individual, but their entire community.
Although homeownership is often viewed as a smart way to build wealth, there are risks associated with it. One of the main challenges of homeownership is that it is not easy to diversify or liquidate your investment.
Unlike stocks or bonds, which can be easily traded and diversified across different asset classes, a house is a single, illiquid asset that is subject to the whims of the local real estate market.
With that said, it’s still possible to minimize these risks by doing your research before purchasing a property, being prepared for unexpected expenses, and holding onto your investment for the long term. Despite the challenges, homeownership remains a viable asset-building mechanism that can offer valuable returns over time.
Here’s what you need to do if you’re in the market to buy a home.
Before you start searching for your dream home, it’s essential to determine your home-buying budget. This means looking at your current income, expenses, debts, and savings to see how much you can realistically afford. You should be fully aware of the additional costs associated with owning a home, such as maintenance, taxes, and insurance.
You can use online mortgage calculators and consult with financial planners and mortgage brokers to help you estimate how much you can afford. You need to have enough saved for the down payment and also be able to afford the monthly payments. It’s crucial to be honest with yourself and avoid overspending, as it can lead to stress, debt, and perhaps foreclosure.
Once you have a budget in mind, you can start researching your options for homes and neighborhoods. You can use online listings, real estate agents, and open houses to get a sense of what’s available, what features and amenities you’re looking for, and what prices are typical in your desired areas.
You can also gather information about schools, transportation, shopping, and other factors that may influence your decision. It’s a good idea to create a list of key features and must-haves for your new home and prioritize them based on your preferences and budget.
To increase your chances of getting your dream home, you need to get pre-approved for a mortgage. This means that a lender will review your financial and credit history and give you a conditional offer for a mortgage up to a certain amount.
This will show sellers that you’re serious about buying and have the financial backing to do so. You can shop around with different lenders to find the best rates and terms for your situation.
Keep in mind that getting pre-approved doesn’t guarantee you’ll get the final approval, so be prepared to show documentation, provide additional information, and make adjustments if needed.
Once you’ve found the perfect home and have been pre-approved for a mortgage, it’s time to make an offer and negotiate with the seller. You can work with your real estate agent to craft a competitive offer that meets your budget and preferences and includes contingencies and deadlines.
The seller may accept, reject, or counter your offer, and you’ll need to react accordingly. If your offer is accepted, you’ll need to go through the closing process, which involves signing legal documents, paying closing costs, and transferring ownership.
This can take several weeks or months, so be patient and work with your lender, agent, and possibly a real estate lawyer to ensure a smooth and successful closing.
Once you’ve closed on your new home, it’s time to celebrate and enjoy the fruits of your labor. You can personalize your space, create memories with your loved ones, and take pride in being a homeowner.
However, homeownership also comes with responsibilities, such as maintaining your property, paying your bills on time, and being a good neighbor. It’s essential to stay organized, communicate with your family and professionals, and address any issues or concerns promptly.
Owning a home can be a lifelong journey, but with proper planning and care, it can also be one of the most fulfilling experiences in life.
Homeownership has been crucial to building generational wealth and financial security for a variety of reasons. Homeownership provides a means for forced savings, has low borrowing costs, and is a hedge against future rent increases. When leveraged correctly, it can become a powerful tool for building long-term wealth. Understanding the financial benefits of homeownership and taking practical steps toward it can help build a stronger financial position for yourself and future generations.
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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.
Find out which areas are most vulnerable to and impacted by natural disasters. Vlad Teodor / Shutterstock.com
Editor’s Note: This story originally appeared on Forbes Advisor. Natural disasters are occurring more frequently and with more intensity. Over the past five years, the U.S. has experienced an average of 17.8 natural disasters each year. That included 18 climate disaster events in 2022, which caused a total of $169.8 billion in damage, according to the National Centers for Environmental Information.
All you have to do is add a teensy little clause to your will. petereleven / Shutterstock.com
You can have pizza now, but there will be hell to pay later — much, much later, hopefully. New Zealand-based Hell Pizza is introducing AfterLife Pay, which the chain describes as a “payment scheme” where you win pizza for nothing right now and in exchange agree to write a legally binding IOU into your will — “without any pesky late fees or penalties.” The unique promotion is intended to poke fun…
Could a backyard home office shed be your key to a lower federal income tax bill? Mike Higginson / Shutterstock.com
Although many employees are returning to the office after the COVID-19 pandemic, quite a few continue to work remotely. Finding a dedicated space to work, however, might prove difficult, depending on the size of your home. If you have some space outside, one option is to buy or build a shed to use as your workspace instead of adding on a new addition to your home. The following questions will help…
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