Money Management

Sometimes, bogus charges end up on your credit card. Read on to see how to handle a pending one. 

It’s an unfortunate thing that year after year, many consumers fall victim to credit card fraud. In 2021 alone, there were almost 390,000 reported cases of credit card fraud, according to research from The Ascent.

When you see a pending charge on your credit card account that’s fraudulent, your first inclination may be to contact your credit card company and dispute it. The annoying thing, though, is that you actually can’t dispute a charge until it officially posts to your account. So while that charge is in pending status, there’s not much your credit card company can do about it.

But there is something you can do. And it might save you a world of hassle.

When you’re able to take action

Sometimes, bogus charges might wind up on your credit card not due to intentional fraud, but simple mistakes. Let’s say you canceled your gym membership last month, but there was a glitch in their system, and so you’re now seeing a pending charge for your monthly gym fee that shouldn’t be there.

In that case, a simple call to your gym might nip the problem in the bud, so it’s worth reaching out and asking to have that charge canceled. If you go this route, that charge might never even officially get posted to your credit card account at all.

In other situations, it may be that somebody got a hold of your credit card and used it to charge an expense that’s not authorized. In that case, it still pays to reach out to the merchant behind that charge, explain the situation, and ask for the charge to be removed from your account.

Dealing with fraud isn’t fun for merchants, just as it isn’t fun for individual consumers. So often, they’ll try to be accommodating to avoid a hassle themselves. And that, in turn, can help you avoid a problem.

In a worst-case scenario, you’ll have to wait to dispute the charge

Ideally, you’ll be able to nip a pending fraudulent credit card charge in the bud before it posts to your account. But if you’re unable to do that, once the charge moves from pending to posted, you’ll have the option to dispute it.

From there, your credit card company is required to investigate the matter. And what will most likely happen is that the charge will be removed from your credit card account while that investigation is underway.

All told, it’s possible for fraudulent charges to hit your credit card account for a number of reasons, from innocent mistakes to criminal activity. That’s why it’s so important to be vigilant about logging into your credit card account and reviewing your spending activity on a regular basis, rather than just waiting to get your statement once a month.

If you go this route, you’ll be more likely to catch a fraudulent charge while it’s still in the pending stage. And from there, you’ll have more options for making it go away without having to deal with the process of officially disputing a charge on your account.

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.

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.The Motley Fool has a disclosure policy.

 Read More 

Younger investors often consider investing all their money in stocks. Explore the pros and cons of this approach and see if it’s a good idea. 

While there are many investment options, they all fall into a few categories. The three main types of investments are stocks, bonds, and cash equivalents. Everything else, including real estate, gold, and cryptocurrency, is considered an alternative investment.

Most investors have a mix of stocks, bonds, and cash, plus maybe some alternative investments. But the stock market has historically provided a fantastic combination of growth potential and reliability, so some people opt to invest all their money in stocks. It’s especially popular with younger investors who have decades until retirement.

Is this a good idea, or is it too risky? To help you figure out if this option is right for you, let’s look at what you can expect with a stock-only portfolio and the potential pitfalls.

Your portfolio will likely perform very well over the long haul

A stock-only portfolio is a great way to maximize growth. Over long periods of time, the stock market has delivered excellent returns for investors. The S&P 500, an index of 500 of the largest publicly traded U.S. companies, is a perfect example. It has an average return of about 10% per year, before inflation.

Nothing else has done so well for so long. The potential returns with stocks are far higher than what’s possible with bonds or cash.

It’s worth mentioning that past performance is no guarantee of future results. Just because the stock market has returned an average of 10% per year doesn’t mean it will continue to do so. Still, it has historically been an extremely effective way to build wealth. If that continues, then putting all your money in stocks will pay off in ways that a more balanced portfolio won’t.

Some years will be much better than others

Although the stock market has done well over long periods of time, its year-to-year performance is highly volatile. Don’t expect a steady 10% per year, because returns are anything but predictable. As far as performance goes, here’s a more accurate idea of what it’s like:

Some years deliver fantastic returns. For example, the S&P 500 rose 34.1% in 1995, 29.6% in 2013, and 28.9% in 2019.There’s the occasional year with big losses. This hasn’t happened too much in the 21st century, but the S&P 500 declined by 23.4% in 2002, 38.5% in 2008, and 19.4% in 2022.Many years are in between those two extremes. Occasionally, gains or losses are very low or practically flat.

Fortunately for investors, the good years far outnumber the bad years. However, you need to be prepared for that volatility when you invest in stocks, especially if you put all your money in them.

You could be short on cash when you need it

This is only going to be a problem if you invest absolutely all your money in stocks. If that’s your plan and you don’t keep any cash on hand, you’re going to run into problems with any big bills that come up.

For example, let’s say your car breaks down and you need $3,000 to get it fixed. If you have all your money invested, you may be forced to sell some of your stocks. If they’ve gone down in value, that will mean selling at a loss.

You can put your entire investment portfolio in stocks if you want. The key is not to put literally all your money in stocks. Outside of your investment portfolio, you should have an emergency fund with enough to cover at least three months of expenses, as well as savings for any short-term goals and large future expenses you need to plan for.

You’ll need to make changes when you’re close to retirement

A stock-only portfolio works when retirement is still a long way off. If you’re not planning to retire for another 20 or 30 years, you have enough time to ride out the year-to-year ups and downs.

As you get closer to retirement, wealth preservation starts to take precedence over wealth building. You can still keep the bulk of your portfolio in stocks, but it also becomes important to diversify.

Once you’re about 10 to 15 years from retirement, start adding bonds to your portfolio for more stability. Those who are retired or getting close to retirement often go with a 70:30 or 60:40 stocks-to-bonds ratio. The right ratio for you will depend on your risk tolerance.

Even if it sounds extreme, a 100% stock portfolio can be a great choice for investors who don’t mind the volatility and have plenty of time until retirement. Just make sure you have a diversified stock portfolio with a large number of companies. You can do that yourself or by investing in index funds, such as an S&P 500 or total stock market fund.

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

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 

Remote workers can save lots of money in areas with a low cost of living. Discover 10 of the cheapest U.S. cities and see what they have to offer. 

Remote work has its fair share of benefits. There’s no commute, which saves workers 72 minutes per day on average. Schedules tend to be more flexible. And many remote jobs also allow workers to live wherever they want.

If you work remotely with no location restrictions, that can be a huge advantage from a personal finance standpoint. Where you live determines how much many of your bills cost, most notably housing. By choosing an area with a low cost of living, you could spend far less and have more money to save or spend how you like.

To give you an idea of potential options, here are the 10 cheapest cities in the United States, according to research on affordable places to live by The Ascent. Under each one, you’ll find its cost-of-living index (lower is cheaper and 100 represents the national average), population, and its grade on Niche. You’ll also find some highlights and lowlights based on its Niche ratings.

1. Harlingen, Texas

Cost-of-living index: 77.1Population: 71,124Overall grade on Niche: BHighlights: Weather (A-minus), diversity (B-plus)Drawbacks: Outdoor activities (C), crime and safety (C), health and fitness (C)

2. Kalamazoo, Michigan

Cost-of-living index: 77.5Population: 74,020Overall grade on Niche: A-minusHighlights: Nightlife (A), diversity (A), outdoor activities (A-minus)Drawbacks: Crime and safety (C-minus), weather (C-minus)

3. Muskogee, Oklahoma

Cost-of-living index: 78.2Population: 37,214Overall grade on Niche: BHighlights: Diversity (A-plus), outdoor activities (B-plus)Drawbacks: Crime and safety (C-minus)

4. McAllen, Texas

Cost-of-living index: 79.3Population: 141,941Overall grade on Niche: B-plusHighlights: Weather (A), nightlife (B-plus), public schools (B-plus), good for families (B-plus)Drawbacks: Outdoor activities (C)

5. Decatur, Illinois

Cost-of-living index: 80.0Population: 71,309Overall grade on Niche: B-minusHighlights: Diversity (A), nightlife (A-minus)Drawbacks: Crime and safety (C-minus)

6. Tupelo, Mississippi

Cost-of-living index: 81.4Population: 37,872Overall grade on Niche: AHighlights: Public schools (A), good for families (A), diversity (A)Drawbacks: N/A

7. Joplin, Missouri

Cost-of-living index: 82.0Population: 51,539Overall grade on Niche: BHighlights: Nightlife (A-minus), diversity (B-plus)Drawbacks: Crime and safety (C)

8. Ashland, Ohio

Cost-of-living index: 82.5Population: 19,544Overall grade on Niche: B-plusHighlights: Outdoor activities (A-minus), good for families (B-plus)Drawbacks: Weather (C-plus)

9. Topeka, Kansas

Cost-of-living index: 82.5Population: 126,802Overall grade on Niche: B-plusHighlights: Diversity (A), public schools (B-plus), outdoor activities (B-plus), nightlife (B-plus)Drawbacks: Crime and safety (C-minus)

10. Salina, Kansas

Cost-of-living index: 82.7Population: 46,896Overall grade on Niche: BHighlights: Diversity (A-minus), outdoor activities (B-plus)Drawbacks: Crime and safety (C)

Cheap places to live in the rest of the United States

Some parts of the country are much cheaper than others. All of the cities listed above are in the South and Midwest. While the Western and Northeastern United States are more expensive, they do have cities that cost less than the national average, so you’re not out of luck if you want to live in either region.

Here are the five cheapest cities in the West and the cost-of-living index for each one:

Great Falls, Montana (87.4)Casper, Wyoming (90.0)Bullhead City, Arizona (90.6)Twin Falls, Idaho (91.3)Las Cruces, New Mexico (92.0)

Here are the cheapest cities in the Northeast:

Erie, Pennsylvania (89.8)Wilkes-Barre, Pennsylvania (91.2)Scranton, Pennsylvania (92.8)Buffalo, New York (95.2)Vineland, New Jersey (95.6)

Cost of living is far from the only thing to consider when choosing a place to live. Everyone wants to have a good quality of life, and cheap bills don’t matter much if you dislike where you live. But if you can work from anywhere and you’re open to moving, cost of living is one important factor to consider. Saving money on housing and other bills could make a big difference in your overall financial situation.

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.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

 Read More 

Mortgage shopping comes with a lot of unfamiliar terminology. Keep reading to learn some definitions that will make it easier. 

When buying a house, you will want to make sure you get the right home loan if you must borrow to help you with your purchase. There are a few key mortgage terms you need to know in order to get the best financing for your situation.

Here’s what they are.

1. Fixed vs. adjustable-rate mortgage

First and foremost, you must understand the terms fixed-rate mortgage and adjustable-rate mortgage (ARM). And you must know the difference between them so you can decide which type of mortgage loan is right for you.

A fixed-rate mortgage is a home loan that has a set interest rate, so the rate you pay to borrow won’t change the entire time. An adjustable-rate mortgage has a rate tied to a financial index that can adjust or change on a set schedule. Usually, an ARM will have a starting rate fixed for a few years, such as three, five, or seven years. After that time, rates could adjust periodically, often once per year.

While an ARM may seem attractive if it has a lower starting interest rate than a fixed-rate loan, you could risk your payments increasing and could risk your total loan costs going up by tens of thousands of dollars if your rate adjusts upward. So, be sure you understand what type of loan you’re being offered and whether you face a risk of costs going up or not.

2. Private mortgage insurance

Private mortgage insurance is another important mortgage term to know. It’s also known as PMI, and it’s a type of insurance lenders mandate home buyers purchase if those buyers make less than a 20% down payment.

PMI usually costs anywhere between 0.1% to 2.00% of your loan amount per year, depending on the specifics of your loan. If you are mandated to buy it, you typically have to pay the costs as part of your monthly payment. So, if you borrowed $300,000 and your PMI costs were 2.00%, you’d owe $6,000 annually for private mortgage insurance and your monthly mortgage payment would be about $500 higher.

PMI doesn’t protect you even though you pay for it. The insurance makes sure your lender doesn’t experience uncompensated losses if they have to foreclose on a home you bought with a low down payment.

3. Points

You should also absolutely make sure you know and understand the term “mortgage points,” when you borrow to buy a home, as you may need to make a decision about whether to buy points.

Mortgage points — or discount points as they are also called — give you a chance to essentially prepay interest and buy down your interest rate. Typically, a point costs 1.00% of your mortgage and it reduces your interest rate by 0.25%.

So if your interest rate was going to be 4.50% and you bought 1 point, your rate would come down to 4.25%. If you were taking out a $200,000 loan, you’d pay $2,000 to buy down your rate and your monthly payment would go from about $1,013 per month to about $984.00. You’d also save around $10,616 in interest over the life of the loan due to your lower rate.

Buying points makes sense if you plan to remain in your home for a long period of time. You’ll need to stay there for a while for the reduced monthly payments to make up for the initial money spent to buy down your rate. If you’re saving about $29 a month, it would take you 69 months or 5.75 years to make up for the initial $2,000 you spent to buy down your loan rate ($2,000 divided by $29).

By making sure you understand these essential mortgage terms, you can help guarantee you get the best home loan to meet your needs. You can make an informed choice about what kind of interest rate to choose, whether to buy with a low down payment even though that means paying PMI, and whether paying points is right for you.

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.The Motley Fool has a disclosure policy.

 Read More 

Lenders deny applications for many reasons, but some of the most likely include bad credit, too much debt, and problems with the home appraisal. Find out more. 

If you’re applying for a mortgage, chances are good you’re excited about buying a home and starting your next chapter in a new location. That’s why it can be so disappointing if your mortgage lender turns you down and says you can’t borrow.

Your would-be lender should tell you why you were denied, but it can also be helpful to know in advance some common reasons why mortgage loan providers turn people down for home loans. Here are three top reasons why a prospective buyer may be told they cannot get a mortgage.

1. A low credit score

In general, to get a conventional loan (one not backed by the government), you need a credit score of at least 620 (although this requirement can vary by lender). If your score is below this and you’ve applied for a loan with a borrower that doesn’t specialize in bad credit loans, chances are your application will not be approved.

The good news is, there are loan options out there even for people with low credit. You may want to look into an FHA loan, which could be available with a credit score as low as 500. This loan is backed by the Federal Housing Administration and is designed to make homeownership available to borrowers with imperfect financial credentials by allowing private lenders to approve them with lower scores and down payments.

2. Having too much debt

If you have too much debt, this is also likely to lead to mortgage denial. Most mortgage lenders like your total debt, including the amount you’ll spend on the new home loan each month, to be below 36% of your income. If you exceed this, you may not be approved for a home loan.

You can solve this problem by paying down your debt so your debt-to-income ratio drops below 36%. You can also look into lenders that are more willing to work with borrowers with a higher ratio or could opt to find a cheaper house that comes with less expensive monthly mortgage payments.

3. Problems with the home appraisal

Issues with an appraisal are another major problem that can result in a mortgage loan being denied — often at a later stage in the process.

When you apply for a loan, you first need to provide your financial credentials to make sure you meet the bank’s borrowing criteria. But, the lender also will want to be sure it is not loaning you too much money relative to the market value of the home.

Lenders have different caps on how much you can borrow relative to what a house is worth. In some cases, you need to make sure you’re borrowing less than 90% of a home’s worth. This would be called a 90% loan-to-value ratio.

The home’s value is determined based on what an appraiser says the house is worth. So if you offered $500,000 for a house the appraiser said is worth only $400,000, this would be a huge problem because your loan-to-value ratio would be based on the home having a market value of $400,000.

If the lender’s max loan-to-value ratio is 90%, then you’d only be allowed to borrow $360,000 and would need to come up with the other $140,000 for the home. In this case, you’d need to have a large savings account balance or might need to go back to the sellers and try to get them to accept a lower price for the home.

These are all important reasons why lenders may not give you a home loan. You should be prepared for these possibilities and take the steps mentioned here to try to reduce the likelihood they will stand in your way of homeownership.

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.The Motley Fool has a disclosure policy.

 Read More 

Love Costco? Read on for some great tips for saving money and making the most of your membership. 

For many people, the decision to join Costco is an easy one. And if you’re someone who likes saving money in the course of your shopping, then a Costco membership is likely worth paying for. This especially holds true if you have at least one warehouse club store close to your home.

But if you’re going to shop at Costco, it’s important to do so strategically. Here are some dos and don’ts to keep in mind, whether you’re new to Costco or have been shopping there for years.

1. Do see if an executive membership is right for you

A basic Costco membership costs $60 a year, while an executive membership costs $120. You might assume that a basic membership is your best bet since it’s cheaper. But an executive membership could make more sense financially. That’s because you’ll be rewarded with 2% cash back on all Costco purchases you make.

In fact, if you spend $3,000 a year at Costco, an executive membership will pay for itself. And if you spend more than that, you’ll benefit financially from the higher membership tier. You should also know that online purchases are eligible for cash back with your executive membership, as are travel packages you buy through Costco.

2. Do compare prices between what’s listed online and your local warehouse club store

Not only do Costco prices vary by region, but they also vary between what you’ll see online versus in stores. If you’re making a larger purchase — say, an appliance or laptop — then it’s especially important to compare the price you’re seeing online versus the prices at your local warehouse club store

You should also know that grocery items in particular tend to be more expensive online. And perishable items can be notably more expensive when purchased online, because they need to be delivered to you right away.

3. Do try the free samples

Some Costco members are shy when it comes to snagging free samples. But rest assured that Costco wants you to grab those samples while you’re roaming the store. That way, you can try new products and have a better sense of whether you ought to be buying them.

If you have kids who are picky eaters, it’s an especially good idea to bring them to Costco with you and have them sample different foods. That way, you’ll be less likely to buy something everyone in your family hates.

4. Do familiarize yourself with the store’s return policy

You can generally return items to Costco without a hassle and get a full refund. This holds true even if, for example, you started eating a food product, noticed a quality issue, and returned the item when it was already 25% consumed.

That said, Costco is stricter with some product categories when it comes to returns. Electronics, for example, must be returned within 90 days if you want a refund. And you should also know that Costco will not accept returns for cigarettes and alcohol specifically.

5. Do buy Kirkland products

Kirkland is Costco’s signature brand, and you’ll find it on everything from baked goods to baby formula. You may be inclined to skip over the Kirkland products you see at Costco and opt for the brands you know and trust. But actually, loading up on Kirkland products could result in a world of savings.

Not only that, but a number of Kirkland products are actually made by well-known brands and are simply relabeled for Costco. Kirkland Signature House Blend Coffee, for example, is actually made by Starbucks — and it says so right on the label.

6. Don’t buy too many perishables in bulk

Buying groceries in bulk is a great way to keep your costs down. But be careful when buying things like produce, meat, and dairy products in bulk.

Unless you have a larger family and do the majority of your cooking and eating at home, you may end up throwing some of your haul away if you buy bulk perishables. And that’s just wasting money rather than saving it.

7. Don’t take a chance on bulk food items you’ve never tried

It’s one thing to buy cases of your kids’ favorite popcorn and granola bars in bulk. But be careful when you’re buying an item in bulk that no one has tried before.

You might think onion garlic pretzels sound delicious. But if your kids end up rejecting that purchase, you’ll risk getting stuck with a product you don’t want. Of course, at that point, you may be able to take it back to Costco — but that’s something you’ll still have to deal with.

8. Don’t bring the wrong credit card with you

You can pay for Costco purchases with a credit card if you have a Visa. If not, you’re out of luck, since that’s the only type of credit card Costco accepts. Of course, if you don’t have a Visa card, Costco will accept cash or a personal check. You can also swipe your debit card to pay for your purchases.

9. Don’t give in to too many impulse buys

It might be hard to keep your spending in check at a store like Costco. Not only is it massive, but it tends to introduce new products regularly, from food to toys to apparel. And so the more you roam those aisles, the more tempted you might be to purchase things that are wants more so than needs.

Impulse buys at Costco, however, have the potential to upend your finances. So a better bet is to come to Costco with a shopping list in hand and only visit the aisles that contain items you’re planning to buy. That might minimize your chances of going overboard.

10. Don’t shop on the weekends if you can avoid it

Like many stores, Costco tends to be most crowded on weekends, since that’s when many people aren’t working. But if you do your shopping on the weekend, you might end up feeling stressed and rushed. That might lead you to buy things you don’t really need or miss out on deals that can benefit you.

Shopping at Costco can be a great experience that saves you money. But keep these tips in mind so you can really maximize those savings.

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.

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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Starbucks, and Visa. The Motley Fool has a disclosure policy.

 Read More