Money Management

Denied a credit card? All isn’t lost. Read on to see why. 

It’s not uncommon to graduate college without a credit score. After all, if your parents have paid all of your bills to date, then you may not have any sort of credit history in your name. And without one of those, it’s difficult to get a credit score assigned to you.

But if you don’t have a credit score, then chances are, you won’t be able to qualify for a credit card, either. Credit card companies need to make sure they’re extending credit to borrowers who are likely to make good on their debts. If you don’t have a credit score, there’s really no way for a credit card company to gauge the risk associated with letting you borrow.

If you’ve been denied a credit card after college, you should know that a secured credit card could help you build credit. However, it won’t actually give you buying power, which is what you might really be after. If that’s the case, here’s another option worth looking at temporarily.

Could your parents’ credit card become yours?

Experian reports that an estimated 28 million Americans are credit invisible. If you fall into that category, getting your own credit card may not be feasible. But in that case, you can ask your parents (either one or both) to add you as an authorized user to a credit card of theirs.

As an authorized user, you get to swipe your parents’ credit card (specifically, your own version of it) wherever it’s accepted. And that means that if you need to cover a $40 restaurant tab and you don’t have the cash in your wallet or the money in the checking account linked to your debit card, you can charge that expense on that credit card instead.

The upside of being added as an authorized user on a credit card, aside from the buying power, is that positive activity associated with that account could help you build up a good credit score. So for example, let’s say you get added to your parents’ card, and they pay the associated bill on time and in full month after month. That activity will count as yours for credit scoring purposes.

Of course, the downside of being added as an authorized user to a credit card is that if the people in charge of that account (in our example, your parents) are late with payments, that activity will be associated with your credit history, too. Only that’s not positive activity, so you might have trouble establishing a favorable credit history.

It’s important to follow the rules

Being an authorized user on a credit card is really a privilege, and it’s one you don’t want to abuse. If your parents allow you to go this route, follow their rules. If they give you a spending limit of $300 a month so they can still pay their bills, stick to it. And if their limit doesn’t work for you, be prepared to pay the difference.

Remember, if you rack up lots of charges you don’t cover and your parents can’t afford to pay their bills because of that, it’s not just your credit you might ruin as you’re trying to build it up. You might also wreck your parents’ credit. And that’s hardly fair.

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This writer isn’t putting in a pool anytime soon. Read on to see why. 

I can admit that I sometimes get a little jealous when I see my friends post pictures of their families lounging by the pool. Granted, when said jealousy really kicks in, what I tend to do is inform those friends that I’m on my way over with my book, a towel, and a bowl of fruit salad as a thank you for letting me take a dip.

But there are times when I think having our own swimming pool would be a nice thing for my family. Then I allow reality to set in. And I’m reminded that having a pool doesn’t make sense for us for these reasons.

1. It’s a lot of money

HomeGuide says the average cost to install an inground pool is $35,000, with most homeowners spending between $28,000 and $55,000. Now, I could try to finance a pool installation with a home equity or personal loan. Or, depending on the amount quoted, I could seriously raid my savings account.

But that’s a lot of money to spend on something I can’t even use year-round. I live in the Northeast, and most of the people I know with pools open them on or around Memorial Day weekend and close them back up around Labor Day.

It would be one thing to shell out all that money if I lived someplace where the year-round climate is conducive to pool usage. Since that’s not the case, I can’t easily justify the cost.

Also, when you put in a pool, there’s upkeep to consider. Homeowners can expect to spend between $1,200 and $1,800 per year on basic pool maintenance costs, according to Bob Vila. And even that is a lot of money for something we’d only use three months out of the year.

2. It’s a lot of time

Maintaining a pool doesn’t just cost money. You also need to put in the time. Even if you’re hiring a service to do an early season cleaning and check your chemical levels weekly, you still have to clean your pool in between. And I’m not sure I want to do the work.

I also, frankly, don’t have much time to do the work. I’m a pretty busy person as it is between holding down a full-time job, taking care of kids, and making sure we have cooked meals and clean laundry. I can’t really take on another task, even if it’s only for a few months.

3. It’s a lot of space

Putting in a pool would mean having to sacrifice a large chunk of our backyard. And that’s not space I’m eager to give up for something we’d only use during the summer.

My kids and their friends like to run around and play different sports in our backyard all year long. And I think we’d all come to resent a pool taking up precious real estate in October, when everyone’s itching to get a nice soccer game going.

Having a pool is definitely a nice thing, and I’m grateful for my friends and neighbors who generously allow me to use theirs. But all told, putting one in just doesn’t make financial or logistical sense for my family. And also, living where I do means the beach is just a short drive away. And why limit yourself to a pool when you could instead enjoy an entire ocean with a view?

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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.
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Many savings accounts have monthly withdrawal limits. Learn about the typical number of withdrawals you can make and the consequences of going over. 

Depending on the bank you use, your savings account may have a monthly withdrawal limit. In the past, all savings accounts had a limit of six “convenient” monthly withdrawals due to Regulation D, a banking regulation put in place by the Federal Reserve. “Convenient” refers to the type of withdrawal, with examples including online and phone transfers.

The Fed got rid of this monthly withdrawal limit in 2020. That means there’s no longer any government regulation on how many monthly withdrawals you can make from your savings account. However, some banks still have their own limits in place.

Most banks that have savings account withdrawal limits set the limit at six per month. But some set it even lower. You can find out whether your bank has a withdrawal limit and the penalties for breaking it in your account’s terms. To give you an idea of what to expect, here are the potential consequences if you exceed your savings account’s monthly withdrawal limit.

The bank could charge you a fee

The most common penalty in this situation is an excess withdrawal fee. This generally ranges from $3 to $15, depending on the bank, and it’s charged per excess withdrawal. For example, let’s say your bank charges a $10 fee for withdrawals in excess of six per month. If you make nine withdrawals that month, that’s three fees for a total of $30. Certain banks have a maximum number of excess withdrawal fees they charge monthly.

The withdrawal could be declined

It’s also possible that instead of charging you a fee, your bank will simply decline the transaction. This could be inconvenient, especially if you really need the money. In that case, the best option is to contact customer service, explain the situation, and see if there’s a way that they can help you put through the withdrawal.

It may convert your account to a checking account

Some banks reserve the right to convert your savings account to a checking account due to excess withdrawals. With these banks, the terms usually state that the account could be converted if you repeatedly go over your account’s withdrawal limits. It’s not something that’s going to happen right away, so you don’t need to worry if you make a mistake one time.

It may close your savings account

The most extreme penalty is the bank closing your savings account entirely. This is rare, but there are banks that reserve the right to do this for excess withdrawals. Once again, banks normally only take this measure if you repeatedly exceed the withdrawal limits for your savings account.

Make sure you know the rules for your savings account

Withdrawal limits on savings accounts can be frustrating, especially since they’re not legally required anymore. But these relics from another time have still stuck around with some banks, so it’s important to watch out for them. Here’s what to do:

First, check if your savings account has a monthly withdrawal limit.If it does, make a mental note (or an actual note) of that limit, and also review what your bank considers a “convenient” withdrawal that counts toward it.Keep track of your withdrawals each month to avoid going over the maximum you’re allowed.

If you find yourself coming up against that limit often, it’s probably time to reconsider either the savings account you have or how you’re using it. There are savings accounts, including excellent high-yield savings accounts, with no withdrawal limits. You could switch to one of those.

Keep in mind though that savings accounts aren’t exactly intended for moving money around frequently; checking accounts are the better option for that. Consider keeping more money in your checking account, ideally enough to cover about one month’s worth of expenses. Make sure your paychecks get deposited to your checking account, as well. If you do that, you shouldn’t need to tap into your savings account more than once or twice per month.

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You should check your brokerage account around every six months to a year. Read on to learn why you don’t need to check it more often — and probably shouldn’t. 

It’s a good idea to have money in a brokerage account so you can earn returns and build wealth. And once you’ve opened up your account with a broker, it may be tempting to check in on it regularly to see how your investments are doing. But, is that really a good idea?

It’s important to make an informed choice about exactly how often you should check your brokerage account, as it may not be as often as you might think.

Here’s how often you should check in on your brokerage account

Generally, it’s a good idea to check your investment account around every six months to a year. This may seem like a long time, but there are good reasons for it.

The biggest reason not to follow the performance of your account too closely is that doing so can lead you to make decisions that cost you. The best and most proven way to consistently build wealth by investing is to pick solid investments and then leave your invested funds alone — ideally, for many years. But, if you’re checking in on your account too often, it becomes harder to do that.

If you check your brokerage account regularly, you may see that you’ve lost money on a particular investment and become afraid you’ll keep on losing, leading you to sell in a panic. The problem with that is, you’ll miss out on any potential recovery, guarantee you sell low, and lock in your losses that you might have gained back over time.

On the flip side, if you’ve made money on a particular investment, then you may decide to buy more of it — which could mean buying at a high. Or, you could decide to cash in on the investment and pocket the gains you already have — but could then miss out on more future returns.

You don’t want to react based on decisions made out of fear or greed, and it’s more likely you’ll do that if you’re monitoring your investment performance too closely.

Why check in once every six months to a year?

Checking in on your account balance around every six months to a year is a good practice not because you necessarily want to sell your investments at that time. Instead, it’s appropriate to take a look at your account at around this time interval so you can rebalance your account as needed.

As the Securities and Exchange Commission explains, “Many financial experts recommend that investors rebalance their portfolios on a regular time interval, such as every six or twelve months.” Rebalancing means adjusting your investment mix so you have a diverse pool of assets, and the right types of assets.

The rule of 110 says you should subtract your age from 110 and have that percentage of your portfolio in stocks. Since your age is changing, you’d want to sell some stocks each year as you get older and get closer to the time you’ll need your invested funds to support you.

You also don’t want your investments too heavily centered around one stock, or even one industry or type of assets. But, this can happen over time if some of your assets outperform. If you make a lot of money on one fund and lose a lot of money on another, soon that well-performing fund will dominate your portfolio and make up too large of a percentage of it. In this case, rebalancing would mean selling some of the well-performing fund in order to diversify.

By checking in around every six months to a year, you can make the right decisions to maintain a good asset allocation, but you won’t be overly tempted to react to short-term events in a way that costs you.

Remember, your brokerage account isn’t a savings account for short-term goals that you need to always know the balance of. Money you invest should be there for the long term, so take the long view in deciding how often to keep tabs on how it’s doing for you.

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It’s important to fund an IRA from an early age so your money grows. Read on to see if maxing out makes sense when you’re about to retire. 

You’ll often hear that it’s important to contribute to an IRA steadily throughout your working years. That way, you can invest your money and give it time to grow.

But what if you’re on the cusp of retirement? Should you still be pushing yourself to max out your IRA, or even contribute to it at all? The answer is, it depends.

When time isn’t as much of a factor

The reason it’s so important to fund an IRA from a young age is that you give your money time to grow for many years. The stock market, over the past 50 years, has averaged an annual 10% return, as measured by the performance of the S&P 500 index.

If you put $300 a month into an IRA starting at age 27 and continue that through age 67, after 40 years, you’ll have a nest egg worth almost $1.6 million. And if you invest your money in S&P 500 stocks or ETFs, you could enjoy a 10% average yearly return, too (although past performance is no guarantee of future returns).

As such it’s a good idea to try to max out your IRA contributions year after year. But when you’re about to retire, the idea of maxing out may be less appealing. That’s because you might be on the verge of taking withdrawals from your account. And between your older age and the fact that you’re looking to tap your IRA soon, the money you put in right before retirement may not grow as much.

If you’re not sure whether to max out your IRA when you’re close to retirement, or even contribute at all, ask yourself these questions:

What does my balance look like? IRAs max out this year at $7,500 for savers age 50 and over ($6,500 if you’re under 50). If you have well over $1 million in savings and want to use your $7,500 for something else, like a nice vacation, then you may decide to skip that contribution and spend the money on something you want to enjoy. If you’ve worked hard and saved all your life, there’s nothing wrong with that. But if you’re low on savings, then frankly, every extra dollar contributed to your IRA helps.

What will I do with the money? If the money you might put into your IRA can be used to enhance your life in another way (for example, funding a home improvement project), then you may decide not to contribute to your retirement plan. But if you don’t have specific plans for that money, you might as well boost your savings.

What does my tax burden look like this year? If you’re worried about owing the IRS money, maxing out an IRA is a great way to lower your tax bill. This assumes, though, that you contribute to a traditional IRA, not a Roth IRA.

Maxing out could still work to your benefit

If you’re 67 years old and you max out your IRA contributions this year, you won’t see as much growth on that money as contributions you made in your 20s and 30s. But an extra $7,500 in retirement savings could still buy you more flexibility later in life.

Even if that money doesn’t grow so much, it could buy you extra leeway to cover things like home repairs, entertainment, and medical bills. So if you can afford to max out your IRA when you’re on the cusp of retirement and you don’t need the money for something specific, you might as well sock it away.

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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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