Money Management

Want to ease your overstuffed mailbox? Here’s why you might consider opting in for digital credit card statements and skipping the mailed ones. 

Having a credit card is a big financial responsibility. It’s on you to pay your bills, keep track of the physical card, and ensure that your data doesn’t fall into the hands of thieves and scammers.

Your credit card statements are your ally in account management, letting you track your spending and payments month by month. As such, it’s a good idea to check yours every month. But does it matter whether your statements are in paper or digital form? Let’s take a look at the benefits (and potential drawbacks) of going paperless.

The case for paperless statements

If you opt in for paperless statements, the biggest change you’ll notice is a lighter load from the mailbox. And if you’re the kind of person who dislikes receiving stacks of paper in the mail (I am also raising my hand), this could be the best benefit of digital-only credit card statements for you. You’re saving trees and sparing yourself potential papercuts.

On a more serious note, opting for digital-only statements will give bad actors one fewer avenue to steal your financial data. If you’ve ever gotten busy for a few days and forgotten to check the mail, or even took a vacation and didn’t ask a friendly neighbor to bring your mail in for you, your money and identity could be at risk. Thieves could easily riffle around in your mailbox and make off with your credit card statements if you receive them in paper form.

Opting for paperless statements might also save you some money, as some credit card issuers actually charge cardholders for paper statements. While the chance to stop scammers and save money are attractive reasons to go paperless, there are a couple potential downsides.

The case against paperless statements

While your paper statements will crumble into dust over a period of decades, they will certainly last longer than their digital cousins. Some credit card issuers won’t make very old statements available to cardholders, so if you’re hoping to go back into your statements from more than a year ago, you might be out of luck. If you’ve got a business credit card, it might not be a bad idea to stay the course with paper statements, or print out copies of digital ones and save them, so you have records going back as far as you need.

If you’re only managing your own credit card accounts, you likely have all the information you need (such as an account login and password) to view statements anytime you want. But if you’re overseeing someone else’s accounts (perhaps an elderly relative), you might not have that information. In this instance, receiving paper statements is your only shot to make sure there aren’t suspicious charges or other red flags with the account.

Which is right for you?

Ultimately, you’re going to have to take a look at your own habits and needs to decide whether to go paperless with your credit card statements. If you know you won’t be compelled to actually seek out a digital statement on the card issuer’s website, while a paper copy landing in the mailbox will prompt you to open it and have a look, stick with paper. But if you’re tired of emptying the mailbox only to shred paper and fill your recycling bin, going paperless might just be for you.

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A credit card could teach your high school grad valuable financial skills. Read on for a few reasons your grad may want to get a credit card. 

It’s graduation season, and many high schoolers and their parents are preparing for the next steps. Whether your high school grad is going to college, taking a gap year, or is ready to jump into the workforce, now is the perfect time to teach them essential personal finance skills to help them succeed in adulthood. Despite their importance, financial skills typically aren’t taught in the high school classroom.

While some parents may fear their teens opening a credit card due to the dangers of overspending and falling into expensive credit card debt, learning how to use credit cards with care in early adulthood can be advantageous. Here are a few good reasons for high school grads to open a credit card now rather than waiting until later in their 20s.

1. Learn how to manage spending

It takes time and practice to learn how to manage money well, and it can be beneficial to learn this skill before your teen has a lot of bills and financial responsibilities. One way for your teen to learn how to manage their money better is by using credit cards.

Teens can learn how to set monthly spending limits and the importance of not charging more than they can afford to pay to avoid credit card interest charges. Learning this early in adulthood can help your high school grad avoid credit card debt now and in the future.

2. Learn the dos and don’ts of credit card usage

In addition to learning to manage their money, high school grads can better grasp the dos and don’ts of credit card usage by getting a credit card. With your guidance, your teen can learn important credit card basics they’ll carry with them throughout adulthood.

Understanding credit limits, the importance of paying more than the minimum amount due, and paying every bill on time can set your teen up for success and help them avoid late fees and credit card interest. If they don’t learn these skills, they may make poor choices in the future.

3. Start building credit

It can be beneficial to establish credit early. If your child ever needs a car loan or mortgage, their credit history and credit score will be considered during the lending process. Getting a credit card and using it carefully is a great way for your teen to start building their credit now. If they wait to build credit, it can take a long time to achieve a good credit score.

4. Be prepared for emergencies

There may come a time when your child needs to pay for an unexpected expense. If it’s a pricey expense, it could be challenging for your teen to cover the cost using only cash. Having a credit card available for emergencies can give you and your child greater confidence. You may not always be around to help them out of a tough financial spot, so a credit card can be helpful.

Credit cards aren’t all bad news

Anyone can rack up credit card debt if they’re not careful, but it’s also possible to make good spending and payment decisions that avoid debt. Allowing your high school grad to open up a credit card and helping to teach them good money management skills now can make their life easier. Review our list of the best credit cards for young adults to learn more.

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When it comes to picking a brokerage firm, my primary focus is on being able to buy commission-free ETFs with low fees. Read on to learn why that’s my only criteria. 

There are a lot of great brokerage firms out there, many of which offer amazing features like advanced research tools and full-featured trading platforms.

But, when it comes to picking a brokerage firm, there is only one thing I care about. Here’s what it is, and why it’s the only thing that matters to me.

This factor alone determines what brokerage firm I use

After I had funded my emergency fund in my savings account and was ready to start investing, I started looking for a brokerage firm. And, the one criteria I had was that the broker had to have a wide selection of exchange-traded funds with low expense ratios, which I could buy commission free.

See, my absolute biggest concern when I’m picking investments is how many fees I will have to pay. That’s because I know, over time, investment fees can really eat into your returns and end up leaving you with a lot less money than you would have if you had picked more affordable investment options.

To understand how big of an impact fees could have, just consider what would happen if you paid a 2% investment fee on a $50,000 investment over a long period of time. If the investment earned an average 10% return, you’d end up with $336,381 after 20 years without fees but only $233,051 with that cost impsed.

I’m not willing to give up hundreds of thousands of dollars in fees because I have to pay my broker to buy investments or pay high expense ratios on the things I invest in. So, I focused on finding a broker that made it as cheap as possible to get my money into the market.

What is most important when you pick a brokerage firm?

Fees and costs were most important to me, and they should be important to everyone who wants to buy stocks because, as the calculations above demonstrated, you really can’t afford to pay high investing costs if you want to make a lot of money.

But, you may also have other things you want to focus on. A lot depends on your investing style. If you tend to buy shares of individual companies rather than sticking with exchange-traded funds as I do, then research opportunities with your brokerage firm may be most important to you. You may not care if the broker offers low-cost ETFs if you don’t plan to buy them.

Of course, if you are an active trader and you buy and sell often, you would want to especially focus on making sure you can do so without incurring commission costs — which is the case with most brokers now.

Ultimately, you can (and should) add to your list of features to make sure you have a brokerage firm that is well-aligned with your investing methods and goals. But, at a baseline, you should always pay attention to how much you are going to have to pay to invest and consider this above all else because getting stuck with high fees just isn’t worth it — especially since there are a lot of brokerages out there that won’t make you pay a fortune.

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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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Banks don’t always check your credit when an account is opened, which could make you vulnerable to scammers even with a credit freeze. Find out more. 

In 2021, there were more than 5.8 million incidents of fraud reported to the U.S. Federal Trade Commission over the course of the year. These instances of fraud cost an estimated $6.1 billion.

Unfortunately, our family was the victim of some of this fraud. Specifically, someone opened a bank account in my husband’s name, cashed a bad check on the account to get the money, and left my husband with a bank account that had a negative balance.

We were very surprised that this happened because my husband’s credit was frozen, so we thought it was impossible for someone to have opened a fraudulent account in his name. But, that wasn’t the case. Here’s why.

Someone might be able to open a bank account in your name even if your credit is frozen

The reason that someone was able to open a bank account in my husband’s name despite the fact that his credit was frozen is very simple. Many banks do not check your credit score when they open an account because you aren’t borrowing money. So, a credit freeze wouldn’t stop a scammer from opening an account because the bank would likely never see it at all.

See, credit freezes can protect against certain kinds of fraudulent actions. If someone tries to apply for a new loan such as a credit card or personal loan in your name, the card issuer or lender would try to check your credit. When they saw it was frozen, they wouldn’t be able to proceed with opening the account so the thief would be thwarted.

Banks, however, use a different system to look at your checking and savings account history. It’s called ChexSystems and it’s focused on your past banking relationships rather than your past borrowing relationships.

If you’ve had a bank account involuntarily closed — perhaps because you had a long history of overdrafting the account and having a negative balance — this would show up on your ChexSystems report and could cause banks not to do business with you. But, of course, my husband had no red flags on his ChexSystems report, so the bank opened the account for the scammer and then allowed that person to cash the fraudulent check.

How to prevent this kind of fraud

After my husband realized that he had been the victim of fraud, he contacted the bank and it took care of everything including closing the improperly opened account and ensuring my husband didn’t have to pay the outstanding balance needed to bring the account balance back to $0 since it was negative after the bad check was cashed.

Still, this was stressful for us and it took time to resolve. But, during the process, we learned that this could have been avoided if we had placed a security freeze on his ChexSystems report as well. This can be done online at the ChexSystems website and it works very similarly to the security freeze for your credit report, as it prevents financial institutions from accessing your record unless or until you provide special authorization.

We have since frozen my husband’s ChexSystems account using this online website so we don’t have to worry about this kind of problem happening again. The downside is if we need to open a new account, my husband will have to unfreeze his report. But since we know scammers out there have his info, we’re willing to put up with this hassle to avoid fraudulently opened accounts in the future.

If you have been the victim of a data breach and know scammers have access to your info, it may be worth freezing your ChexSystems report as well as freezing your credit. That way, you won’t have to deal with the trouble we did in getting a fraudulently opened account closed for good.

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Trader Joe’s is many people’s favorite grocery store. Keep reading to learn a few more reasons to shop there. 

I move house more often than the average person, and unfortunately, it’s been rare that I’ve lived in a town with a Trader Joe’s location. Currently, my closest store is 50 miles away, which is certainly closer than I’ve been in the past. That distance means I visit Trader Joe’s only occasionally to restock my pantry and freezer (pro tip: bring a cooler and ice packs if you’re a similar distance from your nearest store).

Why do I bother driving to a grocery store 50 miles away, when I have another grocery store right in my neighborhood, less than a mile from my home? Because Trader Joe’s has awesome products and it’s worth the trip. I’m not alone here; last year, Trader Joe’s was ranked the second most popular grocery store in the country in a YouGov poll. If that’s not reason enough for you, here are a few less-discussed perks that make Trader Joe’s a great place to shop.

1. No loyalty card, no problem (but some coupons allowed)

One of the best things about Trader Joe’s is that so many of its products can be had for a steal, which can definitely give your checking account a break. But unlike many grocery stores, you don’t need a loyalty card of any kind to shop at Trader Joe’s. This means no giving up your information or having to dig through your wallet at checkout. Everyone gets the same deals. And 80% of what TJ’s sells are its own house-brand items. However, you may not know that TJ’s does sell some brand-name items, and if you have manufacturer’s coupons for those, you can use them.

2. Super friendly staff (and with good reason)

I don’t know about you, but I enjoy shopping experiences where the staff members seem to enjoy their jobs. If you’ve never been in a TJ’s store before, you might be surprised at how friendly the staff is. The satirical humor site Reductress even lampooned it with a piece entitled, “Is He Flirting with You or Does He Just Work at Trader Joe’s?” Staff members have good reason to be happy at work, as the company has often won a spot on lists of the “best places to work” in the past and currently has an average rating of 4 out of 5 stars on employer review site Glassdoor.

I think the work environment, alongside pay and benefits, has an impact here. For example, did you know that Trader Joe’s stores don’t have an annoying PA system that breaks into the music and ruins your shopping groove? Instead, staff rely on a system of bells (you may have seen them at the checkouts), in which different numbers of rings mean different things. For example, one ring of the bell means another checkout lane should be opened.

3. You can try just about anything (and if you love it, stock up)

If you’ve ever wished for more opportunities to get some free samples in your life, this one’s for you. At Trader Joe’s, you can ask to try just about anything. The keyword here is “ask,” and also “don’t push your luck.” You might be able to sample that box of cookies you’re considering, but it’s best to limit yourself. And I wouldn’t count on a staff member opening a bottle of wine for you.

Speaking of products, if you find something you love, buy as much as you can, because sometimes “here today” can end up being “gone tomorrow.” Trader Joe’s regularly rotates products, kissing some goodbye forever and bringing others back seasonally.

Trader Joe’s is a great place to expand your grocery horizons and give your credit card a breather. If you’ve never been before, plan a visit and enjoy these perks.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Are you looking to lessen the tax burden on your estate? Here are the techniques the wealthy use. Read on to learn more. 

Passing on property to your children or loved ones is a great way to ensure that your legacy lives on. However, if you’re not careful, you could end up paying huge amounts in taxes. The good news is that there are ways you can pass on property without incurring hefty tax bills. Here are some of the techniques that wealthy people use to minimize their tax liabilities while transferring property to their heirs.

Gift tax exclusion

The first technique for passing on property without paying taxes is to use the gift tax exclusion. The annual gift tax exclusion allows you to give up to a certain amount of money or property to another person without incurring gift tax. This reduces the overall value of your estate and can lower the tax burden on your heirs.

As of 2023, the annual gift tax exclusion is $17,000 per recipient (or $34,000 for a couple). This means that you can give up to $17,000 worth of property to each of your children, grandchildren, or other loved ones without having to pay gift tax.

Passing down wealth and giving assets during life may result in hefty federal estate or gift taxes. Those who own properties worth more than $12.92 million for individuals and $25.84 million for married couples could face up to 40% tax rates for 2023.

The current exemption amount is temporary and thresholds will decrease to nearly $6 million and $12 million after 2025 if Congress doesn’t make it permanent. As a result, wealthy families are making gifts to lower their taxable estates before the 2026 deadline.

1031 exchange and step-up basis

Also known as a like-kind exchange, the IRS Section 1031 exchange allows investors to sell their property to buy new without paying capital gains taxes. This deferment allows investors to reinvest their sale profits, including capital gains, into a better-performing property. This means that you can defer taxes for decades by continually exchanging properties.

In addition, families can take advantage of a step-up basis. This legal provision allows the beneficiaries to receive property at its current market value, rather than the original purchase price. This means that beneficiaries do not have to pay capital gains tax on the appreciation of an asset that occurred during the lifetime of the deceased.

By leveraging these strategies, you can potentially avoid paying taxes during the growth phase, and once the step-up basis comes into effect, your beneficiaries can sell the property without tax obligations.

Trusts

Trusts are one of the most effective ways to minimize estate taxes. A trust is a legal entity that manages assets for the benefit of one or more individuals, called beneficiaries. Trusts can be structured in various ways to minimize the tax liability of your beneficiaries and maximize the assets they receive. Here are common ones the wealthy use.

Grantor retained annuity trusts (GRAT)

This type of trust allows you to transfer your appreciating property to heirs with potentially no estate or gift tax. When setting up a GRAT, the grantor transfers assets into a trust for a set number of years while retaining an income stream in the form of an annuity payment. If the assets in the trust increase in value, any appreciation will also pass to the beneficiaries free of gift and estate tax. The owner or grantor gets back the principal.

Dynasty trusts

A dynasty trust allows you to transfer your wealth to multiple generations without incurring transfer taxes, such as estate and gift taxes. Simply put, any assets you transfer into a trust — including any increase in their value — are only subject to federal gift/estate tax once. From then on, they’re safe from estate taxes and can benefit multiple generations.

Generation-skipping trusts

A generation-skipping trust is a trust that allows you to pass on property to your grandchildren or other beneficiaries who are two or more generations younger than you. This technique can be advantageous because it allows you to avoid estate taxes that would be incurred if you passed on the property to your children first.

Family limited partnerships

A family limited partnership is a type of business entity that allows family members to pool their assets and manage them collectively. By forming a family limited partnership, you can transfer your property to the partnership, which then distributes shares to family members. This move effectively removes your assets from your estate, which in turn results in a reduced estate tax burden.

Life insurance

Even with these tools, it may be difficult to avoid taxes completely. In addition to federal estate taxes, some states also require inheritance taxes. Retirement accounts and real estate property can be challenging to convert into cash. Real estate is illiquid and distributions from a retirement account are considered taxable income.

Life insurance can be an effective way to cover any potential tax payments. By taking out a life insurance policy, you can designate your beneficiaries to receive the proceeds of the policy tax free. Not only can life insurance assist with covering taxes, but it can also provide beneficiaries with additional funds to fulfill other obligations such as paying any mortgages on the property.

For estate planning purposes the wealthy often use cash value life insurance policies. In addition to the income-tax-free death benefit, the cash value can be used for liquidity purposes while you’re alive, and it grows tax-deferred. Getting a life insurance policy helps ensure that beneficiaries won’t have to sell the estate to cover tax obligations.

Passing on property without paying huge amounts in taxes is possible if you know the right techniques. Estate planning can be complicated, so it is important to work with qualified professionals. With the right planning and guidance, you may be able to minimize your tax liabilities and ensure that your legacy lives on.

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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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