Money Management

Having a checking and savings account at different banks could work to your benefit. Read on to see why. 

In 2021, an estimated 4.5% of U.S. households did not have any sort of bank account, according to the FDIC. But that means that most Americans do have either a checking account, a savings account, or both. In fact, it’s ideal to have both types of accounts. That way, you can use your checking account to pay your bills, and your savings account can function as an emergency fund.

But while it’s a good thing to have both a checking account and a savings account, you don’t necessarily need to have them both at the same bank. Keeping the accounts at different banks could actually work to your benefit.

When you keep your money separate

The advantage of having a checking account and savings account at the same bank is that you can generally transfer money between the two instantly. So, let’s say you need to write a check for $4,000 for an unplanned home repair bill and you only have $2,000 sitting in your checking account. In that case, you can usually transfer the money you need on the spot so you don’t have to worry about your $4,000 check clearing.

When you have your checking account and savings account at separate banks, it could take a few days to transfer funds between the two (meaning, the transfer itself might take a few seconds, but the funds may not move over for a few days). And when you need a boost to your checking account such as in the scenario just described, that could be a problem.

But otherwise, having your checking account and savings account at different banks could work to your benefit, because you get a true separation of your money. And you may be less tempted to dip into your savings account for non-essential reasons if it’s in a completely different bank. To put it another way, you might trick your brain into thinking your savings are really off-limits if they’re not held at the same bank as your checking account.

You also get a higher limit of protection

When you have money at an FDIC-insured bank, you’re protected for up to $250,000 in deposits at that bank. Another benefit to keeping your checking account and savings account at separate banks is that by doing so, you’ll effectively double that limit to $500,000.

Now chances are, you’re not keeping more than $250,000 in a checking account. And you may not have anywhere close to that amount of money in a savings account, either. But given the number of banks that have failed lately, it might make you feel good to know that you have extra FDIC insurance.

You definitely don’t have to keep your checking account and savings account at separate banks. And some people might tell you that having both at the same bank is much more convenient. But it pays to consider keeping your money at different banks due to the benefits you stand to reap.

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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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Eager to see your IRA grow this year? Read on for tips on how to pull that off. 

These days, a lot of people are struggling to cover their essential bills due to inflation. For people in that boat, boosting your savings account balance may be off the table until living costs come down.

But in a recent New York Life survey, 28% of respondents said that building up retirement savings is a key priority for 2023. So if you’re hoping to see your IRA balance grow this year, here are some key steps to take.

1. Pick one expense to cut

It’s pretty clear that if you were to slash your spending across the board, you’d have more money available to put into your IRA. But it’s also pretty clear that if you were to start cutting expenses left and right, you’d end up fairly miserable.

Rather than make yourself unhappy and deny yourself all of the things that make life enjoyable, take a look at the expenses you spend money on and identify a single item to cut. That’s right — just one. And it doesn’t even have to be such a large one. If you’re able to cancel a streaming service you don’t use so often and put $20 more into your IRA on a monthly basis, so be it. Every little bit helps.

2. Boost your income with a second job

The bulk of your paycheck might already be taken up by your essential expenses, leaving you with little room to ramp up your IRA contributions. If that’s the case, a second job could be your ticket to increasing your IRA contributions this year.

The gig economy is loaded with opportunities to pick up work on the side, so think about your schedule, skills, and goals. You may need to focus on a job that doesn’t force you to commit to preset hours if your main job’s hours tend to be unpredictable. And if you have skills you can put to good use, like web development or marketing, you may want to focus on those when seeking out a side hustle.

Finally, think about your income goals. Are you hoping to earn $300 a month from your side gig? $400? Having a number in mind could help you narrow down your choices.

3. Make the savings process automatic

Many people fund their IRAs by seeing how much money they have left at the end of the month and transferring it over. A better bet may be to automate the process so your IRA gets funded before you get a chance to spend your money.

Most IRAs will let you set up an automatic transfer from a checking account. Decide what amount you can afford to part with each month and send that money as soon as your paycheck hits so you aren’t tempted to spend it.

Growing your IRA is a good goal to have, but it’s not an easy one at a time when living costs are so high. But if you make one sacrifice when it comes to spending, boost your income with a side job, and automate your contributions, you might end up really happy with your IRA balance when 2023 comes to an end.

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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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Worried about getting laid off? Read on to see how you can alleviate that concern. 

We’re getting a lot of conflicting information about the economy these days. On the one hand, today’s job market is seemingly quite strong. In April, the U.S. unemployment rate fell to 3.4%, and more than 250,000 jobs were added to the economy. But on the other hand, many financial experts are still warning that a near-term recession is likely. The Federal Reserve itself has even told consumers to gear up for a recession, albeit a mild recession, in 2023.

It’s therefore not surprising to learn that a large number of workers are worried about the possibility of losing their jobs. And in a recent Monster survey, 56% of respondents said that fears about job loss are negatively impacting their mental health.

If the idea of losing your job has been keeping you from feeling your best, there are steps you can take to try to alleviate those concerns. Here are a few worth focusing on.

1. Figure out what skills you lack — and work on them

The more confident you are as an employee, the better you might feel about your job security. So think about your role and the skills needed to be great at it. If you feel you lack any, work on boosting them. That could mean asking to shadow a more seasoned employee on your team or spending some time outside of work doing research and even taking classes.

2. Network internally

The more relationships you’re able to build within your company, the more staying power you might have if your employer is forced to downsize. After all, the more you interact with other teams, the more vital you might become to the broad operation. Also, if your department happens to be targeted for layoffs before another department and you lose your job, the relationships you have with other managers might prompt one of them to offer you a spot on their team.

3. Network externally

It’s also important to establish professional connections and relationships outside of your company. Sign up for industry events in your area and push to attend conferences so you can branch out and meet new people. It also wouldn’t hurt to explore mutual connections on LinkedIn to meet more people in your field.

4. Boost your emergency fund

Getting laid off could mean having to resort to credit card debt to pay your bills in the absence of a paycheck. That’s far from ideal. But if you boost your savings account balance so you have a nice emergency fund to fall back on, the idea of losing a job may not seem as scary. At a minimum, you should aim to sock away enough cash in your emergency fund to cover three months of essential bills. But if you’re able to save beyond that point so you have, say, six months’ worth of bills covered, it might significantly lower your stress level.

READ MORE: Emergency Fund Calculator

The idea of losing a job can be scary and upsetting. And it’s easy to see why layoff-related worries might be harming your mental health. But if you tackle these key items, you may find that your outlook slowly but surely improves despite all the uncertainty that abounds.

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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.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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A 0% APR credit card could help you spend less on credit card interest, but it’s important to use these cards with care. Find out what mistakes to avoid. 

The great thing about 0% APR credit cards is they can save you money on interest charges. Some consumers use these credit cards to finance a costly purchase and to have more time to pay down their debt without paying interest. Other consumers use balance transfer credit cards to transfer debt and avoid additional interest charges while they pay off outstanding credit card debt. Whatever your reason for using them, here are some mistakes to avoid when using 0% APR credit cards.

1. Not paying off your balance before the 0% APR period ends

Many of the best 0% APR credit cards offer 0% APR for 15 months or more. Paying off your card balance before the promotional period ends is ideal. Otherwise, you’ll be charged interest on the remaining balance. If you want to avoid paying extra fees, pay off your balance before the no-interest period ends.

2. Not paying attention to the 0% APR promotional timeline

Credit cards with 0% APR can offer savings, but reviewing the no-interest promotional timeline is essential. You won’t be able to take advantage of 0% interest forever. Instead, the offer is available for a fixed period. After the promotional period ends, you should expect credit card interest charges to apply if you carry a balance on your card. Don’t ignore this important detail.

3. Taking on new debt before paying off existing debt

If you’re using a 0% APR credit card to finance a costly purchase or an emergency expense, paying down your debt before using the card for additional purchases is best. You don’t want to risk accumulating expensive credit card debt, which could harm your personal finances.

Allowing your credit card balance to climb will make it harder to pay down the debt during the 0% interest period. Credit card debt can be an expensive problem to crawl out of, so it’s beneficial to focus on paying off your balance before taking on new debt.

4. Forgetting to make a payment or making a late payment

Mistakes happen, but some mistakes are costly. If you have a 0% APR credit card and forget to make a payment or pay after the due date, your credit card issuer may revoke the 0% APR offer. If that happens, interest will be charged. It’s also likely that you’ll be charged a late fee.

By paying your bills on time each month, you can avoid this. Keep in mind that paying all your bills on time is also a good move for your credit score. Your payment history, which includes whether you pay your bills on time, makes up 35% of your FICO® Score.

5. Choosing the wrong no-interest card for your needs

Some credit cards advertise 0% APR for purchases, while others advertise no-interest for balance transfers. Understanding these differences is crucial to choosing the right credit card for your goals. Here’s a breakdown of each card option:

If you want to use your card to make interest-free purchases, you’ll want to look for a card with a 0% APR offer on purchases.If you plan to transfer existing credit card debt, a balance transfer credit card can give you more time to pay off the debt without paying additional interest. If you make new purchases with a balance transfer card, you may be charged interest.

Make sure you understand the differences between these cards and choose the right one to avoid surprise interest charges. It’s also important to be aware that most balance transfers credit cards charge a balance transfer fee of 3% to 5% of the total transferred balance.

Use credit cards to your advantage

When used with care, credit cards can provide many benefits. You can use credit cards to your advantage by enjoying the benefits and making smart purchase and payment decisions to increase your credit score.

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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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