Money Management

Credit cards may be the most effective way to build strong credit, but they’re not the only way. Learn how you can build a credit score without a credit card. 

Hands down, the easiest way to build your credit score is to borrow money on a credit card, pay your statement balance on time, and never allow debt to become too unwieldy for you to handle. But if credit cards aren’t an option — or you really don’t like them — don’t worry: There are other ways to build a strong credit score without using credit cards. Here are three of the most effective ways.

Get credit for your monthly bills

Got a Netflix account? How about a cellphone? If you’re paying monthly bills for streaming services, internet, phone, cable, and utilities (gas, electricity, and water), Experian will count those toward your FICO® Score if you enroll in Experian Boost.

Experian Boost comes as a feature within a free Experian membership. After you give Experian permission to monitor whatever accounts you use to pay bills, the company will start recording them in your credit history. The process takes a few minutes, and you’ll see your score boosted in real time. For instance, when I linked Experian Boost to my checking account, my score was boosted 2 points instantly (Experian claims the average boost is 13 points).

For a bill to qualify, you need three months of payments within the last six months. If you don’t have three months of payments, Experian will list the account as “pending” and notify you when you can add it to your credit report.

Report your rent payments

Some landlords and apartment complexes can help you boost your score by reporting on-time rent payments to credit bureaus.

But even if your landlord isn’t willing to do this, you can enroll in third-party services, like Rental Kharma and RentReporters, that will report your payments for you. Experian Boost will also keep track of your rent payments. But if you’d like to send rent activity to the other major credit bureaus (Equifax and TransUnion), these services can be your middle person.

Both Rental Kharma and RentReporters claim that reporting rent boosts scores by an average of 40 points within 10 days. But their services are not free — Rental Kharma charges a $75 upfront fee, plus $8.95 per month. RentReporters is slightly higher: $94.95 to set up your account, plus $9.95 per month.

That’s a hefty fee for a credit reporting service. For this to really benefit you, you should have at least 12 to 48 months of good rent payments. It doesn’t hurt to try them, however, as both companies offer refunds if your score is not affected.

Get a credit builder loan

Credit-builder loans are low-risk installment loans designed to help you put positive debt repayments on your credit report.

To be sure, these loans only exist to help you build credit and are not a great option if you actually need to borrow money now. The reason: your lender won’t give you money upfront. Rather, you pay monthly installments up to a certain amount, usually between $1,000 and $1,500. As you make payments, your lender will put the money in an interest-bearing account, like a certificate of deposit (CD). It will report your loan payments to credit bureaus, then release what you’ve paid after the loan term ends.

The problem with credit builder loans is they’re not the best choice for a thrifty person. Even though you’re not technically borrowing money, your lender will still charge APR, anywhere between 6% and 29.99%. You might also have to pay an origination fee for the loan.

That’s right — you’re essentially paying the lender to report your payments to credit bureaus. That’s it.

Don’t rule out credit cards just yet

If bad credit is stopping you from getting a credit card, you still have options.

For one, you can become an authorized user on someone else’s card. The credit card won’t be in your name, but the credit card company will report your activities to credit bureaus. As long as the account holder pays off balances and never misses a payment, you can strengthen your credit score.

You could also get a credit card for bad credit. Many of these cards are “secured,” meaning you put down an upfront payment, like $1,000, in order to open your account. The upfront payment gives your credit card provider peace of mind: if you default, they can use the payment to cover the unpaid balance. These cards will help you build credit, especially if you use them alongside some of the methods above, like reporting rent payments or enrolling with Experian Boost.

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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 positions in and recommends Netflix. The Motley Fool has a disclosure policy.

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Many Americans don’t have enough money in the bank to cover a $500 expense. If you don’t have any savings, find out how you can build them today. 

There have been several points in my life where the idea of saving money seemed like an impossible luxury. One was when I’d just graduated and was living in an expensive city with rent that came to way more than half my income. Another was when I’d poured all my available cash into a struggling startup.

It’s true that having savings stashed away can cushion you against life’s curveballs. But knowing that doesn’t necessarily make it any easier to put cash aside. This is particularly true when you feel as if you’re playing Whac-a-Mole with a never-ending stream of bills.

The most important thing you can do is face the problem. Look for ways to save even a small amount so that it can add up over time. Here are five steps to take.

1. Don’t panic

Stressing about your financial situation is unlikely to change anything. Indeed, personal finance guru Suze Orman says it can often make it worse. She says people often spend more on things they don’t need when they are worried or anxious, which means less cash to put toward other things.

Try to turn that panic into action. Sit down and look at where your money goes each month. If you’ve never made a budget before, now is the time to take control of your money. Whether you use a budgeting app or old-fashioned pen and paper, analyze your spending and find out exactly how much you spend versus what you earn. The ability to budget could become the most powerful tool in your financial arsenal.

2. Look for areas you can cut back on

If you can increase the gap between what you spend and what you earn, you’ll have more cash available for other things. The bigger the gap, the more you can squirrel away into a savings account. Use your budget to give yourself more wiggle room. Start by breaking your spending into essential and non-essential columns. Things like housing, healthcare, and utilities are unavoidable. But subscription services, dining out, and vacations are not.

I’m not suggesting you become a miserable hermit and never have any fun again — especially because there are lots of ways to have fun that don’t involve spending money. But it is time to look at each spending category and see what you can realistically cut. You might be able to reduce your grocery bill a little by couponing and switching to house brands. There might be subscription services or a gym membership that you barely use, or ways to shave your utility costs. Depending on your situation, you might consider more drastic action — for example, looking back, I could have moved to a cheaper apartment.

3. See if you can earn more

There is a limit to how much you can cut your spending, but there are a number of ways you might be able to increase your earning potential. That might involve asking for a pay raise at work or taking on extra hours. Alternatively, could you take on a side hustle or use a hobby or interest to generate cash? Do you have a spare room or a parking space you could rent out?

Sure, time and space are both limited commodities, but so is money. If you can make some compromises, you might use them to boost your savings. Another short-term option? Sell unwanted items online or at a yard sale and put any cash you generate straight into your savings account.

4. Automate your savings

The great thing about making a budget is that you’ll be able to set a realistic savings goal. It may only be $20 a month to start with — you don’t have to build your savings overnight. What matters is consistently saving a part of your income. Once it becomes a habit, you might up the amount you’re putting aside.

Some people get nervous about automatic payments as they don’t want to accidentally become overdrawn or lose control of their money. That’s understandable. On the flip side, if you set up an automatic transfer from your checking account to your savings, that cash won’t get swallowed up by other bills or demands.

5. Avoid high interest debt

Debt is like an unwanted guest who shows up at a party, eats all the food, and then hangs around when everybody else has left. Unfortunately, if you don’t have savings, Mr.-Death-of-the-Party will be pushing on an open door. It can be all too easy to use a credit card to cover an unexpected expense or pay for a meal out if you don’t have enough cash in your account.

It’s true that there can be benefits to credit cards, such as rewards and additional fraud protection. But if you can’t pay off the balance at the end of the month, that debt will start to accrue interest. This can quickly become costly, and those debt payments can make it even more difficult for you to save money.

Bottom line

If you don’t have savings, you’re not alone. Indeed, half of Americans couldn’t handle an unexpected expense of $500. But for many of us — my younger self included — there are steps you can take to change your situation. Use a budget to put yourself in the financial driver’s seat and start putting some money aside.

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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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Costco has had its share of controversies this year. Read on to see if a membership still makes sense. 

Many retailers have faced their share of challenges in recent months due to inflation, and Costco is one of them. Like its competitors, Costco has been forced to spend more to procure inventory.

But that’s not the only challenge Costco has grappled with since the start of 2023. There were a few Costco scandals that got their share of media attention. The question is, should they make you reconsider your Costco membership?

1. Recalled strawberries

Food recalls aren’t all that uncommon. And often, when an item is recalled, it’s not the fault of the store selling it. But earlier this year, a recall was placed on frozen strawberries sold at not just Costco, but also at Trader Joe’s and Aldi, due to a link with hepatitis A cases.

Of course, Costco stepped up and refunded customers in full, so they weren’t out any money. But still, the incident didn’t exactly paint Costco in the best light.

2. Chemical-tasting chicken

There’s a reason why so many Costco customers routinely buy the chain’s rotisserie chicken. It’s an easy way to feed a family without racking up a giant credit card tab.

But earlier this year, customers in different markets reported that Costco’s rotisserie chicken had started to take on a chemical taste. And clearly, that’s not what you want your chicken to taste like — even if it is dirt cheap.

3. An overpriced food court sandwich

This past winter, Costco introduced a new roast beef sandwich to its food court lineup, which at first seemed like a welcome addition. But many consumers were taken aback by the sandwich’s $9.99 price point. Given that Costco’s food court is supposed to be a place to score lunch on the cheap, that’s understandable — especially when you compare the cost of a roast beef sandwich to the classic $1.50 hot dog and soda combo.

Your Costco membership is probably still worth the money

You may have been inconvenienced by the strawberry recall, put off by chemical-tasting chicken, or annoyed at the surprisingly high cost of Costco’s new roast beef sandwich. But are any of these incidents reason enough to cancel your Costco membership? Probably not.

Shopping at Costco regularly can result in a world of savings, especially if you have a larger family to feed. So if you’re still spending less on groceries and household essentials thanks to your Costco membership, then you shouldn’t cancel it because of the aforementioned issues — especially if they didn’t happen to impact you personally.

Now, a good reason to cancel your Costco membership is if you’re not getting much use out of it or you’re consistently unhappy with the store’s selection and quality of goods. And if you live in a small home and are constantly struggling to store your bulk purchases, that, too, is a good reason to reconsider your Costco membership.

But remember, every retailer is apt to experience its share of incidents that get a lot of media attention. Costco happened to have several this year, but that doesn’t make a membership a waste of money by any means.

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

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Are you in line for a payday in the wake of a major tax prep company settlement? Read on to see. 

What happened

Intuit, which owns TurboTax, has entered into a settlement agreement to pay $141 million to lower-income Americans who were charged for tax preparation software that should have been free. About 4.4 million consumers were unfairly charged for tax prep software in 2016, 2017, and 2018, reports CNBC.

So what

Taxpayers whose income falls below a certain threshold are eligible to file their taxes for free. For those filing 2022 taxes, that threshold was $73,000. In 2016, it was $64,000. Because some customers were unfairly charged for TurboTax software they were entitled to for free, the company is now sending out payments to those impacted.

“Intuit is pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future,” said Kerry McLean, Intuit’s executive vice president and general counsel.

While the typical payout from the aforementioned settlement will be $30, some recipients may get up to $85 if they used TurboTax for 2016, 2017, and 2018. Payments are set to begin in May, but some may not hit customers’ bank accounts until early June.

Now what

It’s estimated that 70% of taxpayers are eligible to file their taxes for free. Yet only 2% of those eligible took advantage of a free filing option during the 2022 tax season, according to the National Taxpayer Advocate’s annual report to Congress.

If you’re eligible for a free filing and your tax situation is fairly straightforward, then it generally pays to take advantage of it, provided you’re using a trusted software, like TurboTax. That said, even if you’re eligible to file taxes for free, it can sometimes work to your benefit to hire a tax preparer.

While tax software can help guide you toward the credits and deductions you may be eligible for, there’s no guarantee you’ll end up claiming all of the benefits you’re entitled to if you don’t use an actual tax preparer who knows the rules inside and out. Plus, if you’re self-employed, then it’s important to work with a tax preparer rather than file taxes on your own — even if you can do so for free.

When you’re self-employed, there’s a whole different set of tax rules to follow, and you may be eligible for deductions that salaried workers aren’t. The average cost of a tax preparer for an itemized Form 1040 is $323, according to Intuit. In many cases, the modest fee paid to a tax preparer is more than made up for via the savings involved.

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

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The cost of caring for a pet is rising. Read on to see why that may be forcing some pet owners into very difficult situations. 

A friend of mine who volunteers at a local animal rescue recently met me for lunch, and during that hour, she couldn’t help but vent about the large number of people who were returning animals they’d adopted during the pandemic. Only instead of being angry, she felt sad — both for the animals and for the pet owners involved.

At first, I assumed the main reason for such a high number of returned animals boiled down to changing workplace policies. A lot of people I know who were remote for much of the pandemic have recently been called back to the office — some on a full-time basis. And it’s easy to see how that could make caring for a pet more difficult.

But my friend insists that it’s not a broader return to offices that’s been driving pet surrenders. Rather, she says, the main issue pet owners in that situation point to is rising costs.

Over the past couple of years, inflation has driven the general cost of living way up. And it’s forced many people to raid their savings and accumulate debt on credit cards just to stay afloat.

But inflation is also impacting animal owners. And that may be why so many rescues are seeing an uptick in owners who have no choice but to give their pets up.

Higher costs are a problem

Between March 2022 and March 2023, the “pets, pet products and services” category was up 9.4%, according to the Consumer Price Index. And based on that alone, it’s easy to see why so many people can no longer afford to care for a pet.

Even with pet insurance, the cost of medical care alone for animals can be prohibitive. Throw in higher costs for food and supplies, and it’s easy to see why so many pet owners can no longer manage to cover their expenses.

Giving up a pet isn’t the only option

If you’re struggling to come up with the money to care for your pet, you may be thinking of giving yours up. But before you do, see if there’s a better way. If you’re having trouble covering medical bills, with or without pet insurance, talk to your vet about getting on a payment plan. Many vet offices will allow you to spread out your payments over time.

Another option? If you adopted your pet through a rescue, reach out and see if that rescue can provide some amount of assistance. They may be able to provide you with food, medication, supplies, or funds for those things. They might also create a fundraiser on your behalf so you don’t have to resort to giving your pet back. You can also check out this list of resources for pet owners who are struggling financially.

It may be that a return to office life is driving more people to surrender their pets. But money is no doubt a factor, too. If that’s the case, but you’re willing to put in the time and work to care for your pet, there may be different ways to help subsidize the cost of its care — at least temporarily — so you don’t have to let your beloved pet go.

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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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