Money Management

Credit card points can be valuable, if you remember to redeem them. Find out the potential consequences if you don’t use your credit card points. 

Rewards are definitely one of the best, and most exciting, perks that many credit cards offer. Just use your card for eligible purchases, and you can earn points on every dollar you spend. Let’s be honest, people love earning just about any type of point, and credit card points are especially useful because they can save you money.

Now, any time points are involved, it’s normal to want to accumulate as many as possible. But this often leads to hoarding points instead of using them, and that’s a big problem. To explain why, let’s look at how this can go wrong.

Your credit card points may become less valuable

One of the most important things to understand about credit card points is that their value can change at any time. For example, airlines and hotels have been known to increase the cost of award travel. A hotel could raise room rates from 30,000 points per night to 40,000 points. This is known as a devaluation, because it lowers the value of your points.

There are many types of credit card rewards programs and points out there, but any of them can lose value. Let’s say you have points that can be transferred to multiple airline and hotel loyalty programs. That list of partners can change, leaving you unable to send your points where you planned.

The longer you hang on to your points, the more likely it is that something happens making them less valuable. Even if you have points you can redeem as cash back, you’re still better off using them sooner rather than later. Because of inflation, redeeming $100 today is better than redeeming $100 a year from now.

You could lose them

Points usually don’t expire as long as your rewards card remains open. Double check the terms just to be sure, but that’s how it works with the vast majority of rewards credit cards. Based on that, you may assume that your rewards are safe as long as you don’t close your credit card.

However, the card issuer can also close your credit card. In fact, credit card issuers can do this at any time, and they aren’t required to give you advance notice.

To avoid giving you the wrong idea, it’s extremely unlikely that a card issuer will decide to close your credit card for no reason. Account closures always have some logic behind them, but it could be an issue you weren’t aware of. Here are a few of the most common reasons why a card issuer would close your account:

Your account is inactive. If you haven’t used your credit card for a long time, the card issuer may cancel it. You’ll likely receive a notification before this happens, giving you the opportunity to use your card again and avoid a cancellation or redeem your rewards.Your credit score has dropped. Card issuers monitor the credit history of their cardholders. If something has damaged your credit score, such as missing a payment or defaulting on an account, a card issuer could close your card because you pose a higher risk than before.You violated the terms and conditions of the rewards program. Card issuers sometimes close accounts if they suspect cardholders of abusing the rewards program. For example, if a card issuer suspects you of trying to manufacture credit card spending to earn more rewards, it could shut down your account.

The bottom line is that if you run afoul of your card issuer, it could close your card. When that happens, you may lose all your rewards. Some consumers have lost thousands of dollars worth of credit card points this way.

Don’t hold on to your credit card points for too long

It’s tempting to save your points for the perfect redemption opportunity, especially if you use travel credit cards. You may want to wait until you go on an expensive trip, such as an international vacation, instead of redeeming your points for anything less expensive.

There’s nothing wrong with being strategic about how you redeem points. If you can maximize their value this way, it’s well worth it.

However, keep in mind that the whole reason to earn points is so you can use them to save money. A balance of 500,000 points may look impressive in your account, but it hasn’t benefited you in any way until you use it. If you often find yourself hanging on to points for a long time, start planning how you want to use them and give yourself a time limit to redeem them.

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Think a recruiter or hiring manager is screening your resume? Read on to see why you may be wrong. 

If you’re in the market for a new job, you may be in the process of updating your resume in the hopes of impressing a prospective employer. A new job could actually do a lot of great things for you. For one, it could result in higher pay, which may, in turn, result in an ability to boost your savings account. And if you have credit card debt, a higher wage could be your ticket to paying it off.

Now, you may be eager to fill your resume with details about your experience in the hopes that a recruiter or hiring manager will give it a read and immediately contact you for an interview. But actually, it may not be a person who reads your submitted resume, but rather, a robot.

Companies are becoming increasingly reliant on technology for hiring

Undercover Recruiter estimates the cost of hiring a new employee at $3,479. And on average, it says that 144 people apply for each entry-level position posted, while 89 apply for each professional-level position.

Not only that, but some large employers have been known to receive up to 75,000 applications for open jobs in a single week. So not surprisingly, many companies seek out help in the hiring process. But instead of outsourcing that work to recruiters, they use robots.

More specifically, it’s become pretty common for companies — especially larger ones — to use applicant tracking systems, which are computer programs designed to filter through resumes and identify strong candidates. And because of this, you may want to tweak your resume to make it more machine-friendly.

How to get your resume past a robot

There are a few steps you can take to make your resume more robot-friendly so you get through that initial screening and move on to the interview process. For one thing, use the right keywords. In fact, try to make sure your resume matches a number of important keywords used in the actual job description.

Also, don’t make your resume too fancy from a formatting perspective. Machines generally have an easier time reading your resume if it has a standard web font and is laid out cleanly with separate sections and bulleted points. Along these lines, avoid the use of graphics and logos, which could throw a robot off.

Additionally, do your best to use proper grammar on your resume, and make sure to run it through a spell check program before submitting it. You never know to what extent you’ll be dinged — or denied a job opportunity — due to having misspelled words on your resume.

The fact that robots are reading your resume before an actual human may or may not work to your advantage when looking for a new job. But your best bet is to tweak your resume so a machine is less likely to reject it. Of course, an even more ideal situation when seeking out a new job is to find someone within the company who can submit a resume on your behalf. That way, your resume is more likely to land in the lap of an actual person who will read it.

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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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Although I don’t have to shop at a dollar store, shopping at the Dollar Tree is fun and provides a good value for my money. Here are some key reasons I shop there. 

Over the past few years, I’ve been able to grow my business and increase my income enough that I can shop almost anywhere I want to. Despite having enough cash in my bank account to buy almost anything I want (within reason), one of my favorite places to shop is Dollar Tree.

You might be wondering why I’d be so excited to break out my credit cards at a discount dollar store when I don’t have to. But, there are four very good reasons why I love shopping there even though I could easily afford to go elsewhere. Here’s what they are.

1. Dollar Tree provides a good value

Although I could spend money at any store, I don’t really want to waste money. I want to get the most bang for my buck. And Dollar Tree allows me to do that. Dollar Tree has some great items that cost almost nothing, like sunglasses with stylish frames, cozy socks, and cute picture frames.

While I could easily afford to buy these and other items elsewhere, I don’t see the point in spending a lot more for them when the Dollar Tree ones do just as good a job serving their purpose. I’d rather not unnecessarily increase my costs for no added benefit.

2. Dollar Tree is fun to shop at

Another big reason why I love shopping at Dollar Tree is because it’s fun. The store offers a cool mix of new items and I never really know what I’m going to find there. It can feel like a treasure hunt to check out what new dishware has come in or if there are new holiday decor items or new toys for my kids. In fact, when I want to entertain my kids and do an activity we all enjoy, we hop in the car and go to Dollar Tree just for fun.

3. Dollar Tree lets me decorate for every season

I like to put up festive decor for every holiday including St. Patrick’s Day, Valentine’s Day, and Fourth of July. Buying expensive decor items for all of these events throughout the year would be a waste, though. Fortunately, Dollar Tree has tons of seasonal decor so I can get enough stuff to fill my mantels and tables without spending a lot on items I don’t really need.

4. Dollar Tree lets me save and spend more on other things

Finally, the last big reason why I like to shop at Dollar Tree is because doing so enables me to avoid bigger expenditures at other places — and I can redirect the money I save into savings or into purchases that provide better value.

If I can get my decor or socks for $1 instead of $10 or $20 or more, this frees up a lot of money that can be invested for my future or used for fun expenses like vacations. So, why not shop at a spot that’s fun, provides good value, and makes it easier to spend much less than I earn?

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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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The Child Tax Credit got a major boost in 2021, but it’s since disappeared. Read on to learn about another proposal that might benefit families with children even more. 

In early 2021, the U.S. was still grappling with the COVID-19 pandemic and the massive unemployment crisis it spurred. So it wasn’t surprising that back then, lawmakers were pretty quick to issue a round of $1,400 stimulus checks and boost a number of key tax credits.

One of those credits was the Child Tax Credit. In 2021, its maximum value rose from $2,000 per child to $3,600 for children under age 6 and $3,000 for those aged 6 to 17. The credit was also partially paid that year in monthly installments that hit recipients’ bank accounts from July through December. And, the credit became fully refundable that year, so if a recipient owed no tax, they could still collect its full value.

But that boost didn’t last beyond 2021. In 2022, the Child Tax Credit reverted to its former value at a time when inflation had truly started to surge. That, in turn, put many families with children in a tough financial position. And it forced many people to rack up debt on their credit cards to stay afloat.

Meanwhile, lawmakers have been unable to restore the boosted Child Tax Credit since its expiration at the end of 2021. This doesn’t mean that the credit went away — it simply means that its maximum value has been stuck at $2,000 since the start of 2022.

But recently, a group of lawmakers put forth a proposal to help families with children. And if it goes through, those families could be in line for an even larger windfall.

Could families soon see $393 monthly payments?

Representatives Ilhan Omar, Rashida Tlaib, and Chuy Garcia recently reintroduced the End Child Poverty Act. Under this program, families would receive a payment of $393 per month, per child, until their child reaches the age of 18. The program would apply to all families regardless of income. And children would be enrolled at the time of their birth.

Clearly, an extra $393 a month could do a lot of good for struggling families. But whether this proposal goes through is yet to be determined.

For one thing, there’s apt to be pushback given that this proposal does not include income limits. The idea of giving $393 a month to families earning over $200,000 a year may not sit well. But it’s encouraging to see that lawmakers are trying to provide relief to families with children who might really need the financial lifeline.

Is the boosted Child Tax Credit itself off the table?

Not necessarily. We could see a boosted version of the credit return in the future. But lawmakers have been divided on how it should work.

Some, for example, feel that an earnings requirement should be a component of the credit. Others have argued that imposing that rule would make it so that those most in need of the credit might struggle to qualify.

But either way, lawmakers are working to provide aid to parents of children. That’s something families in that boat can take comfort in.

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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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Skipping your quarterly tax payments can result in owing fines. Read on to learn how much you’ll owe to the IRS if you don’t pay your quarterlies. 

If you’re self-employed and expect to owe at least $1,000 in federal income taxes this year, then you have to pay quarterly taxes. Unfortunately, if you forget to pay — or worse, ignore them — the IRS may hit you with severe penalties that can make your tax burden even heavier.

What happens if you don’t pay quarterly taxes?

If you fail to pay your quarterlies, the IRS will charge you 0.5% of the unpaid taxes for each month you leave the tax unpaid. The tax would then cap out at a maximum of 25%, or roughly 50 months after the unpaid tax was due.

For example, let’s say you owe $3,700 for the second quarter of 2023, but you don’t pay the tax by the quarterly deadline of June 15. The IRS will expect you to pay 0.5% of $3,700, or $18, for every month you avoid the tax. That means, if you waited until January 2024, the IRS would charge you eight months worth of penalties, or $144.

What happens if you underpay?

If you don’t pay enough taxes for a quarter, you may also have to pay a penalty.

Unlike the penalty for missing deadlines, the IRS doesn’t have a flat fee for quarterly underpayments. Often, you won’t know the penalty until after you file your annual tax return and the IRS can determine how much money you still owe.

That said, not everyone will be responsible for paying a penalty on underpayments. The IRS will forgive underpayments if you fall in two groups:

You owe less than $1,000 after subtracting withholdings and credits. If the difference between what you’ve paid and what you owe is less than $1,000, the IRS won’t hit you with a penalty. You pay at least 90% of your taxes for the current tax year, or you paid 100% of last year’s taxes, whichever is smaller. I know that’s confusing. But think about it this way: If you earned less last year — but paid all of your taxes — the IRS won’t charge you a penalty for underpaying taxes this year. Conversely, if you earn less this year (but pay 90% of your taxes), you also won’t pay the penalty.

And yes — the IRS will penalize you for underpaying quarterly taxes even if you make up for it later. So if you paid $1,000 less for taxes in your first quarter, but paid $1,000 extra in the second, the IRS would still penalize you.

If you’re unsure about the underpayment penalty, you can look at the IRS’s Form 2210, which will give you more details.

When are quarterly taxes due?

For the 2023 tax season, the deadlines are the following:

April 18 June 15 Sept. 15Jan. 16, 2024

If you’re self-employed, it’s important to keep track of these deadlines. With the exception of Tax Day, which is broadcasted widely, quarterly tax deadlines can fall between the cracks. To avoid paying penalties, you might want to set reminders the day before the quarterly deadlines. You can also set up regular quarterly payments on the IRS’s website, which might be best if your income is the same every month.

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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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Are you mad the Inflation Reduction Act has made affordable EVs ineligible for the $7,500 tax credit? Read on to discover a loophole in the tax code. 

Last week, on April 18, the IRS officially raised the bar on the $7,500 EV tax credit. From now through 2032, you may qualify for up to a $7,500 tax credit on a new EV if the vehicle is assembled in North America and contains battery components and critical metals whose source is at least 50% and 40% North American, respectively.

In other words — if you’re looking for an affordable EV to use this tax credit on, you can basically buy a Chevy Bolt.

The Nissan Leaf and Hyundai Kona, two of the most affordable alternatives to the Bolt, are no longer eligible for the $7,500 credit. In addition, EVs produced by Genesis, Audi, BMW, and Volvo are also ineligible, making Volkswagen the only foreign automaker whose EVs qualify for the full $7,500 credit.

That’s a huge bummer, but it’s not all bad news: The IRS left a major loophole in its EV tax credit requirements, which, if exploited, could give you the full $7,500 on a new EV produced by one of the ineligible manufacturers mentioned above.

The leasing loophole

You could potentially get a $7,500 tax credit on EVs produced outside the U.S. if you lease the car and ask the dealership to reduce your lease payments by up to $7,500.

The Inflation Reduction Act contains tax credits not only for individuals but auto dealerships as well. Basically, the dealership may get up to $7,500 as a tax credit if its customers lease a new EV. The credit goes to the dealership but it can choose to pass the savings on to its customers as an incentive to buy.

Hyundai and Polestar are already offering significant discounts on leases. Hyundai will reduce your leasing payments by $10 monthly for 39 months, plus a significant reduction on your upfront payment. Polestar’s EV discount is significantly less — $3,750 — and it ends on May 2. Even if the dealership doesn’t advertise the credit, you could use this knowledge to negotiate better leasing terms on EVs.

Is it worth leasing an EV to get the tax credit?

For some car buyers, it can be worth leasing an EV rather than financing it or buying it outright.

Car leases are short, usually two to three years, so you don’t have to worry about buying a new EV that deteriorates or goes out of style faster than you build equity in it. Better yet, monthly payments on leases can be significantly less than those on a car loan. This can help you afford an EV you wouldn’t have otherwise been able to drive. You’re also not responsible for most wear-and-tear repairs, and you can exchange the car after the lease ends for another new EV.

The downside to leases — you don’t actually own the car. You’re paying the dealership to drive its car, and you can’t sell it to cash in on equity.

Since the car isn’t yours, you also have restrictions to follow. Typically, dealerships will let you drive leased cars between 12,000 and 15,000 miles per year. After that you may have to pay a fee for every mile you drive. You might also have to live within the state in which you leased the vehicle, or pay a hefty termination fee to break the lease.

If you’re okay with those restrictions, leasing an EV isn’t a bad idea. Auto companies are working hard to build EVs cheaply and produce them at a mass scale, which could bring down costs and make EVs more affordable when your lease is up. You can save on gas, and hey — getting up to $7,500 off your lease can make an already affordable monthly payment even more suitable for your budget and help you cover the cost of auto insurance for your EV.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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