Money Management

If your credit limit is looking a little low, should you ask for an increase or just apply for a new card? Read on to learn how to decide. 

Have you ever looked at your credit limit and wished it was higher? There are a lot of reasons why you might want to increase your credit limit. It could reduce your credit utilization ratio, which could lead to a higher credit score. It’ll give you more buying power, which could help if you have a big expense coming up and want to use the convenience of a credit card. Or maybe you’ve spent some time improving your credit score and want a higher limit to match.

But there’s more than one way to get a higher credit limit. Yes, you can ask for a limit increase on an existing card — or you can apply for a new card altogether. Which is the right choice, though?

A tale of two travel credit cards

I recently decided to request a credit limit increase on my travel credit card. I have some upcoming international travel planned and I wanted a higher limit in case of an emergency and to give myself more flexibility with a card that doesn’t charge foreign transaction fees. Unfortunately, I struck out twice on this front and was denied an increase after I asked for one through the issuer’s website as well as after calling to speak to a representative.

Thanks to the Fair Credit Reporting Act, creditors are required to inform consumers of the reasons they’re denied for credit. In my case, the reason was that I already have several higher-limit credit cards, and since I paid everything off in 2022, I no longer carry a balance forward — meaning the card issuer isn’t making money from me in the form of interest.

After that second rejection (and a few days of licking my wounds), I decided to apply for a new travel card. Lo and behold, I was approved — and for a credit limit almost three times higher than the new limit I had requested on my old card. Here’s a look at when you might want to either opt for a credit limit increase request or just apply for a new card.

Ask for an increase on an existing card

Originally, I just wanted an increase on the travel credit card I already had, and you may feel the same way. If you’re not interested in managing another credit card, that’s a great reason to pursue a limit increase instead. You might also think you have a pretty good shot at getting approved for that increase, especially if you’ve been a good customer. If you’ve always paid your credit card bills on time and kept your balance below 30% of the limit, you’re more likely to be approved than someone who maxes out their card and is late with payments.

If your existing card has pretty sweet benefits, like a generous rate of cash back, you may also see no need to add a new credit card to your wallet. Why mess with success, right? Finally, if you think having a shiny new credit card may tempt you to spend more than you can afford to pay back every month, going for that limit increase instead is a good move.

Consider applying for a new card

If you’re interested in different perks or benefits than what your current card offers, it could be worth trying to get a new card. I was perfectly happy with my old cash back travel card, but my new one is points-based, and I admit that I’m intrigued at the prospect of learning how these cards work and how to maximize them. As a personal finance writer, it’s also in my best professional interest to expand my horizons, and I’ve never had a points credit card before.

Getting a new card might also offer you the chance to pursue a valuable sign-up bonus (yes, my new card has one of those, too) or take advantage of another perk, like an introductory 0% APR offer. This can be especially great if you have a large purchase to make or want to consolidate debt on existing credit cards and have a period of no interest to get it paid off.

When it comes to your credit card accounts, you have options. If you’d like a higher credit limit and are happy with your current card, ask for an increase. If you’d rather have some new perks and a chance at a sign-up bonus, applying for a new card might be right for you instead. Whichever you choose, if you can manage credit cards responsibly (meaning, don’t charge more than you can afford to pay off in a given month), they can help you improve your credit score and add more convenience to your life.

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Love Costco? Read on to see why it pays to load up on Kirkland products. 

I’ve been shopping at Costco for years, but I have to admit that it took me a while to shift from buying name-brand products to products with the Kirkland name. If you’re not familiar with Kirkland, it’s Costco’s signature brand. Think of it as the generic version of whatever food item or household staple you’re charging on your credit card.

At first, you may be hesitant to buy Kirkland products. After all, why take a chance when you can buy products from brands that are more well-known? But actually, there’s lots to be gained by sticking to Kirkland. Here’s why the brand deserves your attention.

1. It’s commonly less expensive than brand names

Costco is known for its low prices — prices that make it easier to manage your spending and boost your savings account balance. But because it doesn’t have to pay to market its Kirkland brand products the way other companies do, it’s able to offer those products for less. The result? More savings for consumers.

2. It offers a wide range of products

Walk through your local Costco, and you’ll find the Kirkland name on everything from milk to baked goods to toilet paper. In fact, The Ascent found that Costco’s best-selling item is actually Kirkland Signature Bath Tissue, which apparently brings in more than $400 million in revenue for Costco each year.

Personally, I’m a big fan of buying from brands I trust. So the fact that I can get Kirkland muffins as well as tissues is a good thing in my book.

Also, Costco is known to stand behind all of the items it carries in its stores (as well as online), because it takes pride in its Kirkland brand. You can bet that if you ever have an issue with a product, you’ll be eligible for a hassle-free return. Incidentally, I’ve had to take back certain food items due to premature spoilage, but I don’t recall ever having to return a Kirkland product.

3. The quality stands for itself

Some people will tell you that they’ll never stray from a given brand because of the quality involved. I’m here to tell you that I’ve used or consumed many Kirkland products through the years, and not once have I felt like I walked away with an item that’s been sub-par in quality.

Of course, this is subjective. Some people might tell you that Kirkland toilet paper isn’t as lush or easily flushable as that of more heavily marketed brands. But take a bite of a Kirkland cake, muffin, or cookie, and you’ll be hard-pressed to find an issue with what you’re eating.

Also, here’s a lesser-known fact about Kirkland. Often, these products are actually produced by big-name companies, only they’re packaged exclusively for Costco. So while you may be hesitant to buy the generic version of something you love, you may not actually be doing so.

Should you stick to Kirkland products when you shop at Costco?

There may be some items on your shopping list that don’t have a Kirkland version. But otherwise, it definitely pays to load up on Kirkland products in the course of your Costco shopping. Doing so might really give you the best of both worlds — an opportunity to save money on groceries and household essentials without feeling as if you’re compromising on quality in the slightest.

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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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A tax refund is often a big sum of money. Here’s how you can use it to accomplish important financial goals. 

As of March 24, 2023, the average tax refund sent for this filing season is $2,903, according to the IRS. If you’ve filed your taxes and are due a refund, you’ll have some choices to make. When this big sum of money hits your checking account, you’re going to have to decide what to do with it.

The best option is to use your money to increase your financial security — especially as, for most people, it’s rare to get thousands of dollars all at once that isn’t already earmarked to cover essential bills. But, exactly how you should do that depends on the current state of your finances.

To help you decide, here are some tips for how you should spend your tax refund dollars.

Pay off high-interest consumer debt

If you have high-interest consumer debt, using your tax refund to pay it down — or pay it off — could be your best option. This includes things like credit card debt or payday loans or any loans with any interest rate above the return on investment (ROI) you could likely get from a safe investment.

If you can reduce the balance on this debt, you can lower your total repayment costs over time since you won’t be paying interest on as large of a balance. And if you can get your debt paid off entirely, you’ll free up the money you were previously using for your monthly payments to do other things with it.

Put some cash into an emergency fund

If you have your high-interest debt paid off, the next best option is to use your tax refund money to help yourself avoid debt in the future — and to help gain some peace of mind. You can do this by putting the tax refund money into an emergency fund.

Ideally, you should have an emergency fund that could cover three to six months of living expenses so you could weather almost any storm life sends your way. Saving your tax refund can help you get closer to that point even if it doesn’t quite put you there. Even if you’ll still be a long way from having the recommended emergency fund, having a few thousand dollars in the bank will allow you to be prepared for many of the surprise expenses you’re likely to face.

Fund short-term and long-term financial goals

If you don’t have expensive debt and you already have emergency savings, then you can use your tax refund to fund other short-term or long-term goals. For example, you could save the money for a big upcoming vacation or wedding so you don’t have to borrow for them. Or if you aren’t investing enough in a retirement account, you could use the money for that.

What you generally want to avoid is just depositing the money in your bank account or using it on a whim to make a big purchase you hadn’t planned. Instead, by being purposeful about what goals you want to accomplish with it, you can make the most of the lump sum payment the IRS is sending to you.

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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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Lending and borrowing from people we care about can put strain on relationships. Find out why it happens so often and how you can avoid the biggest pitfalls. 

A famous line from Shakespeare’s Hamlet says, “Neither a borrower nor a lender be.” The reason? It puts a strain on relationships, particularly as people don’t always pay back that money. But money lending is one of the oldest professions in the world because there are times when people need to borrow. And sometimes friends and family are their only option.

If you’re considering giving or taking a loan to or from a loved one, you’re not alone. Over 50% of American households either borrowed or lent money to friends and family last year, according to data from the Consumer Financial Protection Bureau. Speaking personally, I’ve lent money to loved ones on several occasions with varying results. If you’re going to make that loan, these golden rules could help protect your relationship.

1. Talk about why the loan is necessary

There can be all kinds of reasons why someone might need a little help. Perhaps they lost a job or have a medical issue and don’t have any emergency savings. Maybe they aren’t great with money and this isn’t the first time they’ve borrowed from you or others. Find out whether they’ve tried to take out a personal loan and why they are turning to you. Perhaps they don’t have strong credit or have already maxed out other options.

If someone you care about has already exhausted other options, you might be saving them from taking a payday loan with crazy interest rates or borrowing from another unscrupulous lender. If you have enough money in the bank, that’s a powerful thing to do. On the flip side, know that there’s a chance you won’t see your cash again. Especially if you lend it to someone who’s often behind in their payments.

Depending on your relationship, try to talk openly about finances. If the person who needs money doesn’t have a budget, perhaps you can encourage them to make one. If they’ve also got credit card debt or other commitments, ask them how they are going to keep on top of their various repayments. If you do it sensitively, this might be a chance to help someone you care about change the way they handle money.

2. Only lend what you can afford to lose

Loaning money is a lot less stressful if you don’t need that cash and won’t be impacted if the loan doesn’t get repaid. That isn’t to say you shouldn’t hope to get it back. But think of it like helping someone who’s drowning — there’s no point in you diving in to help only to get dragged under as well.

I find it helps to mentally treat loans as gifts. It means I only lend money I’d be prepared to gift (and lose). It also reduces the potential for irritation if something goes wrong. Even then, it’s incredibly annoying to lend someone money only to see them buying new clothes and planning a vacation rather than paying you back. But once you make that loan, it can be awkward to complain.

Everybody has a different concept of what they can afford to lose. And a lot depends on who it is that needs the money. For example, some people might be willing to dip into their emergency savings to help their child, others may not. Ultimately, if you are doing OK with your financial goals and have a steady income, you’re in a much better position to make a loan than someone who’s only just keeping their head above water.

3. Be clear — get an agreement in writing

It’s amazing how much gets glossed over in verbal agreements or how two people can leave the conversation with a different view on what was said. Not only can documenting the loan give you something to refer back to, the process of getting things in writing can help ensure everybody’s on the same page.

You might download a template online or make your own from scratch. Here are some items to include:

Date of the loanAmount of loanInterest rate (if any)How the repayments will work, including payment datesWhat will happen if payments are missed

There may also be tax implications for your loan, particularly if it’s for a significant sum of money. For example, if you write off that loan at a later date, the IRS might consider it a gift. Similarly, if you don’t charge interest, those waived interest payments could well come under the gift umbrella.

Bottom line

Given that many people don’t have an emergency fund to cushion against unexpected financial shocks, the ability to borrow from loved ones could be a lifeline. Unfortunately, it can also be stressful for everybody involved. If you don’t feel comfortable making the loan, it’s OK to say no. And if you do go ahead, the steps above may help reduce the potential for emotional fallout.

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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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The more you have in your wallet, the greater risk you’re at for identity theft. Read on to learn how much cards, cash, and ID to carry in your wallet. 

With the rise of digital payments and the increasing popularity of contactless transactions, people are becoming more inclined toward storing their credit card information on their smartphones. But is it safe to store sensitive data on your phone? Some states even allow you to upload your driver’s license or state ID cards to your Apple Wallet. Does this mean we don’t need to carry a physical wallet anymore? Let’s take a look.

How safe are digital wallets?

There is no denying the convenience of having your credit card information on your phone. Especially when you’re in a hurry or need to make a quick payment, it saves you the hassle of rummaging through your wallet for your credit card. However, if someone gets hold of your phone, they can access all of the stored financial information you have.

So it’s always advisable to have a PIN or password lock on your phone and to use biometric verification, such as face recognition or fingerprint scanning, to ensure extra security. It’s also important to choose a reputable and trustworthy digital wallet provider, and to set up strong passwords and two-factor authentication. It’s recommended that you avoid using public wifi when accessing digital wallets, as these networks are often vulnerable to hacking attempts. While digital wallets offer convenience and flexibility, it’s important to take safety seriously to protect your hard-earned money.

What should you carry in your wallet?

While more people are using digital wallets, it is still important to carry some cash and physical identification, since only a handful of states allow digital IDs. When it comes to the number of cards, cash, and ID you should carry in your wallet, financial advisors suggest carrying just the essentials. According to the Wall Street Journal, financial experts say “most people need no more than $30,” as it’ll come in handy for smaller purchases from merchants that don’t accept digital payments.

It’s best to limit the number of cards you carry, especially credit cards, as it reduces the risk of loss or theft. The recommended number of cards to have is no more than three — with at least one a debit card. And as for your ID, your driver’s license or passport should suffice for most situations. Those who carry around too many items in their wallets are at greater risk of identity. The less you carry, the better.

Apart from choosing the right amount of cards, cash, and ID, it’s also important to take some precautionary measures to safeguard your wallet. Make sure you’re not carrying any unnecessary information, such as Social Security cards or birth certificates, which can be used to steal your identity. Experts told the WSJ that people should “Consider slipping a small piece of paper with your phone number in your wallet in case it gets lost. That way, whoever finds it can contact you.”

Storing credit card information on your phone may seem like a convenient option, but it’s important to take security measures to safeguard your digital identity. While carrying a limited number of cards, cash, and ID will reduce the risk of loss or theft, it’s equally essential to enable password-protection on your phone, enable biometric verification, and take extra precautions with the information you carry. Follow these tips, and you’ll be well-equipped to handle any financial situation while keeping your information safe and secure.

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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 Apple. The Motley Fool has a disclosure policy.

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