Money Management

Owe money on a credit card? Read on to see why it might soon cost you more. 

In February, the Consumer Price Index showed that living costs were up 6% compared to a year prior. And that’s a major problem for the Federal Reserve.

The Federal Reserve has made it clear that it likes to see a 2% annual rate of inflation over the long run. That rate, it feels, is most conducive to a stable economy and general economic security among consumers.

To combat inflation, the Federal Reserve has spent the past year raising its benchmark interest rate. And so far, it’s raised rates twice in 2023.

More so than that, the Fed most likely isn’t done raising interest rates. And that’s something credit card borrowers need to be aware of.

The interest rate on your debt could climb

The Federal Reserve is not tasked with setting consumer borrowing rates. So the interest rate you’re paying on your auto loan, personal loan, or mortgage is determined by your lender itself.

That said, when the Fed raises its federal funds rate, which is what banks charge one another for short-term borrowing, the general cost of consumer borrowing tends to rise.

Now, if you’re sitting on debt with a fixed interest rate, additional rate hikes on the part of the Fed this year won’t impact it. For example, if you signed a 30-year fixed mortgage last year at 6.5%, that rate won’t change this year regardless of what the Fed does.

It’s when you’re carrying debt with a variable interest rate that you need to be more vigilant. And credit card debt tends to fall into that category.

In fact, one major drawback of carrying a balance on a credit card is that you’ll generally not only be starting out with a higher interest rate, but a rate that has the potential to climb if that’s what market conditions dictate. So if you owe money on a credit card now, the sooner you can pay it off, the better.

A balance transfer could bail you out

Maybe you racked up a $3,000 credit card balance last year as inflation began to soar and your paycheck couldn’t keep up. The more interest you rack up on that balance, the harder it’s going to be to shed. So you may want to consider a balance transfer to a card with a 0% introductory APR.

If you have decent credit, you might qualify for a balance transfer offer. And if you’re able to transfer an existing balance onto a new card that won’t charge you interest for, say, 12 months, that could give you a chance to get ahead of that debt. You might, for example, decide to take on a side hustle for the remainder of the year to round up the money to pay off your balance. And if you’re not accruing additional interest, that may be more feasible.

All told, any credit card balance you have right now has the potential to cost you even more in the course of the upcoming year. So if you’re able to pay down that debt, you might save yourself a lot of money.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

Do you know where your money goes all the time? Read on for an easy way to find out. 

As someone who checks her credit card balances on a weekly basis, most of the time, I’m well aware of how much I’m spending on various expenses. I know, for example, that grocery purchases and food constitute a big chunk of my expenses, as does gas for my car. I also know what I pay for services like cable, my kids’ various after-school activities, and the multiple streaming services I have access to.

But I still find it very helpful to read my credit cards’ annual account summaries, which usually come through early in the year. And if your credit card offers an annual account summary, I highly suggest giving it a thorough read.

What’s an annual account summary?

Your credit card annual account summary is a compilation of your spending from the previous 12 months. Your purchases will be grouped into different categories so you can see how much you spent on various things, from utilities to groceries to entertainment. You’ll often find that your annual account summary is available in January, or relatively early on in the year.

What are the benefits of reading your annual account summary?

When it comes to reviewing your annual account summary, your first thought may be “Hmm, sounds boring.” But reading through that data is really important.

For one thing, it might help you better budget your money. You might think that groceries only cost you $600 a month, when lo and behold, based on the data your credit card company has provided you with, you’re actually spending more like $700 a month at the supermarket these days, perhaps due to inflation or the fact that your kids are growing.

Secondly, reviewing your annual account summary might help you identify costs you may not have realized you’re paying for. It may be that you were convinced you canceled your Netflix subscription in mid-2022, only to realize you were clearly still paying for it — needlessly — as of December.

Similarly, you might see that you paid your annual professional license renewal in May 2022 at a cost of $100. If that’s not an expense you were planning on for this spring, well, now you know about it. And you can take steps to carve out that money so you’re not scrambling to cover that added cost.

Finally, getting a better handle on your spending could help you keep your credit card balances down going forward. Once you realize you’re spending more in certain expense categories and have subscriptions and other expenses you can unload, it might put you in a better position to maximize your incoming paychecks and avoid adding to any existing credit card debt you might have.

As of the end of 2022, U.S. credit card balances totaled $930 billion, according to TransUnion. Getting a handle on your spending could mean not adding to your portion of that total.

Reading your credit card’s annual account summary may not be the most thrilling thing you’ll do this weekend. But it’s an important set of data to look at, especially if you’ve been having a harder time juggling your bills and coping with the fact that everything is more expensive these days due to inflation.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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

 Read More 

You wouldn’t want to give away money of yours. Read on to see how to track down an old retirement plan. 

Years ago, it was common to get hired by an employer and stick with the same company for 20 years, 30 years, or more. Today’s workers tend to jump ship more often, and that’s not necessarily a bad thing. Switching companies is often a good way to boost wages and grow a career. And it’s also a good way to keep things interesting.

But there’s a danger to all of that job-switching: It might open the door to lost 401(k) funds. Here’s how to track down an old retirement plan you may have neglected to roll over.

Check your statements

When you leave a job that sponsored a 401(k) plan, you’ll often get the option to keep your money where it is. But in doing so, you can easily lose track of it. You also might be charged extra fees since you no longer work there.

If you’ve just realized that you never rolled over an old 401(k), and you’re not sure how to access that money, dig up an old statement so you can see which company administered your plan. From there, you can make some calls to see if someone can help you gain access to your account.

If you left the job sponsoring that 401(k) plan on good terms, you can also try reaching out to someone in human resources and seeing if they can help you. Chances are, they’ll have a record of your 401(k) and will be able to at least point you in the right direction.

Use a service

If you really can’t remember where you had your last 401(k) and calling your old employer isn’t an option, you may want to try a service like Capitalize. It will allow you to input your old company’s name so it can dig up your old 401(k). And best of all, it’s free.

What to do once you find your old 401(k)

Once you’ve managed to find your old retirement plan, you’ll want to move that money into a new plan so you can keep track of it. If your current employer offers a 401(k), you can probably roll the funds into it. If not, you can open an IRA that you manage yourself and roll your money into that account.

In either situation, your best bet is to do a direct rollover, where money moves from your old 401(k) right into a new 401(k) or IRA. If that’s not an option, you’ll need to do an indirect rollover, where you get a check for your old 401(k) balance and you deposit those funds into a new 401(k) or IRA.

But be careful — if you don’t move that money over within 60 days, it’ll be treated as an early withdrawal, which could leave you subject to penalties. And even if you’re old enough to take a 401(k) withdrawal without penalty, you could end up owing a lot of taxes on your withdrawal.

Don’t let your money go to waste

Capitalize estimates that there are more than 25 million “orphaned” 401(k) plans whose owners have lost track of them. And that’s problematic. If you know you have money sitting in an old retirement plan, it’s important to do what you can to find it and move it into an account you can actively manage.

Carving out money for retirement savings is not an easy thing to do. So even if your old 401(k) balance is small, that’s money you no doubt worked hard to sock away. And you absolutely shouldn’t let it go to waste.

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

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.

 Read More 

The average victim of a crypto scam loses $2,600 worth of crypto, and I was almost one of them. Find out what it’s like to be scammed and how to diversify your portfolio safely. 

Bitcoin has been a phenomenal investment for many. It has appreciated 2,500% since 2013, going from $99.99 to about $25,000 per coin. But crypto is confusing, and scammers like to take advantage of folks unsure how to invest in Bitcoin.

Scammers have stolen over $1 billion of crypto (mainly Bitcoin) between 2021 and 2022, according to a report by the U.S. Federal Trade Commission (FTC). Not even romance is safe from scammers — romance scams are one of the most common crypto frauds out there.

Most common crypto scams

Crypto lacks regulation. People aren’t sure who to trust. The 2022 FTC report lists the biggest crypto scams traders should watch out for:

Investment-related fraudRomance scamsBusiness imposters

More than $500 million of scam action boils down to fake investments. Fraudsters contact crypto-curious Americans, claiming they can earn huge investment returns. And why not? After all, people have made millions by investing in coins as ridiculous-sounding as Dogecoin, haven’t they? (Fun fact: Dogecoin is up over 1,000% since inception.)

Scams can be persuasive. I would know — I almost fell for one.

Here’s what it’s like to be conned

A fraudster impersonating one of my favorite YouTube accounts claimed they were giving out “free crypto” as an experiment. I had to send them some Bitcoin to confirm I was real (in hindsight, a huge red flag). I was literally typing “how to transfer Bitcoin” into Google when it occurred to me that, hey — this could be a scam!

I’m a digital native. Over half my life is spent online. I’ve seen scams — they’ve sucked cash from older family members less digitally savvy than me. They were clumsy, and in hindsight, they seemed glaringly obvious. I invest in cybersecurity software and do my due diligence.

Despite all that, I nearly fell for a spam account that probably took five minutes to set up. Yeesh. Talk about humbling. According to the FTC report, the average victim loses $2,600 worth of crypto. I almost lost about half that — enough money to kick-start a solid emergency fund.

As I scrolled through that scammer’s account, rage building at my way-too-close call, it occurred to me: If someone like me can fall for a low-budget crypto scam, anyone can.

How to spot crypto scams

Scammers are like clingy exes — they linger within the DMs of your favorite social feeds. According to the FDIC report, 40% of scammers contacted victims over social media (mainly Instagram). These hucksters play by the same tactics that make them easier to spot.

Three rules of thumb:

If someone guarantees you profits on your investment, they are scamming you.If someone asks you to buy crypto, they are scamming you.If a digital date asks you to move crypto anywhere for any reason, it’s a scam.

Sorting through the nonsense is enough to make the average investor want to pack up their bags and wait out this whole “crypto thing,” potentially missing out on diversified returns. But it’s possible to outsmart the scammers and buy your Bitcoin safely.

Stick to crypto exchanges

Scammers can put a lot of effort into squeezing you for your money. They’ll take advantage of your confusion around crypto and digital wallets. Worst of all, they’ll break your heart as they rip you off. (Cue the sad violin music.)

How to avoid being scammed?

The easiest solution is to stick with an exchange for everything crypto. Avoid wallet-to-wallet transfers with internet strangers. Buy and sell currency directly through reputable exchanges. Stick to well-researched currencies like Bitcoin or Ethereum to avoid rug pulls, a type of crypto scam that ends in collapsing crypto prices.

Crypto exchanges will never ask for money, and they certainly won’t guarantee you sky-high returns. (Not without getting the side-eye from U.S. regulators, that is.) Nor will they attempt to solicit nudes they can use to blackmail you for coins (the FTC report gets awfully specific).

The best cryptocurrency exchanges offer how-tos on investing in your favorite crypto and the information you need to determine whether an investment is right for you. Spoiler: No crypto is 100% guaranteed to return a profit. Not even Bitcoin.

Don’t want to deal with scams? Stick to crypto exchanges, like the best places to buy Bitcoin safely. It’s easy and one of the safest ways for regular folks to diversify their investments. Or avoid crypto entirely — no matter their decisions, investors have options.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Bitcoin, and Ethereum. The Motley Fool has a disclosure policy.

 Read More 

Should you worry about getting a home equity loan based on today’s property values? Read on to find out. 

In 2021, U.S. property values surged as low mortgage rates led to an uptick in buyer demand. The market started to cool during the latter part of 2022. And now, home prices are down a bit compared to a year earlier.

Redfin reports that the typical U.S. home sold for $350,246 during the four weeks ending Feb. 26, 2023. That’s a decline of 0.6% from a year prior, and it also marks the first annual drop since 2012.

Of course, falling home values might be a problem for those looking to sell this year. But will they be a problem for homeowners seeking to borrow against their home equity?

A home equity loan might still very much be in reach

If you have a need for money, you might have several borrowing options. One might be to take out a personal loan, which lets you use your loan proceeds for any purpose. Another option is to borrow against the equity you have in your home. And the benefit of going that route is that you might qualify for a more competitive interest rate on a home equity loan than on a personal loan.

Home equity loan lenders take on less risk than personal loan lenders. That’s because personal loans are unsecured, which means they aren’t backed by a specific asset — whereas home equity loans are secured by the properties whose equity is being tapped. If a borrower fails to repay a home equity loan, the lender can, eventually, force the sale of their home to be made whole.

Because U.S. home values are dropping, you may be wondering if a home equity loan will still be an option for you this year. The answer clearly depends on how much equity, if any, you’re sitting on. But it’s important to realize that despite the aforementioned drop, a lot of homeowners still have plenty of equity in their properties. So all told, you may find that this borrowing option is more than accessible to you in 2023, even if home values drop further.

Should you take out a home equity loan?

There are benefits to borrowing money with a home equity loan, like potentially snagging a competitive interest rate on the sum you borrow. But it’s also important to understand the risks involved. If you fail to repay your loan, you could wind up losing the home you worked so hard to purchase and maintain. It’s that simple.

Even if things don’t reach that point, falling behind on any loan could cause a world of damage to your credit score. So either way, if you’re going to take out a home equity loan, make sure you can work your monthly payments into your budget with ease. If you’re worried those payments will be a stretch, hold off on taking out that loan.

You should also know that while home values may be down right now, borrowing costs are up on the heels of the Federal Reserve’s recent string of interest rate hikes. So a home equity loan may not be as affordable this year as you might’ve expected one to be.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.

 Read More