Money Management

Scammers are getting creative and finding new ways to steal money. 

Gift cards are convenient. But before buying your next gift card, you should consider the best place to purchase it. Your favorite grocery store or big-box retailer probably has many gift card display racks throughout the store. While this is a simple way to buy gift cards at the last moment, you may unwittingly purchase a gift card that a scammer has already used.

Scammers are stealing gift card funds

While gift cards are unusable until activated and loaded with funds, you can still fall victim to a gift card scam when purchasing a brand-new gift card at the store. Scammers are getting more creative, and display rack gift cards have become a common target for them. These display racks are often far from the checkout counter, so it’s easier to access them without being noticed.

Scammers are known to tamper with the card packaging to steal information. They record the gift card number and PIN and cover up their tampering, so the cards look untouched. While the tampered-with cards hold no value until an unsuspecting customer activates them, scammers use technology to steal the funds before customers use them.

Computer programs allow scammers to follow the cards they tamper with and get an alert when a card has been activated. Once they find out a card is active, they can quickly drain the funds before the recipient uses the card themselves.

Gift card theft may go unnoticed for a long time because it’s not unusual for people to keep unused gift cards in their wallets for months or to give someone a gift card long after the card has been bought. But the funds may have already been drained by a thief. For this reason, it’s best to avoid buying gift cards from display racks if possible.

Do this instead to play it safe

Luckily, there are a few ways to avoid being hit by this scam.

Be selective about where you buy gift cards: While it’s convenient to shop gift cards found on display racks, there is a risk of fraud. Instead, choose to buy cards that are kept behind the counter. Buying gift cards from your favorite retailer’s checkout counter is safer. Another option is to purchase digital gift cards directly from retailers.Use credit cards instead of gift cards to pay for purchases: To play it safe, you may want to limit your own gift card usage. You won’t earn rewards by using gift cards. Instead, paying for purchases using rewards credit cards is a smarter move. The best credit cards offer protection against unauthorized charges, so you won’t be held liable for fraudulent purchases. Plus, you can earn valuable rewards with the right card in your wallet.

Three tips to avoid falling victim to gift card theft

If you buy gift cards, make sure you take steps to protect yourself. These tips can help you spot potential theft and minimize the chances of falling victim to gift card scams:

Check for signs of fraud: Before activating a gift card, carefully look at the packaging to ensure that someone hasn’t tampered with it. If something looks off, trust your gut.Use your gift cards sooner rather than later: It’s easy to forget about gift cards we’ve purchased or received as gifts. It’s a good idea to use up the funds as soon as you can, so there is less chance for scammers to spend the cards before you do.Register your gift cards: Some (but not all) gift cards can be registered, and in some cases, it may help protect you if the card is lost or stolen. If you can register a gift card, do it quickly. Check the back of the card to see if a registration link is available.

Be on alert for possible financial scams

You work hard for your money, and life is expensive enough as it is. Be cautious and do what you can to avoid scams so you can protect your money. As scammers get more creative, consumers are more at risk for potential theft. For additional tips, check out these personal finance resources.

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 

The default isn’t necessarily the right (or safest) move. 

First comes love, then comes marriage, then comes joint financial accounts… right? For many people, the answer is yes. According to a 2022 survey by CreditCards.com, 43% of those surveyed had only joint bank accounts with their significant others, and no individual financial accounts. Just 23% reported having only individual accounts.

While there are definite advantages to merging your finances with your partner, there are also some drawbacks. Let’s take a look at both, so you can make a more informed decision if you’re ready to take a relationship to the next level, financially speaking.

Why you may want to merge finances

Far and away, one of the best reasons to combine finances and bank accounts with a spouse or significant other is convenience. If you manage shared bills, such as a mortgage loan, auto insurance, or a cellphone plan, it will be very easy to pay them when they’re due and not have to worry about transferring money back and forth to cover them. Plus, if you have a shared savings account, both partners can easily contribute to it and track progress to big savings goals.

Another reason to join financial forces is to make it easier to be accountable for your spending and savings habits. If you know your partner will be going through the checking account with a fine-toothed comb, you might be less likely to spend money as thoughtlessly as you might if you had no one but yourself to answer to.

Why you may not want to merge finances

Money is a fraught topic for many couples. A 2021 survey by Fidelity found that 1 in 5 couples say money is their greatest relationship challenge. They say opposites attract, but if you’re a natural saver and your partner loves to shop, you may have an ongoing disagreement brewing. No one deserves to be judged for their spending habits, but you may find it difficult to keep a civil tongue if you see that your spender spouse has once again spent shared funds on something you view as a waste.

Another reason to keep your finances separate is for safety. No one ever enters a relationship expecting an abusive situation, but it happens all the time. According to the National Coalition Against Domestic Violence, more than 10 million American adults experience domestic violence every year, with 94%-99% of them also experiencing economic abuse. Women are particularly susceptible to it, as they are often called upon to become family caregivers and give up paid employment and therefore the ability to earn their own money. If you’re a woman in a serious relationship, it could end up being vital that you have your own bank account and assured access to your own money, as you may need to leave that relationship to save your life.

One possible solution

The good news is that there’s a middle path that ensures both partners access to shared money and the ability to save for joint goals. You can open a third bank account for the two of you to share, while still keeping your own private accounts. This may require slightly more legwork, but it’ll spare you from any shame or judgment around your private spending habits while still making it easier to pay joint bills and save for goals like buying a home and taking a dream vacation.

It’s very easy to fall into the trap of “everyone else does it” when it comes to relationships, regardless of whether that default move is actually right for yours. If you choose to keep your finances separate, or open a shared bank account to make managing shared bills and savings easier, there’s nothing wrong with that. Your relationship is not somehow “less-than” because you’re keeping more financial autonomy. After all, your relationships and your finances are likely some of the most important things in your life. Take the time to weigh your options and make the right decision for you and your partner, together.

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

 Read More 

It’s important to know how rate hikes impact you. 

It’s hardly a secret that inflation has been a problem in the U.S. for more than a year. And you may have heard that the Federal Reserve has been raising interest rates in an effort to solve it.

The Federal Reserve raised interest rates seven times in 2022. And we may be in for a similar number of rate hikes this year.

But what exactly do interest rate hikes do? And why should consumers care about them? Let’s dive in.

What we mean when we talk about rate hikes

One point of confusion that tends to arise with regard to the Federal Reserve is that it has the ability to dictate how much interest different lenders and credit card companies charge consumers. That’s not what the Fed does.

The Fed’s job, in a nutshell, is to manage monetary policy for the U.S. and help promote a stable, healthy economy. And the Fed can raise and lower interest rates to achieve this goal.

But when we talk about the Fed raising interest rates, we’re not talking about the rates charged for products like personal loans or auto loans. Rather, we’re talking about the federal funds rate.

The federal funds rate is what banks charge each other for short-term borrowing. But when the federal funds rate increases, it tends to lead to an uptick in consumer borrowing rates (and also, the rates businesses pay to borrow money).

How rate hikes tie into inflation

Inflation is a result of an excess in consumer demand relative to supply. For inflation to slow, supply needs to catch up with demand, and demand needs to wane. And higher borrowing rates tend to lead to the latter.

When it becomes more expensive to finance large purchases, consumers tend to make fewer large purchases. And as spending declines, the gap between supply and demand can narrow.

What’s more, rate hikes on the part of the Federal Reserve tend to lead to higher interest rates for banking products like savings accounts. And consumers are often more motivated to spend less and save more during periods when banks are paying generously, since they can earn more interest on their money. So that’s another way rate hikes can help combat inflation.

Why you need to pay attention to rate hikes

Although the Fed won’t dictate what interest rate you’re offered when you apply for a mortgage loan or go to finance a car purchase, rate hikes can generally influence the cost of borrowing. So right now, for example, if there’s a major purchase on your radar, you may want to hold off on making it if it’s not an emergency since the cost of borrowing is up.

On the other hand, if you have extra money, you may want to look at saving it to earn some extra interest. Banks are paying far more interest than they were a year ago, so you have a prime opportunity to earn more on your savings. And then, you can use that money to fund different purchases so you aren’t forced to borrow at an expensive rate.

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 

Sorry, but you may want to leave that money alone. 

A recent SecureSave survey found that 67% of Americans don’t have the cash reserves to cover an unplanned $400 expense. So if you’re someone who actually has an emergency fund, good for you! And if you have enough money in your savings account to cover at least three full months of essential expenses, even better.

Now, there may come a point when you have to tap your emergency fund. If you lose your job, you might need that money to cover your bills while you look for work. And if your car breaks down or your refrigerator stops working, you may need to dip into your savings to cover repairs or buy a replacement.

But you may reach a point where you’re tempted to raid your emergency fund for the wrong reasons. Here are a few situations where you should not tap your cash reserves.

1. You’ve bought a new home and want to renovate

It’s somewhat uncommon to buy a home that’s in perfect shape, needing no work whatsoever. Chances are, once you move in, you’ll want to renovate to some degree, whether by replacing worn carpets, adding storage space, or swapping out your kitchen countertops and cabinets for something more modern.

These are all perfectly acceptable things to spend money on — just not your emergency fund. And the reason is that these items are not emergencies. They’re all items that can wait until you’ve saved the money to cover the costs at hand.

You may not love coming home to a bedroom with carpet that’s seen better days. But as long as it’s not unsanitary, you’re better off saving for a few months and then swapping that carpet out.

2. You desperately need a vacation

When you work hard day after day, you can easily reach a point where you’re desperate for a break from the grind. But if you can’t afford to pay for a vacation outright, don’t take one. And certainly don’t raid your emergency fund to pay for one.

If you need a break from work, take a stay-cation, or drive to visit a friend in another city where you’ll have access to free lodging and a kitchen you can cook in so you don’t have to dine out multiple times. You deserve to pull yourself away from the job, but escaping to an island doesn’t constitute an emergency.

3. Your bills are costing more due to inflation, and you don’t want to cut back

Many people have been forced to dip into their savings to cope with inflation. If that’s the boat you’re in after having eliminated non-essential expenses, then it’s totally understandable. But before you tap your emergency savings due to inflation, first assess your spending and see if there are costs you can cut.

Let’s say you currently pay for three streaming services and order takeout two nights a week. Those purchases might enhance your life, but if you can’t afford them right now, you should cut back before raiding your emergency cash reserves. That could mean limiting yourself to a single source of streaming content only, and pledging to cook all meals at home until your financial situation improves.

If you actually have an emergency fund, you should be proud of yourself for having made that effort. But you don’t want to let that effort go to waste. Resist the urge to tap your emergency savings for situations that aren’t emergencies. And reserve that money for a period of unemployment or for things like home repairs, car repairs, and medical treatment that can’t be delayed.

These savings accounts are FDIC insured and could earn you 13x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

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