Money Management

There’s often an important perk missing from those upgrade offers. 

If you like your credit card but want even more perks, you might be thinking about upgrading it. Most credit card companies allow upgrades within the same product line. Many also send out upgrade offers to cardholders from time to time.

What many people don’t realize is that you could miss out on valuable benefits if you upgrade a credit card. Before you request an upgrade with your card issuer, here’s why it could be a bad idea.

There’s no sign-up bonus when you upgrade your credit card

The biggest credit card perk that you normally won’t get when you upgrade is a sign-up bonus. Many credit cards, and almost all of the top rewards credit cards, offer bonuses for new cardholders. If you apply for a card with a sign-up bonus, and you complete the bonus requirements, then you get a nice chunk of cash back, points, or miles.

But if you upgrade your credit card, your new card likely won’t include its standard bonus offer. Let’s say you have an airline credit card, and you’re interested in upgrading it. The airline card you want to upgrade to has a sign-up bonus of 60,000 miles for spending $4,000 in the first three months. That many miles could easily be worth $600 or more in airfare.

By upgrading instead of applying for that card like usual, you’re giving up the opportunity to earn those 60,000 bonus miles.

Sometimes card issuers offer bonuses with credit card upgrades. However, these typically aren’t as much as the sign-up bonuses available to new cardholders.

If you’re considering an upgrade, first check how much that card’s sign-up bonus is compared to any upgrade bonus the card issuer is offering. If you’d get a bigger bonus by applying for the card, then do that instead.

Other introductory offers may not be included, either

In most cases, you don’t get any of a card’s introductory offers when you upgrade to it. Sign-up bonuses are the big one, but if there are other new cardholder offers, keep in mind that you also probably won’t be eligible for those.

For example, if a card has a 0% intro APR, that likely won’t be available. A 0% intro APR can apply to either new purchases or balance transfers. If a card has a 0% intro APR on purchases, you don’t get charged interest on purchases you make for as long as the intro period lasts. If it has a 0% intro APR on balance transfers, you can transfer over debt and pay that debt off with no interest during the intro period.

This may not be as much of an issue. If you always pay your credit card in full and don’t have any debt to worry about, then a 0% intro APR isn’t going to be of much use, anyway. But if you’re interested in a card because of its 0% APR offer, apply for it like normal.

Apply for credit cards with sign-up bonuses instead of upgrading

To be fair, there are advantages to upgrading your credit card. A credit card application has a small impact on your credit score, whereas upgrading doesn’t. You also aren’t adding to your number of credit cards when you upgrade. If you apply for a new card and you’re approved, you’ll have that new card plus the old one to manage.

But those advantages aren’t worth missing out on a lucrative sign-up bonus. If a credit card has a bonus for new cardholders, you’re almost always better off applying for it. The only exception is if there’s an upgrade offer for the same amount as the sign-up bonus, but that doesn’t happen often.

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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 proposal would not include cuts to the program’s benefits. 

Medicare is in trouble. In response to the debt ceiling crisis, House Republicans have threatened to reduce government spending by gutting the program. And the problems don’t end there. As reported by the program’s trustees, Medicare is likely to become insolvent by 2028, in what may be a drastic blow to the personal finances of millions of Americans. It is against this backdrop that President Biden released his budget proposal, one that places an emphasis not on downsizing, but on bolstering the program.

Expanding negotiations

As Biden outlined in an opinion piece in the New York Times early this week, the first objective of his proposal is to give the Medicare program some new powers. If his proposal were to pass, it would mark a significant expansion in the program’s ability to negotiate drug prices with manufacturers.

Although the program serves over 60 million Americans, Medicare was not allowed to negotiate drug prices prior to 2022.This led to significant spending on behalf of the Medicare program, with a relatively small number of name brand drugs costing the Medicare Part B program up to 80% of its annual budget in 2019. The Inflation Reduction Act of 2022, however, allowed the Medicare program to negotiate prices on a handful of drugs.

Biden’s proposal would expand those powers of negotiation. Current legislation allows up to 60 Part D drugs and 35 Part B drugs to be negotiated. The rollout will begin in 2026, but is a far cry from a solution to lower costs of the 250 drugs that consume most of Medicare’s prescription budget. President Biden’s proposal would expand these powers and save the program $200 billion by his estimation.

Boosting funding

President Obama’s landmark legislation, the Affordable Care Act, both introduced Medicare and found a way to pay for it without increasing the deficit. Now, a decade and a half later, the program is at risk of running out of money as it pays for increasingly costly care for an increasing number of Americans.

Unless you rake in nearly a quarter of a million dollars each year, you probably don’t know about the Medicare surtax, President Obama’s balanced budget’s ballast. To be clear, every taxpayer is responsible for some amount of Medicare tax, often about 1.45% of taxable income. However, the Medicare surtax adds an additional tax to certain high earners, bringing their tax liability up to 3.8%.

Biden’s proposal would further expand this Medicare surtax. His new budget bill would add an additional surtax tier for those earning above $400,000. Under his plan, taxpayers at this income level would see their Medicare tax rise from 3.8% to 5%.

A grounding exercise

Biden’s budget bill will not pass, at least not in its current form. While the Democratic majority in the Senate will likely pass the measure, a Republican-held House is almost certain to kill the bill. However, it is important to note the greater game being played in Washington.

Against the backdrop of Treasury default risk, the debt ceiling crisis drags on without sign of a compromise between President Biden and House Speaker McCarthy. House Republicans have rejected measures to raise the debt ceiling, calling for fiscal responsibility and hinting at the cutting of entitlement programs, including Medicare. President Biden stands firm in not entertaining negotiations, and this budget bill appears to be a means of applying pressure to a Republican House which has so far offered no formal proposals. Biden’s bill appears to be goading a divided House to counter with a budget bill of its own.

By his estimation, Biden’s proposal would keep the Medicare program solvent beyond 2050. However, in its current form, the bill will not pass a Republican-controlled House. So far unable to counter Biden’s proposal with one of their own, the ball appears to be in the Republicans’ court.

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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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It sure beat a costly car payment. 

In much of the United States, cars are the most convenient mode of transportation, but they’ve been far from affordable lately. The average new car price nearly hit $50,000 to start the year. That has saddled more and more drivers with car payments of $1,000 or more.

It’s enough to make almost any driver consider being car-free. After all, car payments are often one of the biggest expenses, which means they also have a significant impact on people’s personal finances. Eliminating your car payment could free up a lot of money for you. But you’re still going to need to get around, so that means you’ll need to think about how much alternative transportation would cost.

Last year, I spent about four months living in Los Angeles with no car. Now, Los Angeles definitely isn’t known as a walkable city. It’s very spread out, and owning a car is usually recommended. Just how expensive is it to get around without a car there? It’s actually not as bad as you might think.

How much I spent being car-free in Los Angeles

For the most part, I got around Los Angeles using rideshares. I walked when I could, but its reputation for not being walkable is well-earned. Driving, or being driven, is often the only good option. Here’s how much I spent on Uber and Lyft rides:

11 Uber rides: $226.6051 Lyft rides: $783.17Total: $1,009.77

In case you’re wondering why I used Lyft so much more often, it’s not because I’m a devoted fan. One of my rewards credit cards earns bonus points on Lyft rides, so I used that whenever it was an option to get more back.

That means I spent about $250 per month on rideshares, which isn’t a whole lot. But those weren’t my only transportation costs.

I also rented cars twice. Once was through a traditional rental company for $222.97 for a weekend trip to Palm Springs to see family. The other was through Turo for $277.87 to move from one short-term rental to another. I rented each car for longer than I needed so I could drive myself around Los Angeles for a few days. That’s $500.84 in car rental costs.

My grand total, including rideshares and car rentals, was $1,510.61 for my entire stay, which comes out to about $375 per month. Comparing that to typical car ownership costs, I’m pretty happy with how much I spent. Even if you own your car outright and don’t have an enormous car payment, the average cost of car insurance is $240 per month. There’s also gas and maintenance, which could easily tack on another $200.

Is it worth it to go car-free?

Not having a car worked out great for me, but to be fair, I work from home. I don’t need to commute anywhere five times per week. If I had an in-person job that was a $20 ride away, I would’ve been spending $40 per day. Multiply that by 20 working days per month, and it’d cost $800.

You could potentially save money by going car-free in either of the following situations:

You work remotely or have a hybrid work arrangement. The less often you’re required to be at an office, the more viable not having a car is.You live in an area with efficient public transportation. This rules out quite a bit of the United States, but there are exceptions.

If you’re not sure whether you’ll spend more or less without a car, run the numbers to find out. For example, if you have a regular commute, plug it in to Uber or Lyft to see how much it would cost you. Do the same with places you go often, and you can come up with a rough idea of how much being without a car would cost you.

There are times when it’s inconvenient not to have a car. But it’s certainly possible to do it, and you might not need to spend a massive amount of money. If being car-free is a good fit for your life, it could end up saving you money like it did for me.

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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.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.

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If you’re unhappy with your living space, you have options — but which is the best one? 

It’s common for people to buy homes that aren’t necessarily perfect. Maybe your home has an outdated kitchen, or a basement that isn’t usable as living space in its current state. If you’re looking at a big renovation project, you may be wondering whether it pays to deal with the cost and hassle involved, or whether you should just move to a new home instead.

The latter might, in some cases, be the easier route to take. But it’s not necessarily the most cost-effective one, especially given home prices and mortgage rates today.

The upside of moving

Living through major construction in your home can be difficult, to say the least. In some cases, it could completely upend your life.

Let’s say you’re having your kitchen redone. If that means not being able to cook or store food for 12 weeks or more, it’s easy to see why the idea of that isn’t appealing. And so you may be inclined to just buy a home that’s move-in ready instead. While you will have to deal with the hassle of selling a home and packing up your life, that may, in many cases, be less of a headache than living through months of construction.

Then there’s the cost of renovations to consider. If you’re looking at spending, say, $50,000 to gut your kitchen and put a new one in, you may decide it’s worth it to spend a bit more money on a home with an already updated kitchen waiting for you. While doing so might increase your monthly mortgage payments, if you have to finance a kitchen remodel, you’ll be looking at loan payments either way.

The upside of renovating and staying put

The idea of moving might, in some ways, seem easier than enduring a lengthy renovation. But before you start making plans to uproot your life, remember that buying a home is not an inexpensive prospect these days.

In January, the median U.S. home sold for $359,000, as per the National Association of Realtors. That’s higher than the median home sale price one year prior.

Also, mortgage rates are up these days. Between higher home values and borrowing rates, you may find that a new home just isn’t within reach financially — or that you’ll be stretching your budget way too thin to buy one.

Now, you may be thinking, “But if I have to take out a loan to renovate my existing home, what’s the difference?” Well, the difference is that you may be talking about bearing a higher interest rate on a $50,000 personal or home equity loan to redo your kitchen. If you buy a new home, you may have to take the hit of a higher interest rate on a $300,000 mortgage. And that’s on top of closing costs, moving costs, and the many other expenses associated with selling a home and finding another one.

What’s the right call?

Ultimately, it’s possible to make the case that moving makes more sense than renovating, or vice versa. But based on today’s housing market conditions and borrowing costs, you may be better off dealing with the upheaval of a renovation.

Remember, too, that any time you buy a new home, there are certain unknowns you’ll have to grapple with. Will the hot water kick in as quickly as you want it to? Will the air conditioning be sufficient during the hottest summer days? And are there hidden problems lurking that will cost you money?

When you stay put in your current home, you don’t have those unknowns or gotchas to worry about. And that could make for a much less stressful situation.

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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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When it comes to an investment as large as your home, it pays to protect it. 

Your home mortgage represents one of the most significant debts ever. The same is true for every other homeowner you know. Isn’t it wild to hear that 2 out of 3 homes in the U.S. are underinsured? According to Nationwide Insurance, the average amount a home is underinsured is 22%. Some, though, are underinsured by 60% or more.

What does it mean to be underinsured?

Your home is underinsured if you don’t have enough insurance coverage to rebuild it if it’s fully destroyed. And if you think to yourself, “I’m confident my insurance would let me know if I’m underinsured,” you may want to think again. While some agents conduct regular policy reviews with their clients, most do not.

If you have a loan on your property, your mortgage lender likely requires that you carry homeowners insurance. After all, it wants to protect its investment. However, it’s possible that your lender only requires you to carry enough to pay your loan off if it’s destroyed. Let’s say you owe $175,000 on your mortgage and carry $200,000 in coverage. That’s great; you can pay your mortgage if a peril destroys the property. However, there’s another issue at play.

What if the rapidly-rising price of construction means it will cost $400,000 to make the home safe for habitation? Rising construction costs are one of the reasons so many Americans are underinsured. Simply put, our insurance policies sometimes fail to keep up.

You want a policy that can keep pace. If your insurer tells you not to worry because your policy has a built-in inflation guard, don’t allow them to drop the subject. While built-in inflation guards are great when inflation rates are stable, this year has shown us how atypical rates can become.

Read more: Learn more about full replacement coverage.

Have you updated your insurer?

The Hanover Insurance Group commissioned The Harris Poll to research home renovations. The Harris Poll found that one-third of consumers do not realize they need to inform their insurance company when they’re renovating.

Leaving your insurance company out in the cold regarding renovations can easily lead to being uninsured if something catastrophic happens.

Check your liability coverage

You’re underinsured if you’re not carrying enough liability insurance to cover all that could happen in and around your home. Let’s say you’ve added a pool or trampoline, and a few months later, a visitor is injured. If you’ve failed to let your insurer know that you’ve made those additions, it does not have an obligation to cover any liability losses you suffer. And that includes getting sued by the injured party.

If you’ve adopted a dog, let your insurer know. While some insurers don’t discriminate based on breed, a growing number of home insurers now exclude dog breeds that are considered dangerous. Ideally, you’ll call and check with your insurer before bringing home a new pup.

Here’s a list of dog breeds that are typically excluded from homeowners insurance:

AkitasAlaskan MalamutesAny wolf breedsChow chowsDoberman pinschersGerman shepherdsGreat DanesPit bullsPresa CanariosRottweilersSiberian HuskiesStaffordshire terriers

As of 2023, five states have banned the practice of insurance denial based on your dog’s breed. They are:

IllinoisMichiganNevadaNew YorkPennsylvania

Personal property coverage

Personal property coverage protects your home’s contents if they’re damaged or destroyed. Usually, coverage limits are set as a percentage of dwelling coverage. Let’s say your personal property coverage is 50%, and your dwelling coverage is $400,000. If your home burns to the ground and everything is lost, the insurance company will pay up to $200,000 to replace personal property.

And remember, if you’ve purchased or received items of value, you’ll need a rider or endorsement added to your policy to help protect them.

While considering riders

Ensure you’re well-insured by thinking about which perils will likely drain your bank account. For example, do you have an insurance rider that covers sewer and sump-pump backup? Either issue could cost you thousands of dollars.

What about wind and hail coverage? In some states, damage due to wind and hail is covered under a standard policy. In others, it is not. Make sure you know whether you carry the coverage. If not, it’s worth asking for a quote.

While you’re at it, look at riders that cover energy surges, floods and earthquakes, and potential losses to a home-based business due to peril.

Finally, if you really want to rest easy tonight, ask about full replacement coverage for your home and personal belongings. That way, you’re guaranteed to be made whole if your property is damaged, destroyed, or stolen.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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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