Money Management

Don’t forget to regularly use cash back shopping programs to boost your earnings. 

Cash back apps and browser extensions reward you when you shop. Many people use cash back programs as part of their overall personal finance strategy. Earning cash back is like getting free money doing what you already do. In addition to using rewards credit cards, I use cash back shopping rewards programs. Last year, I earned $93 using Rakuten. Keep reading to see how I plan to earn more cash back rewards in 2023.

Rakuten helps shoppers earn cash back

Rakuten is a popular mobile app and browser extension that makes it easy to earn cash back rewards when you shop. It’s free to join the program. When you see an available offer, you can activate it and then make an eligible purchase with the retailer to earn cash back rewards. If you don’t yet use programs like this, you’re missing out on free cash when you shop.

Rakuten partners with over 3,500 stores, so there are many opportunities to earn cash back. When you have at least $5 in your account, you’ll be eligible to receive your earnings on the next payment date. Rakuten sends out payments every three months.

How I earned $93 last year

I do a lot of online shopping because it’s convenient. Last year, I put more effort into using Rakuten to earn rewards. I made $93 by activating offers and shopping like normal. Since there are so many participating retailers, many of my purchases qualified for cash back earnings.

However, since you must activate an offer before shopping, I didn’t always remember to use Rakuten before checking out with my favorite retailers. If I had used the program more frequently, I could have made over $100 last year. My goal is to use Rakuten more this year.

This is my strategy from now on

Since I shop online often, I want to maximize my rewards. I did one simple thing at the beginning of the year that I hope will help boost my earnings. I wrote a reminder on a brightly colored sticky note and placed it on my desktop monitor. I hope this will help remind me to check for available cash back offers before placing an online order.

Most programs, like Rakuten, won’t award you cash back unless you activate an offer before shopping. That means you need to go out of your way to activate offers. If you’re forgetful like me, you may want to put a sticky note reminder on or near your computer so you don’t forget.

Don’t miss out on the chance to earn rewards

If you shop online and aren’t using programs like this, you may want to start. Cash back apps are easy to use, and the earning potential can be significant. But make sure you continue to stick to your budget. It’s never a good idea to go into credit card debt to earn rewards.

Another way you can earn rewards when shopping is by paying for purchases with a cash back card. Some shoppers use cash back credit cards and cash back apps to boost their earning potential. Any extra money earned can help you increase your checking account balance.

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Don’t put this task off for too long. 

It’s pretty difficult to ignore the effect that inflation has had upon everyone over this last year. Everything from gas to groceries has gotten more expensive, and a lot of people are still trying to figure out how to cope with that.

While day-to-day bills are understandably the top priority, those with life insurance can’t forget to look at what effect inflation is having on their policy as well. Here are two things policyholders can do to ensure their family members are well protected, no matter what.

1. Choose a policy with an inflation rider

Inflation riders are optional endorsements that policyholders can add if they want to ensure the buying power of their death benefit remains consistent over time. It may make a life insurance policy a little more expensive, but it’ll also ensure that beneficiaries are well provided for, should the policyholder pass away now or many years into the policy term.

Life insurers often give policyholders a choice between a simple inflation rider and a compound inflation rider. Simple inflation riders increase the policy’s death benefit by a certain percentage every year. If a policy has a $100,000 death benefit, for example, and a 3% simple inflation rider, its value would increase by 3% of the policy’s initial value, or about $3,000 per year. So after one year, the death benefit would be $103,000, after two years, it would be $106,000, and so on.

A compound inflation rider uses compound interest to determine the death benefit increase. Returning to our example of a $100,000 death benefit, if the policy had a 3% compound inflation rider, its value would be $103,000 after the first year, same as with the simple inflation rider. But in the second year, the death benefit would go up by 3% of its current value — $103,000 — making it $106,090. And this difference will only get larger over time.

Compound inflation protection typically costs more than simple inflation protection, but it may also do a better job of keeping the death benefit in line with rising costs. If a life insurer gives both options, it doesn’t hurt to price out each one to see what the difference is.

2. Review the policy’s limits annually

Those who don’t have an inflation rider on their policy may still want to periodically review their coverage to ensure it’s adequate for their needs. If they feel that their initial death benefit won’t go as far as they want it to, they may want to consider purchasing additional coverage.

It’s worth noting that life insurance typically gets more expensive as people age, especially for those who take up habits like smoking or develop serious health conditions. This could make it difficult for some people to purchase additional coverage, even if they want to. But not everyone will see a massive increase in their premiums.

Keep in mind that inflation isn’t the only thing that can change the desired death benefit. Adding a new family member or a child moving out could affect how much coverage the policyholder feels they need. Take all of these things into account when deciding how much life insurance to buy.

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

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Waiting to join could cost you. 

These days, consumers are spending more money than usual to put food on the table. As of January, grocery prices were up 11.3% on an annual basis, as per the most recent Consumer Price Index reading. And we could be stuck with soaring grocery prices for many more months.

It’s for this reason, among others, that you may be thinking of signing up for a Costco membership. Buying food and household goods at Costco might result in a lower credit card tab than you’d be looking at by shopping at a regular supermarket or big-box store.

But if you’re going to join Costco, it pays to get moving quickly. Wait too long, and you might get stuck paying more for your membership.

Lock in a lower rate while you can

Right now, the cost of a basic Costco membership is $60 a year, while the cost of an executive membership is $120. An executive membership gives you the benefit of 2% back on your purchases, the same way you may be used to getting cash back from your credit card.

But these prices may not last that long. Costco typically raises its membership fees about every five and a half years. The last time an increase took effect was June 2017. And in a recent earnings call, Costco CFO Richard Galanti basically came out and said that members should expect a fee hike.

Now, one thing he didn’t say was when that fee hike would take place. But he was quoted as having said, “It’s a question of when, not if.” So it’s fair to assume that there’s a good chance Costco memberships will go up in price at some point in 2023.

So if you’re been thinking about signing up for Costco, you may want to do so now. When you sign up for Costco membership, it’s good for a year. So if you lock in the current rate now for either the basic or executive membership, you won’t have to worry about a fee hike until your membership comes up for renewal.

Is it worth it to join Costco?

Shopping at Costco can result in a lot of savings, but that’s not necessarily the case for everyone. If you’re on the fence about a Costco membership, ask yourself:

Do I have a Costco store nearby? If the closest one is 30 minutes away, you may not get there often enough to make good use of your membership.Do I have a larger family to feed? If you live alone, or it’s just you and a partner, you may not be able to take advantage of bulk discounts on perishable items.Do I have a lot of storage space? When you buy a 24-pack of toilet paper, you need a place to put it. If your home lacks storage space, you may find that buying in bulk is a hassle.

Joining Costco could help you keep your bills down at a time when living costs are so expensive. And if you’re going to join, you might as well do so before membership fees increase. But take some time to think about whether you’re likely to get your money’s worth before locking in that membership.

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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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It’s a number you really want to keep under control. 

Your credit utilization ratio is one of those things you probably don’t spend much time thinking about. Heck, you may not even know what a credit utilization ratio is.

In that case, here’s a primer. Your credit utilization ratio measures the amount of revolving credit you’re using at once. If your total credit limit across your various credit cards is $10,000, and you’ve racked up a $2,500 balance, that puts your credit utilization ratio at 25%.

According to a recent report from VantageScore, the average credit utilization ratio among consumers was 31% as of December 2022. That may not seem too high, but it could be problematic for one big reason.

You want to keep that ratio low

The more of your available credit you use at once, the more of a borrowing risk you might come across as to lenders. And so it’s helpful to keep your credit utilization ratio to 30% or below.

Once your credit utilization ratio exceeds the 30% mark, it can start to cause credit score damage. And once that happens, it can become more difficult to qualify for a loan or an affordable interest rate on one.

As such, an average credit utilization ratio of 31% among consumers isn’t so great. It’s not horrendous, but it means that the typical credit card user is just above that ideal 30% threshold to avoid credit score damage.

How to bring down your credit utilization ratio

If you’re not sure what your credit utilization ratio looks like, access a free copy of your credit report, and you should get the answer there. If your credit utilization ratio is above 30%, it’s in your best interest to bring it down. And one effective way to do so is to simply pay off some of your existing credit card balances.

Doing so won’t only help your credit score improve. It could also save you money. After all, the less of a balance you carry forward on your credit cards, the less interest you accrue.

Another way to bring down your credit utilization ratio is to get a spending limit increase on your credit cards. If you’re a cardholder in good standing, you can usually ask your credit card companies for a credit limit increase every so often.

In some cases, you may have to show proof of a higher income to get that request granted. And you’ll also need to be current on your bills (which means being timely with your minimum monthly payments). But if you can satisfy those criteria, your credit card issuers might raise your credit limit, and that could help your credit utilization ratio shrink.

A number to watch

It’s not every day that your credit utilization ratio is something you think to check on or work on. But the lower that ratio, the more it can help your credit score. And so if you’re on the cusp of applying for a large loan, like a mortgage, then it definitely pays to keep tabs on your credit utilization ratio and make sure it’s in decent shape.

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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’s well worth the extra money to me. 

When I first started shopping at Costco, a regular membership sufficed for me. That’s because back then, it was just me and my husband, and we didn’t rack up the same massive credit card tabs for groceries that we do now. Also, back then, we were on more of a budget, so we didn’t have the same leeway to spend on household items and electronics we do these days.

But once we had kids, upgrading to a Costco executive membership started to make financial sense. And at this point, I don’t ever see myself going back to a basic membership.

A fee that’s more than worth paying

There’s a difference in cost between a basic Costco membership and an executive membership. A basic membership, as of now, costs $60 a year. The executive membership costs $120.

It’s worth noting that these prices could rise, and soon. Costco has not increased the cost of its membership fees in over five years. So at this point, members are actually due for an increase.

But if Costco raises the price of memberships, the cost of a basic one could increase by a mere $5 a year, and the cost of an executive membership could rise by just $10. These increases would be in line with previous ones. And even then, the executive membership would still make sense for me.

The primary benefit of having an executive membership at Costco is getting 2% back on all Costco purchases. And I make a lot of those.

In fact, once your annual Costco spending reaches $3,000, the executive membership pays for itself. That’s because it costs $60 more than a basic one, and 2% back on $3,000 is $60. So if you think you’ll spend more than $3,000 at Costco in a given year, the added fee makes sense.

Last year, I spent over $7,000 at Costco. That might seem like a lot of money, but keep in mind that I not only buy groceries there weekly, but I also use Costco as a source of things like holiday gifts and electronics. I also own a small business, and from time to time, I’ll find products I need to do my job at Costco at a lower price than I’ll find elsewhere.

Now, I may not spend $7,000 at Costco every year. But as long as I spend enough to eke out even a little savings from the executive membership, that added fee will be worth it.

Assess your Costco spending

You might assume that a Costco executive membership isn’t necessary for you. But before you make that call, look at your total spending from the past year. You may be surprised to see that you spent enough money to justify the cost of an executive membership.

Of course, if Costco raises its membership fees this year, or in the future, a good bet will be to reassess the need for an upgraded membership. But even if Costco’s next fee hike brings the cost of an executive membership up to more than $130, chances are, it will still make plenty of sense for me financially.

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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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It’s a benefit that makes the extra cost worth it. 

I’m the sort of person who isn’t always so quick to upgrade. I’ll hang onto the same cellphone, for example, for many years until it basically stops functioning. And the fact that my family’s second car is a 16-year-old Prius whose trunk is so old it won’t open should speak to the fact that I tend to err on the side of frugality and saving money.

But one area where I’m more than happy to spend extra is my Costco membership. I upgraded from a basic membership to an executive one many years ago, and I haven’t looked back since thanks to this awesome perk.

The best part of an executive membership

A basic Costco membership costs $60 a year, while an executive membership costs $120. Clearly, that’s a large difference. But it’s worth paying the additional money for one key benefit: the ability to get 2% back on purchases, the same way you might get 2% cash back on a credit card.

I happen to shop at Costco a lot. I stop in weekly for items like produce, dairy products, and snacks, which my kids seem to magically go through at a rapid clip. I also use Costco for other purchases, like cleaning supplies, toilet paper, and items for my dog. And when I need a gift in a pinch, I might just pick one up at Costco, since my local store tends to have a nice selection at prices that won’t ding my bank account.

All told, I spent more than $7,000 on Costco purchases in 2022 alone. And while I paid an extra $60 for my executive membership, because I got to enjoy 2% back on my purchases, I wound up more than making my money back.

In fact, what Costco does for executive members is issue a rewards certificate once a year. I got mine in early 2023 and used it to cover a week’s worth of food and supplies so that I didn’t have to spend any money out of pocket. That was a nice treat, and it gave me the wiggle room to treat my kids to a restaurant meal that week by virtue of that savings.

A perk worth paying for

Sometimes, you have to spend money to make money. In my case, I spent an extra $60 on a Costco membership to score a reward certificate worth $147. And all told, I made $87 by upgrading my membership. So even though paying for upgrades generally isn’t my MO, this time, it made a lot of sense. And I really have no plans to go back to a basic Costco membership anytime soon.

Of course, if Costco raises the price of an executive membership substantially, I may need to crunch the numbers and rethink mine. But while a fee hike may be in the cards for 2023, it’s doubtful that the cost of any type of membership will increase a whole lot. So chances are, it will make sense for me to continue paying a little more money to collect my 2% back on every single Costco purchase I make.

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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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