Money Management

Some companies may switch to cash-only payments to save on credit processing fees. 

Many businesses accept credit card payments for added convenience. However, companies must pay fees to process credit card transactions. This added expense keeps some businesses from accepting credit card payments; some even choose to operate on a cash-only basis. Could higher fees entice more companies to go cash only? Keep reading to find out more.

Merchants pay fees when they run credit card transactions

Since consumers use credit cards regularly, many businesses accept credit card payments in addition to debit card and cash payments. But doing this comes at a cost to business owners. That’s because merchants must pay fees every time customers swipe their credit cards.

In spring 2022, Visa and Mastercard raised their credit card swipe fees. Due to increased costs, some companies may decide to change what form of payment they accept. Some companies may set minimum spending limits to use credit card payments or may only accept cash payments to deter customers from using credit cards altogether.

Could this mean that more businesses will switch to cash-only payments? It’s possible. But it’s unlikely that all companies will decide only to accept cash payments because that’s not convenient for consumers who may only have debit and credit cards in their wallets. This move could deter some customers from doing business with brands.

Don’t ditch your credit cards

If you’re wondering if cash-only payments will eventually become the norm, you likely don’t need to worry too much. Most businesses want to provide various payment options to customers, so it’s convenient for them to spend money. Accepting multiple payments encourages more consumers to do business with a company and could help boost sales.

Consumers should keep in mind that some businesses may choose to charge customers a fee to pay with a credit card, which would make their purchases more costly. But if you use credit cards frequently, you don’t have to plan to stop using them anytime soon.

Credit cards make it easy to pay for your purchases when you shop in a store and online. Plus, rewards credit cards allow consumers to earn valuable rewards when they use their cards. You can feel confident knowing that many businesses will continue accepting credit cards, even if some companies change their payment processes due to rising business costs.

Be prepared with cash

It’s never a bad idea to prepare for multiple scenarios. You may encounter some businesses that don’t accept credit cards. One thing you can do is always keep some cash in your wallet. This is a good move because you never know when you may end up at a business that only accepts cash payments or one that passes payment processing fees on to the customer.

Some businesses that only accept cash payments have on-site ATMs for customers to use. However, be aware of potential checking account fees to use them. If the ATM isn’t associated with your bank, you may need to pay out-of-network ATM fees, which impacts your bank account balance. That’s why it’s good practice to keep extra cash on hand in case you need it.

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In some cases, it could be a price worth paying. 

Many people are used to driving over to their nearest Costco, loading up a cart full of groceries and household goods, getting their receipts inspected at the door, and heading on home. But a single Costco trip could easily take upward of an hour depending on how far your nearest warehouse club store is and how much time it takes you to shop there.

If the idea of taking time out of your week to head to Costco seems overwhelming, you may want to consider using Costco’s same-day delivery service. This service allows you to order perishable items from Costco and have them delivered to your door.

But while Costco’s same-day delivery service is certainly convenient, it can also result in a higher credit card tab than you’d rack up by doing your shopping yourself. So you’ll really need to ask yourself if it’s worth paying for, especially if money is tight.

The upside of same-day Costco delivery

Ordering same-day Costco delivery could save you time and stress. And if your nearest warehouse club store isn’t close to your home, it could make sense to pay a little extra and save yourself the longer trip — and the cost of gas associated with making it.

Same-day delivery from Costco is also a good option for people who don’t have a car. Think about it: When you shop at Costco, you’re generally buying bulk or larger-sized items. That means you need a way to transport them. So if you’d be looking at paying for a car service or rideshare to do your Costco shopping, you might as well just pay to have your food delivered and spare yourself the hassle of having to leave the house.

But let’s say you don’t live so far away from your nearest Costco and you have a perfectly functional car sitting in your driveway. Does same-day delivery make sense in that scenario? It may not.

Consider the markup on your purchases

When you order same-day delivery through Costco, you pay a higher price per item than you would at a store. Costco makes this very clear on its website.

Now, the extent to which you’ll pay extra will hinge on where you live and what you’re ordering. Costco prices vary by geographic region. So you might pay more for a 12-pack of muffins in one city than another. But let’s say your local Costco charges $9.99 for those muffins. If you order them through same-day delivery, you might end up paying $11.99.

Some items, though, might have a higher markup than others. And if you’re ordering a larger haul, a $2 or $3 dollar markup on 17 different items could really amount to a lot of money.

Plus, though you won’t be required to tip the person who delivers your Costco order, you may feel compelled to (and that’s certainly the nice thing to do). So that’s yet another expense to account for.

Sometimes it’s worth paying for conveniences

As a general rule, if you have a car and nearby access to Costco, then ordering same-day delivery doesn’t make a ton of sense. But if you’re having a particularly busy week, or you’re run down and don’t feel up to a trip to the store, then by all means, order same-day delivery if it makes your life easier and you can afford it.

It’s common to throw money at things that provide convenience, and same-day Costco delivery doesn’t have to be an exception. And if you limit it to an occasional thing, it really shouldn’t break the bank.

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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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Interested in going electric? 

Did you know that you can get a free electric range just by taking advantage of some federal legislation? Last year, the Inflation Reduction Act was passed, and it can essentially score you a free electric range in the hopes of incentivizing people to switch from a gas stove. Here’s how you can save money and upgrade your appliance.

Why electric stoves?

Currently, about half the homes in the U.S. have gas stoves and the other half use electric.

According to research, electric stoves are more energy-efficient and are better for the environment, plus there are health risks associated with gas stoves. Additionally, electric ranges are typically easier and cheaper to maintain since they don’t require extra parts like burners or special piping like gas ranges do. In an effort to help families switch to electric stoves, the Inflation Reduction Act gives credits and rebates which can earn those who qualify a new stove.

Two years ago California passed a law mandating that any new buildings or homes constructed starting this year will have to support the use of all-electric appliances instead of natural gas appliances. Since then, more than 50 cities in California, including Los Angeles, have banned most gas appliances for new construction. This is part of the state’s process of improving indoor air quality and helping the environment.

How does it work?

The newly-enacted Inflation Reduction Act gives various tax credits and rebates for electric vehicles and residential energy efficiency improvements. Essentially, the Act provides an incentive for those looking to replace their old gas ranges with an energy-efficient electric model. Under the High-Efficiency Electric Home Rebate Program for households with annual income below 80% of the local area’s median income (AMI), households will receive rebates that cover 100% of the electric stove to the maximum of $840.

To look up your AMI, you can go to this site https://ami-lookup-tool.fanniemae.com/amilookuptool/ and enter your address. It will give the AMI for where you live. For households with annual income between 80% to 150% AMI, households will receive a rebate for up to 50% of the cost of the stove. These rebates will be given at the point of sale, or when you purchase the appliance, and your income will be verified. Best of all, the program isn’t limited to just electric ranges either; it also applies to water heaters, space heating and cooling, insulation, and other electrification upgrades. One household can receive up to a total of $14,000 worth of rebates.

The Inflation Reduction Act is a great way for those looking for an energy efficient upgrade in their kitchen appliances without going over budget. Not only does it provide incentives for switching over from gas models, but it also offers plenty of other benefits such as electric vehicle credits and other residential energy upgrades — making it well worth your while! So if you’ve been wanting to make the leap from gas appliances to more energy-efficient models, now is definitely the time to take advantage of this great federal legislation before it’s too late.

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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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Just one example: School food has increased by threefold! 

Inflation has been a major concern this past year, and it’s not hard to see why. Prices for essential items have been rising steadily, affecting the cost of living for many households.

According to the Bureau of Labor Statistics, inflation from December 2021 to December 2022 was 6.5%. After hitting a high of 9.1% last June, inflation has dropped but is still near a 40-year high. This is largely due to supply chain disruptions, high energy prices, and high demand caused by the pandemic.

The increase in cost of goods

Here is a list of 20 essential items that have increased the most this past year.

Food prices have seen the biggest increases over the past year. In fact, 15 out of the top 20 essentials are food-related products. Food at schools has increased by threefold, the largest price increase of all. A big reason for the dramatic jump is Congress failing to extend school meal waivers. The average price of eggs has increased by nearly 60%, margarine by nearly 44%, lettuce by almost 25%, and canned fruits and vegetables by more than 18%. This is mainly due to supply constraints due to pandemic-related lockdowns and transportation delays. The remaining items are energy, transportation, and household-supply related.

Inflation hasn’t impacted all items

While the cost of most daily essentials such as food and transportation has skyrocketed, there are some items that have actually declined in price. Electronics and many travel-related costs saw price decreases. Smartphones have dropped by close to 25%, and TVs by nearly 15%. Here are a few other notable items that have decreased in price.

All these increases can make day-to-day life quite expensive. Understanding what items are increasing in price can help us budget better as we navigate our financial decisions during this time. Many of these price increases are due to supply chain disruptions. Knowing where our money is going can help us make informed decisions about where best to invest our funds so we can benefit in the long run.

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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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Think rent prices are going up? Think again. 

Rent is becoming cheaper. According to Redfin, median U.S. rent prices peaked in August 2022 at $2,053 and have steadily dropped since. Some cities, like Minneapolis, are dropping prices faster than others.

That’s not to say rent is affordable. Despite shrinking costs, the median U.S. rent is still 4.8% more expensive than last year. Only a handful of cities are bucking the year-over-year trend.

According to Redfin, here are the 10 cities with the most significant drop in rent prices:

Minneapolis, Minnesota (-8.5%)Oklahoma City, Oklahoma (-6.4%)Phoenix, Arizona (-5.0%)Houston, Texas (-4.6%)Milwaukee, Wisconsin (-4.1%)Chicago, Illinois (-3.6%)Baltimore, Maryland (-2.1%)Austin, Texas (-2.0%)Birmingham, Alabama (-1.8%)Los Angeles, California (-1.5%)

Why are rent prices falling?

There are a few possible explanations. Redfin economist Chen Zhao attributes much of the price discounting to a general upward trend in housing construction. He believes rent will continue to fall in the coming months.

There’s more. In 2021, stimulus money flowed thick and heavy, incentivizing folks to flood the rental market. (Update: Six states are still sending out stimulus checks.) With the stimulus well running dry, there is less demand for rental housing, forcing property owners to lower prices.

Another factor is mortgage rates. As the cost to take out a loan rises, buyers flee the market, and homeowners are stuck with houses that don’t sell. These homeowners may list their properties on short-term rental platforms like Airbnb or rent them out otherwise.

Is now a good time to move?

On an absolute basis, rent is expensive. Despite the recent six-month drop, rent is still 20% more expensive than it was two years ago. If you’re only willing to move when costs are historically low, then now is not the time.

However, trying to time the housing market is like trying to predict a coin flip. Much like timing the stock market, you’re apt to lose, especially over the short term. Rather than try to time the market, consider whether you have sufficient savings to move out.

How much rent can you afford?

You may be willing to pay up to move out. I moved out of my parent’s home despite doubling my rent because I had the means and the desire to do so, even though it stretched the budget. The move was worth it; my mental state improved, among other perks.

That said, millions of Americans struggle financially. Many folks don’t have enough savings right now, and 1 in 3 Americans have no savings at all. Consider whether it’s worth moving out if it means living paycheck to paycheck.

Whatever your choice, consider creating a monthly budget or checking out a rent calculator before weighing the move. Budgets give you a clearer insight into your finances. The best budgeting apps make tracking your monthly expenses automatic.

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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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