Money Management

Your credit card’s travel insurance could cover you when an airline doesn’t. 

Southwest Airlines had a high-profile meltdown over the holiday season. In just one week, it had to cancel over 15,000 flights. Many travelers found themselves stranded for days and stuck with hefty extra bills for things like hotels, meals, and alternative transportation as they tried to reach their destinations.

The airline has said that it will honor reasonable reimbursement requests for those types of expenses. It’s also giving 25,000 Rapid Rewards points to customers affected by travel disruptions. Hopefully, everyone who was affected will get reimbursed without issue. But let’s be honest: Sometimes getting money from a travel provider is like pulling teeth. There can be delays and arguments about what constitutes a “reasonable” expense.

Lots of credit cards advertise that they offer complimentary travel insurance. You might be wondering if that will help you in this situation, especially if you were one of those affected Southwest travelers. Fortunately, if your credit card has travel protections, you could get your money back that way.

How credit card insurance protects you from flight issues

There are a few credit card travel protections that can apply for flight issues. They are:

Trip delay reimbursement: Provides reimbursement for reasonable expenses you incur when your trip is delayed, up to a maximum amount. To qualify, the delay typically needs to be at least 12 hours or require an overnight stay.Trip cancellation and interruption insurance: Provides reimbursement for eligible travel expenses if your trip is canceled or cut short, up to a maximum amount.Baggage insurance: Provides reimbursement for baggage issues, up to a maximum amount. Depending on the policy, this may cover delayed, damaged, and/or lost luggage.

The exact protections depend on the credit card. Some credit cards offer all three of these protections. Others offer fewer, or none at all. Terms and coverage limits also depend on the card and its policy. For example, some cards offer up to $500 in trip delay reimbursement, whereas others offer $300.

You can learn all about the protections a card offers in its guide to benefits. Or, if you’re looking for a new credit card and want one with certain travel protections, you can find this information on a card’s web page.

Although rules vary from card to card, there are some that apply with most credit cards:

You must pay for travel with the credit card for its travel insurance to apply. For example, if your credit card offers trip delay insurance and lost luggage insurance, you’d need to pay for airfare with that card to get those benefits.Coverage is normally secondary, meaning it applies to excess expenses once all other reimbursement has been exhausted. Let’s say you have $1,000 in reasonable expenses, but Southwest only reimburses you for $700. If you also have coverage through your credit card, it would reimburse you for the remaining $300.You need documentation to file a claim. Make sure to save all your receipts and records of the travel issue you’ve experienced.

How to use credit card travel protections

If you had extra expenses because of Southwest flight issues, or you want to be prepared for the next airline meltdown, here’s what to do.

Request reimbursement from the carrier first

For Southwest, you can get all the information you need for this on its disrupted holiday travel page. If you have any other travel insurance, you’ll also need to file a claim with that company.

You might want to wait for a response before filing a credit card insurance claim. Just keep in mind that you must file within a certain time period of the incident, often 60 days. If the carrier is slow to respond or isn’t willing to reimburse you, make sure to file your credit card insurance claim in time.

Next, file a claim with your credit card’s benefits administrator

You can find out how to file a claim in your card’s guide to benefits or by calling the number on the back of your card. Most card issuers let you file online or by phone.

You’ll need to submit your supporting documents during the claim process. If you have an eligible claim, then you’ll receive reimbursement.

Southwest’s holiday flight issues are a perfect example of why it’s always good to have travel insurance. Many people don’t want to pay extra every trip for an insurance policy, so credit card insurance is a smart way to get coverage at no additional cost. If you don’t have a card with these protections, look into travel credit cards that can protect you on every trip.

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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 recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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No country in the world has escaped the pandemic unscathed. 

Inflation hurts. Prices soar, your dollars don’t stretch, and your bank account balance shrinks. Although it’s true, it does not help the situation to remind ourselves that inflation — and then getting that inflation under control — is part of the economic cycle.

In an overly-simplified nutshell, inflation occurs when demand is greater than supply. Let’s say a new type of television comes on the market that fully immerses the viewer in the experience, sort of a cross between TV and virtual reality. It’s a new product, and there is relatively little supply. Due to the lack of supply, the price people are willing to pay to have the new television goes through the roof. That’s inflation.

There’s no denying that inflation hit us hard last year, with prices rising 7.7% over the previous year. And we weren’t alone. According to Pew Research, analysis of data from 44 advanced economies shows that consumer prices have risen substantially since the days prior to COVID-19.

Misery loves company?

The point of this article is not to revel in the pain experienced by others. It’s more about understanding that specific situations, like a pandemic or war in another country, impact us all.

A note as we begin: Each country calculates its inflation rate in a slightly different way. Due to that fact, this is not an apples-to-apples comparison.

United Kingdom

Inflation in the United Kingdom hit a 41-year high of 11.1% in 2022. By October, households were paying, on average, 88.9% more for necessities like electricity and gas. Food and non-alcoholic beverage prices jumped by 16.4%, and the country faces its longest recession on record.

Italy

Italy has also been hit hard, with a year-over-year inflation rate of 11.8%. Energy prices have risen at a rate of 38.3%, due largely to the Russian invasion of Ukraine. The jump in price is not surprising, given that Ukraine previously supplied most of Europe’s natural gas supply.

To make matters worse for Italian citizens, Italy is the only country in the EU where wages have declined over the past decade. Furthermore, unemployment is at an all-time high, with Italian youth being hit the hardest. The unemployment rate for young Italians is 21.2%.

In an effort to prevent more Italians from falling into poverty, the government has extended bonuses to low and middle-income citizens, including migrants.

Poland

With an inflation rate of 17.9%, Poland is on the verge of a deep recession. It is rare for a Polish citizen to land a fixed interest rate, so interest on existing loans have risen, making it even more difficult for households to cover expenses.

Approximately 1.6 million Poles live below the subsistence level. To put that in perspective, a one-person household with an income of $145 per month or less is considered to be below the subsistence level.

And it doesn’t look like things are going to improve anytime soon. According to the president of the Polish Development Fund, a recession in Germany and Italy is likely to splash over into the Polish economy, worsening both unemployment and public debt.

Sweden

Not only did Sweden experience a year-over-year inflation rate of 10.9% in 2022, but economic prediction calls for 2023 to be another rough year. At the heart of the issue are rising interest rates and the impact of the war in Ukraine on natural gas prices.

Like other countries facing economic hardship, overall consumer and business sentiment remains low.

Egypt

Also impacted by the pandemic and war in Ukraine is Egypt, with a year-over-year inflation rate of 16.2%. And even though the interest rates in Egypt were among the highest in the world before the war in Ukraine, they’ve increased even more.

Working class families in Egypt have been hit especially hard as the price of staples like bread, rice, and sugar have increased. Even nuts are now considered a luxury item. Small businesses are also struggling because they can no longer afford to stock their shelves.

In America, we wait to see if a recession will occur and if the Federal Reserve can manage to rein in inflation. Other economies around the globe face similar issues. While there’s no comfort in that, it does underscore just how intertwined the global economy is.

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It’s easy to see why so many think that way. 

Many financial experts spent much of 2022 sounding dire warnings about an upcoming recession. And so at this point, it’s not really shocking to see that many Americans are worried about a near-term economic downturn.

In fact, in a recent survey by Primerica, 81% of middle-income Americans said they think a recession will strike at some point in 2023. But is that prediction accurate?

We might manage to avoid a recession

A recession could hit if consumer spending declines to a drastic degree in 2023. But so far, there are no signs of that happening.

During the 2022 holiday season, in fact, consumer spending rose a lot. And while some Federal Reserve data points to a recent decline in consumer spending, we’re not talking about a drastic one.

As such, there’s no reason to assume that a 2023 recession is a given. Not only has consumer spending held fairly steady despite aggressive interest rate hikes on the part of the Federal Reserve last year, but unemployment levels today are basically at a 20-year low. And that’s a sign of a healthy economy — not an economy on the verge of collapse.

It’s best to prepare for a recession regardless

A recession may not hit in 2023. But preparing for one is never a bad thing, because in a worst-case scenario, you’ll have shored up your finances for no specific reason. And perhaps the most important step you can take to gear up for a recession is to boost your emergency fund if it could use a lift.

Take a look at your savings account balance. Do you have enough money in there to cover at least three full months of essential bills, like your rent, car payments, food, and utilities? If not, consider it a wakeup call to do what you can to boost your savings, whether by cutting back on spending or getting a second job.

Along these lines, if you have job skills that could use some refreshing, make that effort. If a recession does hit, unemployment levels could rise as companies are forced to cut their headcount. A good way to avoid winding up on the chopping block is to stay current with your skills and continuously work to improve them. After all, your employer is apt to have a harder time parting with strong performers than employees who come in, do the bare minimum, and don’t add a ton of value.

Finally, now would be a good time to shed lingering credit card debt — such as balances you racked up during the holidays, or during periods of higher inflation levels last year. Not having those debt payments to cover could make it easier to get through a period of unemployment should that come to pass.

A recession is by no means guaranteed to happen in 2023, even if many consumers think otherwise. But it’s still a very wise idea to prepare for economic conditions to worsen so you’re well-positioned to ride out a downturn and avoid long-term financial pain.

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Keep these points in mind so your finances aren’t thrown off course. 

Retirement is a big milestone to look forward to. But the transition to retirement can be intimidating. That’s because you’re going from earning money and seeing paychecks hit your bank account every month to potentially earning nothing at all.

It’s a great idea to set up a budget for retirement before you make your workforce exit. That way, you’ll be able to make the most of your new income and will be less likely to go overboard on spending.

At the same time, it’s a good idea to get a handle on your tax situation. Here are three things to know about taxes if your retirement is right around the corner.

1. You’ll still have to pay taxes

There are a number of dangerous myths out there when it comes to taxes, and one is that retirees don’t have to pay them. That’s just not true. Depending on your personal situation, you may end up with a low-enough income to not have to file a tax return — but that’s a function of your income, not age (meaning, you could be in your 20s, and if your income is low enough, the tax-filing obligation goes away).

2. Withdrawals from savings may be taxable, depending on the type of plan you have

If you’ve been steadily socking money away in an IRA or 401(k) plan, good for you. Ideally, you’ll now be retiring with a nice nest egg to tap. But you may need to pay taxes on the withdrawals you take out of your savings, depending on the type of plan you have.

If your money is sitting in a traditional IRA or 401(k), your withdrawals will be taxable. The amount of tax you’ll pay will hinge on your total income and what tax bracket you fall into. But either way, the IRS will get a piece of your withdrawals. On the other hand, if you have your money in a Roth IRA or 401(k), you get to take withdrawals without paying the IRS a dime.

3. Your Social Security benefits may be taxable as well

Many seniors rely heavily on Social Security as an ongoing income source. Now you may not end up claiming your benefits as soon as you retire, depending on your age and financial situation. But if you do start getting benefits, you should know that they may be taxable, depending on what your total retirement income looks like.

If you’re a low-enough earner, and/or if Social Security is your only income source in retirement, then you’ll generally get out of paying taxes on your benefits. Otherwise, prepare to pay up. You should also know that certain states tax Social Security, so in addition to federal taxes, you might owe taxes at the state level.

Avoid a tax shock

The last thing you want is to have a tax headache on your hands once you retire. Keep these points in mind if you’re gearing up to close out your career within the next 12 months.

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Heading to the grocery store on this day could help you keep your bills down. 

Groceries can be a big monthly expense for many people — especially as the price of food has gone up in recent months and rising prices may continue into 2023.

If you’re tired of spending a fortune on your credit card every time you head to the grocery store, it may be smart to think about what day you do the bulk of your shopping. That’s because you may be able to score bigger bargains if you’re strategic about when you buy.

More deals may be available on these days

If you want to maximize the chances of paying low prices at the grocery store, shopping mid-week may be the way to go. Specifically, many experts advise shopping on Wednesday and Thursday.

Going to the store during the middle of the week can allow you to get better prices because many stores restock their shelves at this time when their weekly deliveries arrive. If there are items remaining on the shelves that did not sell from the prior week, you may be able to get those at deep discounts.

Since stores are in the process of switching their prices on Wednesdays or Thursdays during restock days, it may also be possible to double dip and get sale prices from both the prior and upcoming week. This can allow you to get more discounted food products.

Many experts also report that bread, snacks, and beer tend to be put on sale during these days of the week. Since many people tend to spend on these items, buying them when they’re at their lowest price of the week could also help you maximize your grocery savings.

What’s the best day for you to shop?

Although many stores restock on Wednesdays and Thursdays, it can be helpful for you to track prices and pay attention to what’s going on at the particular grocery store you frequent. You can usually see when restocking is happening when you visit the store, so you can take note of which particular day new items get added to the shelf where you live.

You can also keep track of the sales schedule by paying attention to when the items you buy the most tend to be discounted. This can help guide you as to whether Wednesday, Thursday, or a different day makes the most sense for you to load up your cart.

Aside from the fact that you can usually save money on groceries by shopping on Wednesday or Thursday, going to the store mid-week can also help you save time since it may be less crowded than during the weekend rush when everyone tends to head out to buy their food. If you can move through the store more quickly due to reduced crowds, that will give you less time to make impulse buys.

By being strategic and making slight tweaks, such as changing the day you shop, you can end up saving more than you might think on your food expenses. Since there’s little to no effort involved in switching up your grocery store days, it’s worth a try to see if this trick will save you some cash.

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To quote the late Nancy Reagan, “Just say no.” 

If you have yet to run into a point-of-sale (POS) tip request, you undoubtedly will. POS tip requests are popping up everywhere, from concession stands to automatic car washes. That’s right. Some automatic car wash owners would like to be paid and then tipped — even though no employee labor is involved.

How it works

Here’s an example of how POS tip requests work. You walk into a store to pick up a new top, choose the item you like, and pay for it with a credit card. The store clerk swipes your card, then turns the card reader back to you for a signature. Rather than finding a line to sign your name, you find a prompt to leave a tip. Retailers determine the tip suggestions, but they typically range from 10% to 30% of your total bill.

How you can handle POS tip requests

No matter how great the pressure may be to make the person on the other side of the counter happy, you have options when you’re asked to tip.

1. Just say no

Hit the button that reads “no tip” and walk away with a clear conscience. Only you decide when tipping is appropriate.

2. Create a tip list

Etiquette expert Thomas P. Farley, better known as “Mister Manners,” told ABC7 New York that he has a tip list, and only three people make the cut: Servers, bartenders, and washroom attendants. On your tip list, include anyone you would usually tip without being prompted. For example, you might want to include your barber, hairdresser, or the person who cleans your hotel room.

3. Stick with the list

Tattoo the list on your mind so you never leave home without it. Pushing “no tip” when asked by someone who does not make the cut is a smart way to leave money in your bank account.

4. Pay with cash

If you want to avoid awkwardness at the register, pay with cash. This is especially helpful when you expect to shop in a store you know will ask for a tip. It’s a win/win. You don’t have anyone watching to see what you do, and you don’t have extra credit card debt to pay off.

The trickery behind POS tip requests

As you stand there, trying to determine whether the service you received is worthy of a tip, the employee who ran your card is looking at you, waiting for your response. While tipping is intended to reward excellent service, studies have shown that most people are motivated by social pressure to do what is expected.

Imagine that you’re strolling through a boutique, shopping for a gift. While the store employee doesn’t help you find what you’re looking for, they are friendly, and you strike up a short conversation. Now, instead of leaving the store thinking how pleasant that employee was, you’re asked to rate their pleasantness by leaving a tip. And it’s all while they’re looking at you from across the counter.

Harry Brignull is an expert in ways design can manipulate people into making specific choices. In an interview with Vox, Brignull said, “It’s easy to cross the line from honest persuasion to harmful manipulation.”

Brignull explains that touchscreens sometimes emphasize the buttons that leave a big tip. However, they de-emphasize the button that leaves no tip at all. In the industry, it’s called “dark patterns.”

A growing trend

ABC7 News in New York City spoke with Dipayan Biswas, a marketing and business professor at the University of South Florida.

Biswas — who has studied tipping for a decade — says that businesses allow tips to make jobs more lucrative for their employees. The employer does not have to raise employee pay if customers are willing to foot the bill.

As the practice grows, the concern is that more businesses will adopt POS tip requests to keep their employees happy. It’s up to you to determine whether you’re willing to supplement their income.

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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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