Money Management

You don’t want to make the wrong call here. 

Opening a credit card is a big decision. How you use the card will affect your credit for years to come and, if you carry a balance on the card, it could affect your ability to save for your other long-term goals too.

When you’re thinking about opening a joint credit card, there’s even more you have to weigh. Here’s what you need to know to decide if this is a smart move for you.

How do joint credit cards work?

A joint credit card works the same as a regular credit card, but it allows more than one person to charge items to the account. The card owners don’t have to be related in any way, though they often are. Both parties on the credit account are liable for the bills and the creditor may pursue both of them if they default on their debt.

These credit accounts are rare, so those interested in them will have to do some digging to see which cards will allow this. But more importantly, you have to make sure you’re on the same page with your partner.

If the two of you disagree about how to use the credit card, it could damage your relationship as well as your credit. Be sure to sit down together and discuss how you’ll use the card, who will handle the bill payments, how you’ll redeem any credit card rewards, and whether you need each other’s approval to charge expensive items to the card. You should also discuss how you’ll handle it if one person wants to close the card.

Alternatives to joint credit cards

Since joint credit cards are pretty uncommon, it may not be possible for you if you have a specific card you want to open. But there’s another option that can help you achieve a similar effect with a lot less hassle: authorized users.

One person opens the credit card as the primary account holder, but they may designate other authorized users that they want to have access to the card. These authorized users may use the card just as they could a joint credit card, but they aren’t legally responsible for paying the bills.

This arrangement is much more common, and it can be a lot easier on you because you can remove an authorized user at any time if you choose. Unlike joint credit cards, you don’t have to close the credit account to remove it from the other person’s credit report.

Enabling a child or partner to become an authorized user on your credit card is a great way to help them build or improve their credit. Even if they don’t actually charge any items to the card, the account will still appear on their credit report and your on-time payments will help them raise their credit score over time.

That said, authorized users can be subject to some of the same possible pitfalls as joint credit cards. If the primary account holder and the authorized users disagree about how to use the card, the primary account holder could find themselves facing unexpected charges. All authorized users should sit down with the primary account holder to discuss expectations and how they’ll pay for any items they charge to the account.

No matter which option you choose, be sure to keep the long-term consequences in mind. And check in with the others sharing the credit account periodically to make sure everyone’s still happy with the arrangement. Doing this will help all users avoid unpleasant surprises.

Top credit card wipes out interest until 2024

If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.

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 

Don’t rush to close your brokerage account just yet. 

For years on end, the amount of interest savings accounts were paying was so negligible that it wasn’t even worth talking about. But over the past number of months, savings account rates have soared on the heels of rate hikes on the part of the Federal Reserve. And now, it’s possible to snag an interest rate as high as 4% on your money, depending on the savings account you open (though many high-yield savings accounts are still paying in the 3% range).

Not surprisingly, certificate of deposit (CD) rates are also up these days. Many banks are paying upward of 4% for a 12-month CD term.

Given that both savings accounts and CDs allow you to earn interest on your money without running the risk of losing out on principal, you may be inclined to stick to these accounts for a while and stop investing in your brokerage account. But is that really the right call?

It still pays to invest

It’s easy to see why the idea of putting all of your spare cash into savings or a CD might appeal to you. When you invest in a brokerage account, you risk losing money. You could buy $2,000 worth of stocks only to have that balance whittled down to $1,500 a month later if the market declines.

On the other hand, if you put $2,000 into a savings account, you’re guaranteed to have a $2,000 balance at a minimum as long as you don’t take withdrawals. And the same holds true with a CD — leave your money alone, and you won’t lose any.

But while it’s true that investing in a brokerage account carries some risk, the upside is also more substantial. Yes, some savings accounts and many CDs are paying interest in the 4% range right now. But if you invest your money, you might earn double or triple that return over time. And that could make a big difference.

Let’s say you have a spare $5,000 you don’t expect to need or use for many years. If you put it into a savings account and leave it there for the next 20 years, and your bank pays you 4% interest on that sum, you’ll end up with $10,956. That means you’ll have doubled your money, which isn’t too shabby.

But let’s say you’re able to snag an 8% return on your $5,000 over the next 20 years by investing it. In that case, you’ll end up with $23,305. That’s almost five times the amount you’re starting with.

Don’t just take the easy way out

Keeping all of your money in a savings account or CD may be less stressful than investing it. But you might also limit yourself if you insist on keeping your cash in the bank. So even though you’ll get a lot more interest out of a savings account or CD than you would’ve a year ago, it still makes sense to put some of your money into a brokerage account and continue investing.

These savings accounts are FDIC insured and could earn you more than 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 more than 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 

Anyone without life insurance should read this ASAP. 

Most people need life insurance. Those without a policy should consider taking some important steps as soon as possible in order to make sure their loved ones are not left unprotected and in dire financial straits if something goes wrong.

Here are five of those steps.

1. Determine if life insurance is needed

The first and most important step for anyone without life insurance is to determine if buying a policy is necessary. For most people, it is. It’s important to have coverage if loved ones rely on your income or services.

For example, a person who cares for aging parents or minor children would need life insurance, as would someone who helps a spouse cover mortgage payments or childcare costs.

Those who expect to have others relying on them in the future should also buy life insurance, as should people whose family members would have a hard time paying burial expenses in the event of an untimely death.

2. Decide what kind of policy to buy

A term life insurance policy is the best option for most people. It offers coverage for a set period of time such as 30 years. Most people don’t need coverage forever since they eventually stop having people rely on their services or income.

A whole life policy is an alternative. It remains in effect for life, and it also has an investment component and accrues a cash value. It’s usually not the right option. It’s much more expensive than a term life policy and provides a lower rate of return than many investment alternatives. Those who need coverage forever may want one though — such as parents who will always need to provide for a disabled child.

3. Estimate the necessary death benefit

Anyone buying life insurance must decide how large of a policy they need. The amount the policy pays out is called the death benefit. For most people, the DIME formula is the best way to estimate the death benefit. DIME stands for debt; income; mortgage; education.

The life insurance policy, in other words, should pay a large enough death benefit to pay off all remaining debt and the mortgage on a family home; to provide for minor kids; and to replace the policyholder’s income for as many years as it will be needed.

4. Get life insurance quotes

After deciding on the type and amount of coverage, it’s time to start shopping around. Life insurers will give quotes online or through insurance agents to those who provide basic health information and details about their age. Getting several quotes is a good idea to make sure the most affordable coverage is purchased.

5. Apply for coverage

Finally, it’s time to apply for coverage. A life insurance application requires detailed health history and often a medical exam to assess the risk of the policyholder dying while covered.

Most people can get some kind of life insurance. Even people with pre-existing conditions may have options such as guaranteed issue policies. But those who are in poor health may pay more or have limited choices when it comes to what coverage they can buy.

If you’re currently without coverage, it’s best to take these steps ASAP, because if a policy is needed but not purchased, loved ones could pay the price.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review 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.

 Read More 

There’s some good news. 

Many consumers struggled financially from the start of 2022 through the end of it. And a big reason largely boils down to inflation.

Prior to 2022, many consumers lived paycheck to paycheck without any money in savings. As a result, a lot of people were forced to rely on credit cards to keep up with their basic bills last year.

Because things got so tough in 2022, many states stepped up and offered stimulus checks to eligible residents. But there was no federal stimulus aid made available to the public. And at this point, a federal stimulus round during the first half of 2023 seems unlikely. In fact, there’s a good chance we won’t see federal stimulus aid at all in 2023.

That may not be the news cash-strapped consumers want to hear. But the news isn’t all bleak. The Bureau of Labor Statistics just released inflation data for the month of December. And it could spell relief for a lot of people.

Inflation is finally easing

In December, the rate of inflation from one month to the next fell for the first time in almost three years. The Consumer Price Index (CPI), which measures changes in the cost of consumer goods, dropped 0.1% in December compared to November. The last time the index fell on a monthly basis was May of 2020.

Meanwhile, the annual rate of inflation dropped from 7.1% in November to 6.5% in December. That’s the smallest annual increase since May 2021.

Now to be clear, an annual rate of inflation of 6.5% is still very high, historically speaking. In fact, the Federal Reserve plans to continue raising interest rates until it sees inflation head closer to the 2% mark, which is more in line with what annual inflation looked like prior to the pandemic.

But still, 6.5% inflation is far better than 9.1% inflation, which is where levels peaked in mid-2022. And if the rate of inflation continues to trend downward, it could make it so a lot more consumers are able to manage on the income they have access to rather than keep racking up debt.

Is a 2023 stimulus check out of the question?

It’s not out of the question, but it’s also pretty unlikely. Right now, the national unemployment rate is very low, and there’s no sign that we’re on the cusp of a recession based on consumer spending data.

Now that could change in the coming months, especially if the Federal Reserve continues to raise interest rates. But December’s encouraging inflation data could prompt the Fed to go easy on its next rate hike, making a recession less likely.

Of course, a recession isn’t something anyone should hope for, as it has the potential to do a lot more damage than an extended period of inflation. So for that reason, consumers should actually hope there’s no federal stimulus round in 2023, and rather, should focus their energy on hoping that inflation levels will continue to recede.

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 expert loves 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 expert even uses 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 

Like any loan, it’s best to approach a reverse mortgage with caution. Knowledge is key. 

Suze Orman is nothing if not passionate about her followers, and a series of calls and emails from fans seeking advice has gotten the financial guru worked up. The calls deal with reverse mortgages and whether they are a good idea.

What is a reverse mortgage?

A reverse mortgage is much like a home equity loan in that seniors can tap into the existing equity in their homes. The major difference is that a reverse mortgage is repaid with interest, only when the homeowner dies or sells the property.

What are the rules of a reverse mortgage?

Reverse mortgages are designed to help seniors find the money they need to age in their own homes. Here are the rules associated with a reverse mortgage loan:

A homeowner must be 62 years of age or older.They must own the home outright or have a substantial amount of equity in it.The property must serve as the senior’s primary residence.They must receive counseling from a HUD-approved reverse mortgage counseling agency. During this meeting, the counselor and homeowner will discuss eligibility, financial implications, and alternatives to a reverse mortgage.

It’s risky, says Orman

If landing a traditional mortgage once felt like a breeze, the same may not be true of a reverse mortgage. Like all loan types, there are risks associated with reverse mortgages.

Taking a loan too early

The earliest a homeowner is eligible to take out a reverse mortgage is age 62, but Orman considers it risky to do so. “If you tap all your home equity through a reverse at 62 and then at 72 you realize you can’t really afford the home, you will have to sell the home,” she said.

Once they sell, a homeowner must repay the reverse mortgage with interest. If they’re in financial distress, it will only be made worse by having a loan hanging over their head.

Not understanding how the loan works

Orman spoke of a 71-year-old listener named Carol. Carol has severe COPD and an income of only $1,500 to $1,600 per month. At the time of her husband’s death, Carol had $53,000 remaining on her mortgage. When someone called her to convince her to take out a reverse mortgage, they made it seem like her financial situation would improve.

Any money owed on the original balance is deducted from the amount the homeowner can borrow, and the original mortgage is paid off. “All of a sudden, she owes $90,000 on this reverse mortgage. The house is only worth $148,000, so she’s only going to get like $60,000, and she can’t do anything with that now. If she simply had sold the house, to begin with, we could have figured it out from there because owning a home is expensive,” Orman said.

Homeowner expenses continue — even after a reverse mortgage

Homeownership can be expensive, even after taking out a reverse mortgage. According to the Consumer Financial Protection Bureau (CFPB), even after being approved for a reverse mortgage, a homeowner remains responsible for paying ongoing property charges. These expenses include taxes, insurance, maintenance, and repair costs.

While the idea of a reverse mortgage may seem sound, it’s important to approach such loans with an abundance of caution.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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