Money Management

Checking accounts may seem straightforward, but they have several benefits you might not be aware of. 

Checking accounts are one of the most popular banking products, and you may already know about some of their benefits. You can set up direct deposit so that your paycheck automatically goes to your checking account. You can also use one to pay bills and withdraw cash at ATMs, so it’s great for money management.

These aren’t their only useful features, though. To get the most out of this type of account, here are the little-known perks that checking accounts offer.

1. Get cash when you travel

When you travel to a foreign country, it’s good to have some of the local currency. Paying with credit cards and debit cards isn’t always an option. And if you run into an emergency, you might need cash.

You could do this the old-fashioned way by going to a currency exchange. However, these places normally offer poor exchange rates. What some people don’t realize is that they can get a much better deal going through their own checking accounts.

Many checking accounts allow you to withdraw cash at ATMs anywhere in the world in the local currency. Your debit card’s payment network, such as Visa or Mastercard, handles the currency conversion, so you get a competitive exchange rate. Although some banks charge a foreign transaction fee for this, there are some banks for international travel that don’t.

2. Get your paycheck early

Direct deposit is one of the big benefits of having a checking account. You save time when you don’t need to deposit paychecks yourself, and you also don’t need to pay a fee to a check-cashing service.

You may even get paid early thanks to your checking account. Some banks give you early access to your paychecks as soon as they receive notice of the upcoming deposit. You could have that money up to two days sooner.

3. Insured for up to $250,000

Some people worry about whether their money is safe in a bank. It’s good to be cautious, since your bank accounts are likely where you’ll keep a large portion of your savings. Fortunately, your money will be protected.

Almost all U.S. banks have FDIC insurance. Eligible accounts with this type of insurance are covered for up to $250,000 in the event of a bank failure. Checking accounts are eligible, as are savings accounts, certificates of deposit (CDs), and several other financial products that banks offer.

If you want to know whether a bank is FDIC-insured, call the bank manager. This information is also usually available online.

4. High interest rates

High-yield savings accounts get all the attention, but there are high-yield checking accounts that offer impressive interest rates, too. The difference is that checking accounts come with some strings attached to earn that interest.

With these checking accounts, you typically only earn interest up to a certain balance limit. For example, the interest rate may apply to balances up to $5,000 or $10,000. Another common requirement is a transaction minimum with your debit card. You might need to use your debit card 10 or 15 times per month to earn that high APY.

For large balances, high-yield savings accounts are still the best option. But a high-yield checking account could be worth it to earn more interest on the smaller balances you keep in that account.

5. Rewards on your purchases

Although they’re not known for it, select checking accounts earn rewards on your debit card purchases. Once again, there are often strings attached with rewards checking accounts. You may only earn rewards up to a certain amount of spending, and there could be a minimum balance requirement.

It’s worth mentioning that rewards credit cards offer much more value. Many of them offer higher rewards rates and generous bonus opportunities. But if you can’t qualify for the top rewards credit cards yet, then a rewards checking account could be a good choice for the time being.

Checking accounts are often that default account you use for paying bills and moving money around. Although they’re ideal for that, they also have several other interesting and valuable benefits to offer.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Putting off buying pet insurance? That’s a bad idea. 

Anyone who has ever taken a companion animal to the vet knows that an unexpected illness or injury can give an owner’s credit cards a workout. That’s why pet insurance is typically a recommended purchase.

Pet insurance can cover the costs of care a furry family member needs, so owners don’t have to struggle to find the money to pay when there’s a problem.

Of course, the premiums can come at a cost, so some owners may be wondering if it’s possible to wait to buy insurance until after a pet gets sick. Here’s what owners need to know about that option.

Waiting to buy pet insurance could be a huge mistake

It might seem tempting for owners to try to save on premiums and quickly sign up for pet insurance coverage only after an animal has shown signs of an illness or has been diagnosed.

The problem with this, however, is that no pet insurance policy will cover a pre-existing condition — and many policies have a waiting period between the time when coverage is purchased and the time when the policy kicks in.

This means if an owner takes a dog to a vet and the animal is diagnosed with diabetes, for example, the owner can’t then go out and buy coverage for the dog that will cover diabetes. Diabetes would be excluded from coverage. Or if an owner suspects their dog has allergies, the owner can’t get coverage today that will pay for a diagnosis and treatment of allergies tomorrow.

What’s worse, many pet insurance policies define pre-existing conditions fairly broadly. If that’s the case with a policy an owner chooses, lots of different ailments may be excluded from coverage if the policy wasn’t purchased until after a problem happened.

For example, if a dog has an upset tummy that goes into the medical records and the owner buys a pet insurance policy a short time later, it’s possible that any future gastrointestinal issues would be considered pre-existing and wouldn’t be covered.

Pet insurers can avoid paying to treat problems that developed prior to the time a policy was purchased because they aren’t subject to the same strict rules applicable to human health insurance. While human insurers cannot deny coverage due to an existing medical problem (or charge more to cover those with health issues in most cases), pet insurers can and do deny coverage for existing medical issues.

Pet owners who don’t get insurance before an animal gets sick may still be able to buy an insurance policy to cover other things — although it depends on the insurer and the nature of the pre-existing condition. But as soon as a medical problem happens before coverage is bought, the insurer will likely disclaim responsibility for related issues for life.

Here’s when pet owners should buy coverage

To avoid the risk of a pet insurance policy excluding many health issues, pet owners should buy insurance as soon as they can while their pet is as healthy as possible. It’s well worth getting signed up for coverage before there is an issue, so that owners will have the peace of mind of knowing money is there to care for their companion animal in a time of need.

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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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An emergency fund can help you out when pricey, unexpected expenses come your way.  

No one likes dealing with car issues. But if you own a car, problems happen — even if you keep up with regular maintenance. I recently found myself dealing with car troubles, which resulted in a nearly $600 car repair bill. Luckily, I’ve been committed to boosting my savings, so while it was frustrating having to take time out of my busy week to get my car fixed, I was prepared. Here’s how my emergency fund saved the day.

Extra expenses can pop up when you least expect them

Car issues and other costly life problems usually appear when we least expect them. It goes something like this: You’re busy going about your day, and suddenly, your car won’t start. That scenario happened to me earlier this week.

My car is 10 years old, and I have no idea how old the battery is, so I assumed I needed a new one. It turns out I needed a new starter. All is well now, but the repairs cost me nearly $600. While this is an affordable repair bill, I’m thankful I had the financial means to pay it.

Over the last year, I have remained committed to my savings goals. I’ve been regularly stashing cash in my savings account for future expenses like this, so I didn’t have to worry about taking out a loan or racking up credit card debt. Instead, my emergency fund saved the day.

An emergency fund can make a difficult situation easier

Most of us know that emergencies can occur any time and usually come with an expensive bill. But that doesn’t mean we’re always financially prepared to handle these situations. When we’re not prepared, it may mean that we have to take on expensive debt.

Having an emergency fund available can allow you to handle costly situations more easily — and you’ll likely feel less stress when you get a surprise bill if you already have money set aside.

If you don’t have much extra money, that’s okay! Having a small emergency fund is better than having none. Work with what you have. If you haven’t yet funded your account, you may want to consider doing so. This way, you have a financial back-up plan for when life gets interesting.

How to make your savings goals happen

If you struggle to save money, you’re not alone. Even if you have minimal extra funds, you can do a few things to set yourself up for success.

The following suggestions may help you reach your savings goals sooner:

Open a high-yield savings account: Where you store your extra money matters. High-yield savings accounts are an excellent place to keep your emergency fund. Having a separate bank account for these funds will make you less tempted to spend it all. Plus, you can earn interest while your money sits in the bank. Put your savings on auto-pilot: Many people struggle to save because they forget or spend most of their money and have none left to stash away. To avoid these scenarios, put your savings on auto-pilot. Set up automatic transfers, so extra funds are regularly transferred to your savings account. You’ll make your life easier by doing this. Start small: You don’t have to start with a big goal. Everyone has to start somewhere, and it’s okay if you need to start small. The most crucial part is that you get started. Consider this a gentle reminder to start outlining your savings goals now.

It’s never too late to start saving money. Whether you’re ready to save $100 a month or $500 a month, it will make a difference — and your future self will be glad. If you’re looking for additional guidance on managing your money, you may find these personal finance resources helpful.

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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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These moves could help you make the most of your shopping experience. 

Some people shop at Costco once a month or less. Others make Costco part of their weekly shopping rotation.

No matter which camp you fall into, you should know that there are steps you can take to save money at Costco on top of the savings you’re already getting by gaining access to low-cost household and grocery items. Here are some ways to squeeze out extra Costco savings in 2023.

1. Stick to a shopping list

You’ll save yourself money on food by virtue of not letting it go bad or throwing it away. That’s why it pays to make a shopping list before you head out to Costco (or any other grocery store, for that matter). That list should be based on planned meals and items you know you have a near-term need for. It should also be based on how much room you have in your fridge and freezer.

After all, buying bulk produce and dairy products at Costco might result in a lower credit card tab than buying those same items at a regular grocery store. But if you wind up having to toss out half of your haul, you won’t end up with savings.

2. Buy staple items when they’re on sale

Even though Costco offers low prices on its inventory year-round, every month, it releases a deal book highlighting specific discounts for a limited period of time. It pays to look at that deal book to see which items are marked down. If you’re a Costco member, you should receive that book in the mail, but you can always access information on current specials on Costco’s website.

3. Sign up for an executive membership

A basic Costco membership costs $60 a year, while an executive membership costs double — at least for now. It’s possible that Costco will look to raise its membership fees at some point in 2023, since it hasn’t done so in years. But an executive membership could actually end up saving you money despite its higher cost.

With an executive membership, you get 2% cash back on all Costco purchases. So if you do a lot of shopping there, upgrading your membership in 2023 could result in more savings.

If you’re not sure whether an upgrade is worth it, all you really need to do is ask yourself whether you commonly spend more than $3,000 a year at Costco. Why’s that the magic number? If you do the math, 2% back on $3,000 of spending equals $60, which is what you’ll pay extra for an executive membership (a total of $120). So once your spending exceeds that point, you come out ahead financially by going for the more expensive membership.

Now $3,000 might stop being the magic number if Costco opts to raise its fees later on in 2023. But for now, you can use that number as your starting point.

Shopping at Costco is a great way to enjoy a world of savings. But if you want to take that concept even further, be sure to employ these tips.

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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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Higher living costs are a good reason to get a second job. 

Living costs have been soaring since mid-2021. And while there are different factors that can explain that, one obvious one is that Americans received an influx of stimulus aid at a time when supply chains were having issues. That created a disconnect between supply and demand. And any time you have a situation where the former lags behind the latter, there’s the potential for living costs to rise.

It’s not so surprising, then, to learn that 82% of people today who have a side hustle got one to cope with inflation, according to a Neighbor.com survey. And if you did the same, that was a smart move.

But at some point, inflation levels are apt to cool down. And at that point, you may start thinking that it’s time to dump your side hustle.

But is that the right choice? Or should you hang onto that gig even if inflation manages to cool?

The case for keeping a side hustle long term

Whenever you have a situation where you’re spending more than you’re comfortable with, whether it’s due to inflation, wedding season, the holidays, or circumstances specific to your life, it’s a good idea to take on a second job. Doing so could help you avoid costly credit card debt and the unfavorable consequences that tend to come with it.

As such, it pays to hang onto your side hustle when inflation is soaring. But even once living costs come down, holding onto that second gig could do a lot of great things for your financial picture.

For one thing, a side hustle can just plain buy you more breathing room. You never know when your cable bill might increase, or when utility rates might rise. So the more you earn, the less you have to worry when it starts costing extra to be you.

Plus, you never know when a major home or car repair might become necessary. If you have a side hustle, you can use that extra money to boost your savings balance so you’re covered in the event of unplanned bills or emergencies.

Finally, there’s talk that a recession could hit in 2023. And to be clear, that could happen even if inflation drops to a more moderate level. So in that case, a side job could be a very important thing, because if your main employer is forced to downsize, you’ll have a back-up income source to rely on.

Don’t be so quick to dump that side hustle

If your side hustle makes you miserable, then you may want to ditch it once inflation cools off. But if you’re reasonably happy with the work at hand, then it pays to think about holding onto that second job, even if you don’t need it as much as you once did.

Having extra money is never a bad thing. And in the absence of a massive raise at your main job, a side hustle could give you the breathing room you need, both during periods of economic uncertainty and otherwise calm stretches.

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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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