Money Management

Don’t assume that Costco is the cheapest way to buy groceries. 

Costco’s low prices, free samples, and affordable food court are just a few of the reasons the chain has attracted millions of fans around the world. If you receive Supplemental Nutrition Assistance Program (SNAP) benefits, you may be pleased to know you can spend them at Costco warehouses. Here’s how it works and why it might not be cost effective for every family.

Using your EBT card at Costco

SNAP benefits get loaded onto an electronic benefits transfer (EBT) card, which can then be used like a debit card in many stores, including Costco. However, your EBT card will only work in Costco warehouses. You can’t spend your SNAP benefits online at Costco.com or in the food court or Costco gas stations.

Another restriction? Your EBT won’t pay for non-SNAP approved items, whether that’s at Costco or anywhere else. SNAP benefits are designed to pay for essentials like dairy products, meat and fish, fruit and vegetables, and non-alcoholic drinks. You can’t use them to pay for things like alcohol, pet food, tobacco, or other non-SNAP products on sale in the grocery mecca.

That said, if you buy a mix of items, you won’t need to separate them before you get to the checkout. One commenter reports that you can first use your EBT card to cover SNAP items and then pay the remaining non-SNAP balance afterward.

You can also use cash back apps with your EBT card at Costco. Several cash back apps will pay rewards on Costco spending if you scan receipts after you’ve been to the store. It doesn’t matter whether that spending comes from your SNAP benefits or another route, making it a great way to get a few extra dollars into your bank account.

Should you use your SNAP benefits at Costco?

The biggest consideration when it comes to spending your SNAP benefits at Costco is the $60 annual membership fee. If you’re considering paying that fee, you’d need to save at least $5 a month for your membership to pay for itself, so think about how much you’d save.

You might even consider paying $120 a year for the executive membership so you can earn 2% back on your purchases. Bear in mind that the maximum monthly SNAP benefit for a family of four is $939. A family would need to spend $500 a month at Costco — more than half those benefits — to cover the $120 executive membership fee. Any additional savings would be a bonus. All the same, $120 is a lot to pay out in a lump sum and $500 is a lot to spend in one store every month. On top of which, many families don’t receive the maximum SNAP benefits and there are restrictions on how long you can receive benefits.

That said, it is possible to shop at Costco without being a member. For example, you could get someone who is a member to take you. They would need to show their membership card upon entry and you’d use your EBT card to pay. However, other methods of getting around the annual fee — such as using Costco.com or spending with gift cards — won’t work if you’re paying with an EBT card.

Here are some other factors to consider.

1. Emergency benefits won’t last forever

If you live in a state that still pays emergency SNAP allotments, that extra money won’t last forever. States can only pay the extra food benefits while the national health emergency is in place. Right now the government hasn’t said it will extend the emergency, but it hasn’t said it will terminate it either.

It hasn’t officially extended the emergency beyond its current expiration date of mid-January. However, it’s also promised to give 60 days’ notice before any termination, so we’re in a kind of health emergency limbo. At the time of writing, we can assume that states will be able to pay that emergency cash until at least the start of February. Don’t pay the annual Costco fee thinking you’ll get extra SNAP money for the whole of next year.

2. Costco isn’t always the lowest cost option

Costco can be great value, but it doesn’t always come out on top price-wise. You may be able to get better deals at low-cost grocery stores that don’t charge a membership fee. Moreover, if your state runs a double up food bucks program, you could get two-for-one on all your fruit and vegetable spending at participating stores and farmers markets. This may well end up being significantly cheaper.

3. Bulk buying isn’t for everybody

Bulk buying can be a great way to save money, especially if you buy non-perishables that will last. Even so, it won’t suit every household. For example, some families might not be able to afford to buy six pounds of ground meat at once, even if it works out cheaper overall. Teaming up with a neighbor or family member might make those bulk savings more feasible, and could also let you split the annual membership fee.

Bottom line

Every family is different, and only you can work out whether your SNAP benefits will go further if you use them at Costco. Just don’t automatically assume Costco is the lowest-cost option, particularly if you need to pay for the annual membership. After all, $60 can buy a lot of groceries so it’s worth doing some homework before you pay that annual fee.

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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.Emma Newbery 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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Earning interest is a great way to boost your income, but choosing a bank account that meets your needs is essential. 

In today’s economy, many people are prioritizing their savings goals. Storing extra money in an interest-earning bank account is an excellent way to boost your income while having funds set aside for future expenses. Not all bank accounts are the same, so where you put your extra money matters. Keep reading to learn why it may not be best to store your spare cash in a CD.

A CD earns interest, but has restrictions

A certificate of deposit, also known as a CD, is a bank account that earns interest, and typically these accounts offer attractive interest rates. However, when opening this type of account, you must agree to leave your money in your account for a specific time.

While CD terms vary, most banks require customers to keep their money in the bank for anywhere from six months to five years. You can find many CDs that offer 1-year terms.

If you withdraw your money before the CD term is up, you can expect to pay penalties. If you want access to your money and don’t want to agree to a lengthy term, this may not be the best type of bank account for you.

It’s worth noting that most CDs lock in the interest rate throughout the term. That can be a win if interest rates decrease during that time. However, you’re at a disadvantage if interest rates continue to rise.

High-yield savings accounts may offer similar interest rates

You may want to go a different route than a CD. At this time, many of the best high-yield savings accounts are offering attractive rates, and those rates aren’t too far off from current CD interest rates. That means you could earn interest without worrying about withdrawal restrictions.

With a high-yield savings account, if an emergency expense comes up, you have the flexibility to withdraw your money without paying penalties. For this reason, many people use high-yield savings accounts for their savings needs.

With this type of bank account, interest rates aren’t locked in. If rates increase, you’ll be at a disadvantage. But many banks have continued to raise interest rates over the last few months.

A high-yield savings account may be the best choice if you want to earn interest on your savings contributions, but also want the flexibility to access your money if necessary.

Don’t miss out on the chance to earn interest

It’s important to remember that most checking accounts don’t earn interest. That means if you’re storing all your money in your checking account, you’re missing out on the chance to make extra money from the interest.

For those wondering how much money you should keep in your checking account, it may be less than you think. Consider leaving some extra cash in your checking account, and then moving the rest into an account that earns interest so you can boost your bank account balance.

Any extra income makes a difference in today’s expensive world and can improve your personal finance situation. If you want to earn interest on your money and want full control over when and how you use your money, check out our list of best high-yield savings accounts to learn more.

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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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A few savvy moves could leave you debt-free by the end of the year. 

Maybe you took out a personal loan in 2022 to cover a home renovation. Or maybe you needed a large pile of cash to fix up your car, and a personal loan was your best bet.

The upside of borrowing via a personal loan is that you’ll generally snag a lower interest rate than you will with other options, such as a credit card. Plus, personal loans offer the benefit of fixed interest rates, so when you sign one of these loans, you can anticipate the same monthly payments until your debt is paid off.

Now, if you took out a personal loan in 2022, you may not have it paid off before the end of 2023 if you stick to your current payment schedule. But often, personal loans won’t penalize you for an early payoff. And so if your goal is to shed your personal loan debt by the end of 2023, you can employ these strategies to get there.

1. Start budgeting

The simple act of following a budget could make it easier to pay off your personal loan, because it might give you a better sense of how to manage your money. And the start of a new year is actually a great time to put together a budget, because you might be looking at a new (hopefully higher) paycheck, if you’ve gotten a raise. Once you set up your budget, you can play around with different bills to free up more cash to pay off your personal loan.

2. Commit to a few specific cost-cutting measures

If you currently spend the bulk of your paycheck, or all of it, then expediting your personal loan payoff may be tricky. But if you want that loan done with by the end of 2023, then a good bet is to commit to cutting back on a few specific expenses.

You may, for example, want to pledge not to travel in 2023. Is that a big sacrifice? Of course. But it could also free up the money you need to get rid of that debt once and for all. (To be clear, this isn’t to say you shouldn’t take time off from your job. But you may want to go the staycation route so you’re not spending money.)

3. Get a side hustle

Boosting your income could be your ticket to paying off a personal loan more quickly. And while your paycheck at your main job may be getting a lift, chances are, it’s only a modest one.

To make solid progress on your personal loan, consider taking on a side hustle for 2023. The gig economy is still in good shape, and there are different jobs you can look at to boost your income that won’t necessarily interfere drastically with your current schedule.

You might, for example, sign up to drive for a ride-hailing service and simply pick up passengers when it’s convenient to do so. Or, you might find a job like editing or web design where your clients are pretty flexible. Explore your options to find a gig that’s a good fit.

If you’re staring at a pretty large personal loan balance, the idea of paying it off by the end of 2023 may seem daunting. But these moves could be your ticket to knocking out that debt and starting off 2024 with a completely clean slate.

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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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And the sooner you implement it, the better. 

The start of a new year is a popular time to map out different financial resolutions. Yours might include paying off your credit cards, spending less money, and boosting your savings.

All of these can be challenging goals. But if you make one key banking move, you may find that you’re able to close out 2023 saying that you’ve pulled all of them off.

It’s all about managing your money effectively

If you work and get paid on a regular basis, you can probably anticipate that a specific amount of money will hit your checking account month after month. Now you might take the attitude that once all of your bills are paid in a given month, you’ll take your remaining money and use that cash to meet your goals. So you might, for example, put $100 at the end of the month toward your credit card balance and then stick another $50 into savings.

But there’s a problem with that strategy — namely, it assumes you’ll keep your spending in check enough to eke out money each month to meet your goals. So rather than leave things to chance, a better bet may be to take advantage of one feature that most bank accounts offer these days — the automatic transfer.

Unless your bank is really behind the times, you should have the option to set up an automatic transfer that moves money out of your checking account and into your savings account in conjunction with your paychecks arriving. And that’s an important thing, because if the temptation to spend money has thwarted your financial goals in the past, this helps eliminate that temptation.

So, let’s say your goal is to boost your savings by $2,000 in 2023 and also pay off a $1,000 lingering credit card balance. That means you’ll need to come up with $3,000 to make that happen.

If you set up an automatic transfer from your checking account, you can arrange for $250 to land in your savings account each month. You can use some of that money to pay off your credit cards and keep the remainder in savings so you have cash reserves to tap in case you wind up facing a financial emergency, like a home or car repair.

A move worth making

There are different banking moves you might think to make in 2023. These could include opening a certificate of deposit (CD) or even switching from a physical bank to an online-only bank if that results in a higher interest rate on your money (which it very well might).

But another key move to make in 2023 is to set yourself up with an automatic transfer. Doing so could spell the difference between meeting your financial goals and falling short. And if you don’t want to deal with the disappointment of failing at your financial resolutions, then it pays to take this very simple step at the start of the year — before you have a chance to fall victim to impulse spending.

These savings accounts are FDIC insured and could earn you more than 17x 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 17x 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 2022.

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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