Money Management

If you don’t think credit cards have any value, you should read this. 

Chances are good you’ve heard lots of warnings about how expensive credit cards are. And those warnings are worth listening to. In fact, you absolutely want to pay attention to the high interest rates on credit cards and avoid carrying a balance so you don’t find yourself sending a fortune to your creditors each month.

But while credit cards can come at a big cost if you pay financing charges, they can also save you money if you use them wisely. In fact, here are five ways you could end up with more money in the bank by using credit cards.

1. You can earn rewards for purchases you’d make anyway

One of the best ways credit cards save you money is by reducing the cost of your purchases. If you buy items you’d otherwise need but use a cash back or rewards card to do it, those rewards end up paying you back part of the money you spent. For example, if you have a cash back card offering 2% back on all purchases, you essentially get a 2% discount on everything you buy.

2. You have strong fraud protections

Credit cards provide you with strong protection against fraudulent charges. With most cards, you are not responsible for paying the cost of any unauthorized charges on your card. By contrast, if someone stole your cash, there’d be nothing you could do and you’d just be out the money.

3. You can avoid having to purchase travel insurance

Many credit cards offer various types of travel insurance. For example, you might get car rental coverage or trip protection insurance with your cards.

Since you might otherwise have to buy these types of insurance, you save the money you would have spent on them. And your card might offer insurance you wouldn’t necessarily have paid for that can save you a fortune if something goes wrong.

For example, many credit cards offer lost luggage protection that reimburses you for necessities if your luggage is delayed or that can pay for the cost of items that go permanently missing if your luggage disappears for good.

4. You can get other types of consumer protections

Some credit cards offer other kinds of protections as well. For example, your card might provide price protection and ensure you’re reimbursed if you buy an item and the price goes down in the days or weeks after you made your purchase.

Cards also routinely offer extended warranties that make the manufacturer warranty longer. If your item breaks during this extended warranty period, this can save you from having to pay out of pocket for repairs or replacement.

5. You can build good credit that makes other transactions cheaper

Finally, if you use your credit cards responsibly, this will help you increase your credit score. A good credit score can make many other transactions much cheaper. You may be offered a lower rate on a car loan or mortgage loan, for example. Or you might be able to sign up for a cellphone or utility services without having to make a large deposit.

For all of these reasons, credit cards can save you money. Just be sure to use them wisely, pay them on time, and don’t carry a balance.

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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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When you’re paying off debt, discouragement is the enemy. 

Paying off debt is like trying to adopt better eating or exercise habits. We’re enthusiastic at first, but soon, discouragement kicks in. Nothing happens as quickly as we want it to, and we feel like we’re spinning our wheels. If you find yourself in that position, there’s a good reason for it. There are also things you can do to make yourself feel better.

Debt fatigue

Experts refer to what you may be going through as “debt fatigue.” It’s that exhaustion you feel as you work to pay off debt. You may feel burnt out and resentful. You may even feel sad or apathetic.

Here’s the thing, though: To accomplish your goal of getting rid of debt you must push through. The trick is knowing how to do it.

1. Build in fun

As someone who has paid off more than $100,000 in debt, I mention this first because I think it may be what got me through. Many years ago, I sat down to add up all that my husband and I owed. I think I put it off for a long time for two reasons.

We always had enough money in the bank to make the minimum payments. I really did not want to know where we stood.

Although we could make payments each month, it bugged me that we were paying compound interest rather than earning it on investments. I knew we could do better, but dreaded facing the reality of our situation.

I can remember precisely where I was sitting as I listed each debt, the interest rate, and how much we were spending each month. It was a jarring experience. It also lit a fire to turn things around, even if it took years to do so.

It’s been nearly 20 years, but the experience has stayed with me. There are several amazing ways to chip away at debt. We chose the snowball method. We focused on paying extra toward one debt each month until that debt was paid off. Then we rolled the amount we paid on that debt to the next debt on our list. Once it was paid off, we rolled it over to the next debt, and so on.

You know what I remember about that time? All the fun we had. We made it a point to have friends over for mystery parties. We took short day trips that cost little but created great memories. We budgeted enough money each month to meet friends for dinner a couple of times and generally found other ways to entertain ourselves without breaking the bank.

Intellectually, I know that I was itching to get out from under that debt, but my memories of that time are sweet because we made sure to focus on living in the moment and finding fun where we could.

I’m not telling you it’s going to be easy, but I am encouraging you to make fun a priority. You don’t have to stop living simply because you’re paying off debt. You may have to get creative and come up with low-cost ways to have that fun, but it’s vital you continue to enjoy your life.

2. Imagine the future

I’m a terrible flier. According to my mother, I’ve been just awful in airplanes since I was a young child. After years of looking for ways to calm down on flights, I’ve discovered something that helps.

From the time I begin planning for a trip through the entire flight, I imagine walking through our destination airport, picking up a rental car, and discovering a new city. Whenever I’m tempted to think about turbulence or the talkative guy in the seat behind me, I refocus my attention on the amazing experience we’re about to have.

It works the same way when debt fatigue hits. Refocus your thoughts on what the future is going to be like once that final debt is paid in full. What will you do with the extra funds? Will you save for a special vacation, invest more, donate to charities you care about, or a combination of all three?

Maybe the future you imagine is totally different, and that’s okay. The point is to focus on what life will be like after debts are gone. As long as you stick with your pay-off plan, you will get there. In the meantime, you have time to decide how you want to spend money when high-interest debt is no longer an issue.

3. Distract yourself

Let’s say your repayment plan is slated to last 36 months or 48 months. While you know you’re going to spend that time getting out of debt, consider what else you want to do during those months. Learn a new language, take up woodworking, buy used cross-country skiing equipment and take to the open trails. Do something that enriches your life.

In other words, accomplish two things at once. Once a repayment plan is set up, put it on auto pilot by setting up auto pay. In the meantime, distract yourself by focusing on other goals.

Even if you follow these suggestions, there are times you may be discouraged. Acknowledge what you’re feeling and use it as the extra motivation you need to make debt a thing of the past.

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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. Dana George has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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You can experience the joy of Costco without paying the yearly membership fee. 

You probably have several people in your life constantly raving about how much they love Costco. The brand has a lot of loyal fans due to its wide variety of products and low prices. Did you know you can shop there if you want the Costco experience but aren’t ready to pay the yearly membership fee? Keep reading to find out how to shop at Costco without a membership.

Stock up on Costco goodies by shopping with Instacart

So you want to try some of the best Costco products that get a lot of praise? You can do so by placing an order through Instacart. The best part is that you don’t have to be a Costco member. Instacart users can pick up their order or deliver it to their doorstep.

It’s worth noting that product prices are usually slightly higher when shopping through Instacart compared to the in-store prices that members pay. But this solution offers a simple way to try Costco without investing in a Costco membership.

Instacart charges delivery and service fees, so keep this in mind before using this service to shop at Costco. Understanding these fees in advance can help you better stick to your budget.

Other ways to give Costco a try before joining

There are other ways to sample the world of Costco without a membership.

Here are two more options you may want to explore:

Shop at Costco with a friend

If you want to shop in person and aren’t a Costco member, you can. But you’ll need to go with a friend or family member with an active membership. Costco members can bring children and up to two guests. Your friend will need to pay to provide their membership details at checkout, but you can have them buy your items and you can pay them back after. This method gives you the perfect opportunity to see what it’s like to be a member for a day.

Shop Costco.com in your pajamas

If you’re hoping to avoid the in-store crowds, you can. Another way you can try Costco without being a member or stepping in the door is by placing an order at Costco.com. Non-members can shop and get items delivered to their homes.

One thing to keep in mind is you will pay slightly more when shopping this way. That’s because Costco implements a 5% surcharge on most purchases (except prescription drug items) for non-members. This charge is something to consider if you want to avoid extra fees.

How much will this fee impact your shopping bill? Imagine you buy $200 worth of items at Costco.com. You’ll be charged $10 for this convenience. If you decide to become a member, you can avoid the 5% surcharge by purchasing a membership before finalizing your order.

A warehouse club membership could be a win for your wallet

Should you join a warehouse club? Only you can decide if this move fits your personal finance goals. But the above solutions give you a way to check out Costco to determine if it’s a good investment for you and your family.

While warehouse clubs aren’t for everyone, many people find they can keep more money in their bank accounts by investing in a membership and buying essentials in bulk. Life isn’t cheap, so small savings can add up to make a significant difference in your life.

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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.Natasha Gabrielle 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 have been hard on everyone. But will that situation persist? 

It’s not unusual to experience a financial setback in the course of the year. If you got hit with an unplanned bill at any point in 2022, you may have landed in credit card debt to cover it. Or, you may have lost your job for a period of time.

But this year, Americans on a whole experienced one massive financial setback — inflation. Living costs have been extremely elevated since the start of the year, and that’s forced a lot of people to rack up costly debt or raid their savings accounts just to stay afloat.

In fact, in a recent Fidelity study, inflation was cited as Americans’ top financial setback in 2022. But will things ease up in 2023? Or are we in for another year of soaring living costs — and loads of stress for consumers?

Some positive signs

We’re closing out 2022 with inflation at a pretty high level, historically speaking. And so it’s fair to say that Americans won’t see much relief in that regard at the start of 2023.

But will things get better as the new year progresses? There’s a good chance that they will.

First of all, inflation seems to have peaked, because for the past number of months, the Consumer Price Index, which measures changes in the cost of consumer goods, has consistently been showing smaller and smaller annual increases.

In fact, even the Federal Reserve is acknowledging that inflation is heading in the right direction. For much of the year, the Fed pushed aggressive interest rates to address the problem of inflation. But it recently pledged to slow down those rate hikes, which is a positive sign.

There are also some other positive data points to consider. Recently, Walmart CEO Doug McMillon said that inflation is easing in a number of key consumer spending categories, including toys and apparel. And while the latter is clearly more of a necessity than the former, all told, it’s good news.

Finally, the Producer Price Index, which measures what businesses pay for goods before they reach consumers, rose 7.4% in November on an annual basis. But that’s down from an 8.1% increase in October.

Patience is key

Clearly, there are signals that indicate that inflation may be cooling off. But those impacted by it will probably need to sit tight for at least a few more months until they’re able to benefit from a notable downtick in living costs.

After more than a year of sky-high costs, the advice to be patient may not be welcome. But it’s reflective of reality.

Living costs are apt to be high at the start of 2023, so consumers should continue to do their best to spend conservatively and, if possible, take steps to boost their income, like taking on side gigs as time allows. At some point, things are apt to get better. And ideally, by the end of 2023, we’ll be in a place where basic expenses like food and utilities are not such an overwhelming burden for everyday Americans.

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